Whistleblowing saboteur costs us $167m bellows Tesla’s accountant

And another $262,000 to figure out who he was


A former Tesla employee who leaked information about its production problems cost the electric car biz $167m, Musk's crew claims.

That is the latest in an increasingly bitter legal battle between the car biz and its former technician Martin Tripp, who Tesla insists on calling a “saboteur,” despite being countersued by Tripp for defamation.

This week, Tesla added an “expert report” [PDF] written in November 2018 as part of its ongoing lawsuit in an effort to highlight the financial damage that Tripp’s conversations with the press had caused.

Despite Tesla paying the report's author an eyebrow-raising $750 an hour, the $167m claim is built entirely from the fact that Tesla’s share price fell slightly following the publication of two articles in June 2018.

The share price was at $320.28 at 1521 on June 6, 2018, the report notes. Then an article saying that Tesla was putting damaged battery packs into new Model 3 cars came out and at the end of the day, that price was down to $319.50. With some advanced mathematics (multiplying the difference in share price by the number of shares), Tesla confidently tells the judge that Tripp - the source of the story - cost it $133.8m.

A similar situation occurred just a few days earlier when Tripp told a reporter that Tesla’s production process was massively inefficient and he estimated the company had wasted $150m in scrap vehicle parts that were piling up on the shop floor as the company desperately tried to meet its production schedule. That time the share price dipped from $296.94 to $296.74 so Tripp has cost it $33.6m.

What budding mathematicians will have already noted however is that these shifts in share price amount to dips of just 0.24 per cent and 0.06 per cent respectively - i.e. you could argue that the articles actually had no real impact on the share price given that they were smaller than typical daily market fluctuations.

Ludicrous

And in fact that the report’s own graphs show how ludicrous the claim is. One shows the price between 1400 and 1600 on the day that the second article came out. It takes the share price at 1521pm - when the article was published. But step back, oooh, one hour and the price was around $312.50. So using the same logic, you could argue that on the day the article came out, Tesla actually gained in value by $1.2bn. They should give Tripp a raise.

In other words, the analysis that Tesla paid someone $750 an hour to produce looks a tad inaccurate. And that’s before you consider the fact that the share price actually went up in the following days.

That’s not all though: Tesla pins the cost of its finding out who its leaking employee was on Tripp too. That investigation, the report says, cost it a staggering $249,494. The hourly costs of that investigation are blacked out but consider this: the first article appeared on June 4 and they were interviewing Tripp on June 14 and 15. So not a huge amount of investigation appeared to be needed to track down who was leaking the information.

And just to put it all into perspective, the actual cost to the company of Mr Tripp’s time, i.e. how much it actually paid the person building its cars, rather than the people investigating them or writing reports in which they add up share prices, was under $10,000. “In summary, I find that damages owed to Tesla for Mr. Tripp’s breach of loyalty include unearned wages of $7,385,” it says.

Tesla CEO Elon Musk is notoriously thin-skinned and a long series of reports outlining how the company was struggling to produce its new Model 3 car hurt his feelings. Musk tends to attack anyone who doesn’t pretend that his self-created hype bubble is real. But in this case, Tripp not only stopped pretending but actually burst the bubble by giving details of what was really going on inside the notoriously secretive company.

Tripp’s reports seem to have been accurate. Tesla’s denial about the massive level of production waste consists not of saying there wasn’t massive waste but of disagreeing over the cost of that waste: it wasn’t $150m, the company says. Although it won’t say what its estimate is.

Pack animal

And Tesla says that no damaged battery packs were included in new Model 3s but the wording of its denial is sufficiently vague that it is all too possible that after the story detailing Tripp’s allegations came out, that Tesla may have gone back and pulled the packs out. We can’t know for sure because Tesla won’t answer any questions about it.

Tripp also said robots that were supposed to be building Model 3 cars, speeding up the process, weren’t operational. Tesla doesn’t deny that either but claims that they weren’t supposed to be working at that time: something that Tesla execs can simply decide is true.

The articles and monetary damages are all a sideshow however to the main allegations made by Tesla against its former employee. It claims that Tripp wrote some malware that he then installed on several machines and used it to collect and export "several gigabytes" of confidential information that he allegedly then provided to unnamed third parties.

Elon Musk smoking a spliff on Joe Rogan's podcast

Holy smokes! US watchdog sues Elon Musk after he makes hash of $420 Tesla tweet

READ MORE

"His hacking software was operating on three separate computer systems of other individuals at Tesla so that the data would be exported even after he left the company and so that those individuals would be falsely implicated as guilty parties," Tesla claimed.

Is all that true? That’s what the lawsuit should find out. But it is worth noting that Tripp has countersued Tesla for defamation and invasion of privacy and wants $1m in damages.

He says he was a whistleblower and his motivation was to flag the company's “unnerving, dangerous, and wasteful business practices.” But Tesla’s very public and aggressive approach - repeatedly referring to him as a “saboteur” for example - has resulted in him receiving “numerous threats to his personal safety, which, upon information and belief, have been stirred by the foregoing false and defamatory statements published about him by counter defendant.” Tripp also says that claims that he had threatened to shoot up the Tesla factory are entirely untrue.

