Ex-Tesla CEO Martin EBERHARD has dropped his lawsuit against Tesla and Tesla CEO Elon Musk that alleged slander, libel and breach of contract.

Musk has publicly blamed Eberhard for cost overruns and delays on the Tesla Roadster.

Eberhard’s lawyer Yosef Peretz told the San Jose Business Journal that the co-founder dropped the suit voluntarily but offered no further comment, except to say that more may become public about the case in September.

Eberhard’s decision follows the judge’s recent ruling that the lawsuit could move forward after Tesla filed a motion to dismiss it in June.

Although Eberhard’s suit alleged that Musk ‘compromised Tesla Motors’ financial health’ Tesla announcing earlier this month that it was profitable in July, reporting a net income of US$1m on revenue of US$20m from the sale of 109 Roadsters. 

See also: US: Musk to remain as Tesla CEO till 2011