Tesla CEO Elon Musk likes to call himself "founder" of companies he didn't actually start. This weird fetish has never been fully safe and legal, until now: The real founder of Tesla Motors is dropping his lawsuit and granting permission.

Huge infusions of money would seem to have helped Tesla Motors: the electric-car startup has escaped a bitter lawsuit from founder Martin Eberhard and finally sited a power-train factory — and that's just this week. But other fights loom.

Elon Musk has a very loose definition of the word "founder." The Tesla CEO calls himself a PayPal founder; he isn't. He calls himself a Tesla founder; today a court begins hearings over whether he should stop saying that.

Elon Musk posted a lengthy blog entry slamming his CEO predecessor, Martin Eberhard. Ostensibly, Musk is just defending himself against Eberhard's recently-filed lawsuit. But enemies of Musk take note: If Tesla wants to keep Daimler's money, it must keep Musk.

California's liberal millionaires have turned the Tesla Motors waiting list into a thing of wonder. It's thousands of dollars just to sign up. But company bigwigs fetishize their electric vehicle just as irrationally, a lawsuit reveals. Heartening.

When visionaries clash, whose vision do we believe? On newsstands this week, Newsweek's Dan Lyons savages Tesla Motors, the electric-car maker. Tesla was once the brightest hope of Silicon Valley's clean-transportation industry; now on its fourth CEO in less than two years, it's better known for manufacturing boardroom drama than actual vehicles. Lyons writes that Tesla's Roadster is a "classic Silicon Valley product — it's late and over budget, has gone through loads of redesigns, still has bugs and, at $109,000, costs more than originally planned. Company founder Martin Eberhard (left, at bottom) says that lead investor Elon Musk (left, at top), who recently installed himself as the company's fourth CEO, made costly changes to the car's design and is "a terrible CEO." Musk's retort: "Martin is the worst individual I've ever had the displeasure of working with."Eberhard and Musk have long feuded, even before Musk ousted Eberhard as Tesla's CEO. But I'd note that for once, they're not outright contradicting each other here. It's far more common for Musk to have a version of events that conflicts with everyone else's accounting. His history of events at PayPal, the electronic-payments startup he cofounded, seems to be shared only by him. And Musk has been telling everyone who will listen that SpaceX, his rocket startup, has a "Nasa contract to build the Space Shuttle replacement after 2010." If you ask Nasa administrators, they'll say that's more than a stretch of the truth. (In fact, SpaceX is competing for a contract, but it has only hit some of the milestones; Nasa is currently planning to rent out space on Russian rockets to supply the International Space Station, and a future supply contract for SpaceX is a possibility, not a certainty.) So Musk has a tenuous relationship with reality. Is this a handicap in his business? Apple CEO Steve Jobs is famous for his "reality distortion field" — a charisma that leads others to believe the most exaggerated claims, because the vision behind them is so compelling. Of course, Jobs actually has brought his outlandish vision to life four times: With the Apple II, the Mac, the iPod, and the iPhone. Musk has realized the Roadster, and SpaceX has managed, after several crashes, to launch one lone rocket. He's also got SolarCity, a startup which installs solar panels on roofs. If in 2011, we live in a shiny future where we drive Tesla cars powered with clean electricity from SolarCity panels, and SpaceX's Falcon1 rockets are supplying orbital space stations, then we will be living in a reality of Musk's making — much as Jobs envisioned the iPod in the dark days of October 2001, and then, three years later, saw them everywhere on the New York subway. There's another possibility, however, which would also make Musk like Steve Jobs — the Jobs of two decades ago, who was forced out of Apple by the CEO he hired. Tesla could go under, SpaceX could fail to win the Nasa contract, and SolarCity could get beaten down by rival cleantech startups. And then Musk, driving his Roadster on the lonely roads of Silicon Valley, would find himself facing a reality not constructed in his mind. An unpleasant thought, that. Far easier just to succeed.