In other words, just like Tesla itself, the whole lawsuit is fascinatingly over-the-top and most of the claims are likely exaggerated. ®

Similar topics

Broader topics


Other stories you might like

  • Lonestar plans to put datacenters in the Moon's lava tubes
    How? Founder tells The Register 'Robots… lots of robots'

    Imagine a future where racks of computer servers hum quietly in darkness below the surface of the Moon.

    Here is where some of the most important data is stored, to be left untouched for as long as can be. The idea sounds like something from science-fiction, but one startup that recently emerged from stealth is trying to turn it into a reality. Lonestar Data Holdings has a unique mission unlike any other cloud provider: to build datacenters on the Moon backing up the world's data.

    "It's inconceivable to me that we are keeping our most precious assets, our knowledge and our data, on Earth, where we're setting off bombs and burning things," Christopher Stott, founder and CEO of Lonestar, told The Register. "We need to put our assets in place off our planet, where we can keep it safe."

    Continue reading
  • Conti: Russian-backed rulers of Costa Rican hacktocracy?
    Also, Chinese IT admin jailed for deleting database, and the NSA promises no more backdoors

    In brief The notorious Russian-aligned Conti ransomware gang has upped the ante in its attack against Costa Rica, threatening to overthrow the government if it doesn't pay a $20 million ransom. 

    Costa Rican president Rodrigo Chaves said that the country is effectively at war with the gang, who in April infiltrated the government's computer systems, gaining a foothold in 27 agencies at various government levels. The US State Department has offered a $15 million reward leading to the capture of Conti's leaders, who it said have made more than $150 million from 1,000+ victims.

    Conti claimed this week that it has insiders in the Costa Rican government, the AP reported, warning that "We are determined to overthrow the government by means of a cyber attack, we have already shown you all the strength and power, you have introduced an emergency." 

    Continue reading
  • China-linked Twisted Panda caught spying on Russian defense R&D
    Because Beijing isn't above covert ops to accomplish its five-year goals

    Chinese cyberspies targeted two Russian defense institutes and possibly another research facility in Belarus, according to Check Point Research.

    The new campaign, dubbed Twisted Panda, is part of a larger, state-sponsored espionage operation that has been ongoing for several months, if not nearly a year, according to the security shop.

    In a technical analysis, the researchers detail the various malicious stages and payloads of the campaign that used sanctions-related phishing emails to attack Russian entities, which are part of the state-owned defense conglomerate Rostec Corporation.

    Continue reading
  • FTC signals crackdown on ed-tech harvesting kid's data
    Trade watchdog, and President, reminds that COPPA can ban ya

    The US Federal Trade Commission on Thursday said it intends to take action against educational technology companies that unlawfully collect data from children using online educational services.

    In a policy statement, the agency said, "Children should not have to needlessly hand over their data and forfeit their privacy in order to do their schoolwork or participate in remote learning, especially given the wide and increasing adoption of ed tech tools."

    The agency says it will scrutinize educational service providers to ensure that they are meeting their legal obligations under COPPA, the Children's Online Privacy Protection Act.

    Continue reading
  • Mysterious firm seeks to buy majority stake in Arm China
    Chinese joint venture's ousted CEO tries to hang on - who will get control?

    The saga surrounding Arm's joint venture in China just took another intriguing turn: a mysterious firm named Lotcap Group claims it has signed a letter of intent to buy a 51 percent stake in Arm China from existing investors in the country.

    In a Chinese-language press release posted Wednesday, Lotcap said it has formed a subsidiary, Lotcap Fund, to buy a majority stake in the joint venture. However, reporting by one newspaper suggested that the investment firm still needs the approval of one significant investor to gain 51 percent control of Arm China.

    The development comes a couple of weeks after Arm China said that its former CEO, Allen Wu, was refusing once again to step down from his position, despite the company's board voting in late April to replace Wu with two co-chief executives. SoftBank Group, which owns 49 percent of the Chinese venture, has been trying to unentangle Arm China from Wu as the Japanese tech investment giant plans for an initial public offering of the British parent company.

    Continue reading
  • SmartNICs power the cloud, are enterprise datacenters next?
    High pricing, lack of software make smartNICs a tough sell, despite offload potential

    SmartNICs have the potential to accelerate enterprise workloads, but don't expect to see them bring hyperscale-class efficiency to most datacenters anytime soon, ZK Research's Zeus Kerravala told The Register.

    SmartNICs are widely deployed in cloud and hyperscale datacenters as a means to offload input/output (I/O) intensive network, security, and storage operations from the CPU, freeing it up to run revenue generating tenant workloads. Some more advanced chips even offload the hypervisor to further separate the infrastructure management layer from the rest of the server.

    Despite relative success in the cloud and a flurry of innovation from the still-limited vendor SmartNIC ecosystem, including Mellanox (Nvidia), Intel, Marvell, and Xilinx (AMD), Kerravala argues that the use cases for enterprise datacenters are unlikely to resemble those of the major hyperscalers, at least in the near term.

    Continue reading

Biting the hand that feeds IT © 1998–2022