It appears that Elon Musk just got $400,000 richer, after a former Tesla employee has been ordered to pay the electric vehicle manufacturer for exposing trade secrets with the press, according to a recent court filing.
Back in 2018, Tesla filed a lawsuit against Martin Tripp after he had revealed to reporters that the company had been wasting a significant amount of scrap metal and cash – a claim that Tesla has denied. In the internal documents leaked to Business Insider, it appeared that nearly 40% of all raw materials used in the production of driving units and batteries at the Nevada Gigafactory need to either be reworked or scrapped altogether before they can be sent off to the factory in Fremont, California and assembled into Model 3s.
That means, for every 2,500 driving units and battery packs manufactured at the Gigafactory, there are an additional 1,000 of “nonconforming material” produced. Half of that “nonconforming” material is then either modified and used for other car parts (which could explain the faulty suspensions on Model X’s and Model S’s, Model Y roofs flying off… the list continues, but I digress), while the other half turns into scrap. Then, Tripp also revealed that the electric car manufacturer had over-reported production levels of the Model 3 sedan by a whopping 44% – which was also denied by Tesla. However, once Musk discovered that Tripp was the culprit behind the damning allegations, he was immediately fired.
Tripp was soon accused of hacking and leaking “confidential and trade secret information” in a “willful and malicious” way, allegedly to deliberately smear Tesla and hurt its business. Tripp however, argued that he only exposed the information because he felt that public safety was at stake (in retrospect, his concerns are certainly don’t appear to be unfounded, given recent NHTSA investigations), and in response he filed a countersuit of defamation, also implicating Tesla of not meeting its environmental obligations.
According to internal estimates reviewed by Business Insider, Tesla had burned through nearly $150 million in scrap parts halfway through 2018, excluding overhead costs of producing the scrap (ie., labour hours, energy etc.). In fact, the cost of scrap was so enormous that the money was sometimes quantified in comparison to another, more dramatic number – such as the scrap metal cost measured in miles of footlong Subway sandwiches (in one case, the waste equated to 137.11 miles).
By the end of 2018, Tesla was suing Tripp for over $167 million, as noted by Tripp’s defence team in a legal filing. However, following the two-year dispute, on Tuesday Bloomberg reported that the sum was reduced to $400,000 in a proposed settlement agreed to by Tripp. In the settlement, Tripp also admitted to disobeying trade secret laws and secrecy agreements, in addition to accepting a fine to the tune of $25,000 for continuing to reveal confidential information regarding Tesla despite being ordered by a judge to stop.
Information for this briefing was found via Bloomberg and Business Insider. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.