I confess: I completely missed the Tesla Roadster parked outside when I walked into Joey & Eddie's, the San Francisco watering hole where Valleywag used to hold weekly meetups with readers. But there was no mistaking the guy parked at the bar: It was Elon Musk, the CEO of Tesla Motors. He had driven up to surprise me at the behest of Adeo Ressi, the founder of VC-ratings site TheFunded.com, who was Musk's housemate in college. Matt Marshall, the editor of VentureBeat, also dropped by. Musk pressed a set of keys on me and offered a Tesla test drive; I turned them down. Honestly, I figured I'd crash the thing, and I didn't want to put a further dent in Tesla's already parlous cash balance. But I finally agreed to go for a ride with Marshall. How was it, you ask?Kind of boring. If you like amusement-park rides, you'll love the Tesla Roadster. If, like me, you sit there calculating the infinetesimal odds that the operator's insurers will allow a rollercoaster to actually pose any real danger to you, you'll hate it. I spent the ride up to Coit Tower and back thinking about how much coal was burned to generate the electricity now being thrummed away by the Roadster's motors. Back at the bar, Musk was affable enough, considering I've hinted he's taking out his midlife crisis on his employees and may be scheming to take over Tesla Motors completely by running it into bankruptcy. He laughed at the last idea, and then thanked me for the suggestion, saying he hadn't thought of that particular financial maneuver. Musk still blames cofounder Martin Eberhard for Tesla's current straits. When Tesla raised its fourth round of funding in 2007, Musk says, Eberhard, then CEO, told investors that the Roadster's cost was $65,000, giving it a $25,000 gross margin. "It's right there on the slide, with Martin's name on it!" Musk told me. The company, he adds, was already in the middle of a search for a CEO to replace Eberhard. A private-equity firm which had invested in Tesla sent some consultants to help Tesla sort out supply-chain issues, and they found that the Roadster's parts actually cost the company $140,000. "We might as well have sent customers $50,000 and saved the bother of making the car," said Musk. Former Flextronics CEO Michael Marks, a Tesla investor, confirmed their findings — and that's when Musk decided to fire Eberhard and replace him temporarily with Marks. Just as now, the company's cash position was running low, and Tesla tapped existing investors for new funding, despite having just raised a round. He revealed none of this at the time, he says, because it would have jeopardized the company's ongoing CEO search. (Not that that worked out particularly well; Musk installed Ze'ev Drori, then replaced him last month.) That's Musk's version, anyway. I'm skeptical, if only from experience with Musk; when he was running PayPal, I remember him making statements that company insiders told me didn't match the facts. But as he was leaving to drive back to the Valley, Musk mentioned that his divorce from his sci-fi novelist wife Justine was a mutual matter; he got the paperwork in first, but she was getting ready to file papers, too. That, at least, checks out. I'm still not sure if I should trust Musk's account of what led Tesla to these perilous straits. But I do believe now that he's brave enough to drive a Roadster up to San Francisco and deliver it in person.

Tesla Motors, Silicon Valley's troubled electric carmaker, is still running on financial fumes, with $9 million or less in the bank. It's been widely misreported that the company has already raised $40 million. In fact, that's the amount it's hoping to raise, in the form of convertible debt, from current investors in a rights offering, which will take 30 days to complete. Musk made a fortune from PayPal, the online payments startup purchased by eBay, and other startups. He says he has enough money to take the entire round if other investors don't step up. And that may be exactly what he's hoping will happen.In a bankruptcy, holders of Tesla's debt will have priority over all holders of common and preferred stock in the company — including the Valley celebrities like Google cofounders Larry Page and Sergey Brin and eBay billionaire Jeff Skoll who have invested in Tesla. Raising this round of debt, followed by a bankruptcy filing, could be Musk's way of squeezing out other shareholders — especially cofounders Martin Eberhard and Marc Tarpenning. Employee with unexercised stock options will get wiped out in such a scenario. Current shareholders will have a right to invest in this debt round according to their current share — but Musk may well be counting on the short 30-day offering period and tight financial markets to shut out anyone who doesn't have the cash handy. Why do I think this is a likely scenario? Because Musk has done something similar before. When Musk briefly served as PayPal's CEO, he'd run the company's bank account to six weeks' worth of cash. PayPal insiders say Musk was pulling "financial machinations" to maintain his control of the company — but the board fired him instead and replaced him with cofounder Peter Thiel, who steered the company to its $1.5 billion purchase by eBay. Unfortunately for Tesla, there's no obvious white knight like Thiel on the horizon.

To anyone familiar with Elon Musk's brief, troubled career as CEO of PayPal, the troubles at Tesla Motors, his electric-car startup, seem all too predictable. As does his spin on his decision to lay off dozens of employees, close Tesla's Detroit office, postpone a new model, and replace Ze'ev Drori as CEO. Musk blames past CEOs — chiefly cofounder Martin Eberhard — for the company's current troubles.“It’s taken us about a year to correct major errors,” Mr. Musk told the New York Times. Eberhard has a snappy response: “Look at the constant factor at the company through all the years: Elon.” A history lesson from PayPal: Not until Peter Thiel replaced Musk as CEO, and he ceased day-to-day involvement with the company, did it thrive. (Photo by Peter DaSilva/New York Times)

Former Tesla Motors CEO Martin Eberhard, who was ousted along with over two dozen other employees after the company failed to meet an expected shipping deadline, will have to wait a bit longer for his own all-electric roadster. That's because a technician got into a fender bender test-driving the sporty coupe. Eberhard graciously offered to take the same vehicle after it is repaired rather than demand a new vehicle. (Photo by Neeta Lind)

Tesla Motors founder Martin Eberhard, who was ousted from the company a month ago, lists the names and titles of 26 Tesla employees he claims have been fired following the installation of new management. The turnover came after the company missed its deadline to ship its first batch of 100 electric sports cars. Tesla's new management has attributed the delay to problems with the car's unique transmission. Asks Eberhard, "Is this really the right time for Tesla to be tightening its belt? Get the transmission working and ship the cars. No show stoppers here!" Tesla's VP of marketing, Darryl Siry, is a regular commenter at Jalopnik and Valleywag. Darryl, any comment? VentureBeat has more reporting.