By on May 14, 2008

340x.jpgAutoblogGreen sets 'em up. We knock 'em down. This time, Tesla's cheerleaders are hailing the fact that Larry Sonsini has joined Tesla's Board of Directors. "The presence of Sonsini as a member of the Tesla team is of particular importance moving forward because of his area of expertise. Sonsini is Chairman of Silicon Valley law firm Wilson Sonsini Goodrich & Rosati and a specialist in IPOs and mergers and acquisitions. This is important because Tesla chairman Elon Musk has previously declared that the company will be going public, likely sometime in 2009." So the car company that's allegedly delivered two car to a single paying customer, a Silicon Valley start-up that's lighting cigars with $100 bills, wants some more cash to burn. Some more of someone else's cash to burn. And Sonsini, a man hauled in front of the House for investing in whilst advising companies who backdated options, is just the shark they need to find and devour the whales. You know, as "Tesla Motors drives forward the electric transport revolution and grows to become one of the great car companies of the 21st century." Call me cynical, but Silicon star IPO guy or no, how can anyone trust a lawyer who says his "yardstick of success" is "inner peace?"

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13 Comments on “Tesla Birth Watch 47: Scandal-Tainted Shark to Help Tesla Prepare for IPO...”

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    inner piece of the action

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    specialist in IPOs and mergers and acquisitions

    Anyone read more into that than IPO? I’d almost bet an acquisition at this point since they haven’t delivered a paying customer car yet – I could be wrong, but he may be there to prep them for sale.

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    I could be wrong, but he may be there to prep them for sale.

    To whom? Seriously; I can’t think of a single company that would want to buy Tesla.

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    Robert Farago:

    To whom? Seriously; I can’t think of a single company that would want to buy Tesla.

    Ford. They need to compete with GM on the electric car front.

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    How is Ford going to raise capital to buy Tesla? They are already totally levereged. They would have to ask each employee to “chip in a hundred bucks”. Actually, with their lower payroll numbers these days, each employee might have to take out a home equity loan and send their proceeds to the Glass House.

    For Ford to survive, they need to have an answer to the Volt already in the works, if not AHEAD OF THE VOLT. And if this is the case, it would mark the first time in Big 2.8 history that a major new product wasn’t announced four years before it is actually in production and available for sale. Read: Ain’t gonna happen.

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    “Ford. They need to compete with GM on the electric car front.”

    There isn’t enough real intellectual capital at Tesla to be worth bothering with. All the major components are off the shelf items and the underlying car comes from Lotus. Tesla is a disgrace to the name as the real Nikola Tesla was one of the most original and brilliant inventors of his age.

    “… need to have an answer to the Volt already in the works”

    Count me a cynic, but no way is the Volt going to change the face of the automotive world, if it ever goes into production at all.

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    So are they trying for the first-day IPO run-up, sell as soon as possible, then let the company tank (or not, whatever) strategy? Their continuing quest for positive press would certainly lend itself well to that effort. You have to hold options for something like 6 months before you can dump them, and continual fawning might just keep the stock afloat until the sell-off can begin.

    Less cynically, it could be a realization on their part that they just need more money. In which case, an expensive dealership in LA would seem a waste when you have more pre-orders than you can make anyway.

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    MgoBLUE, jthorner:

    I keep forgetting sarcasm doesn’t translate well over the web.

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    Call me a cynic but there isn’t a chance in hell of Tesla becoming “one of the great car companies of the 21st century”. Even if the Roadster is a smashing success, where do they go from there? A Prius fighting hybrid? Or an upscale Lexus Prius fighting hybrid? An IPO isn’t going to generate the capital needed to create a full line of all new groundbraking, reliable, desireable vehicles. As soon as everyone cashes out (on emminently pratical, efficient, green, and modest goods) and the problems start happening with the Roadster and the delays keep on coming with Whitestar, their stock is gonna tank, golden parachutes will unfurl, and Tesla will crumble.

    I would love to see a new company jump onto the scene and shake things up, but the over promise/ under deliver, knowlegeless, impatient, investor driven strategy of Tesla points to the all too familiar Silicon Valley IPO MO instead of that of a Messiah.

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    I would bet that a non-unionized company with zero pension costs, and utilizing excess industry capacity for assembly at below the cost of capital has a better chance of surviving than GM. But I expect shortly to see “Tesla by Great Wall”

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    I’m proud to say that I called Tesla a “pump’n’dump” scheme several years ago on the EVDL when Tesla first started their hype. Unfortunately my prediction appears to be coming true.

    jthorner : “There isn’t enough real intellectual capital at Tesla to be worth bothering with.”

    So true. I can’t see anything revolutionary. Contract-built body. More insane than revolutionary use of laptop batteries. Reinventing what industrial AC VFDs have been doing for years. Claiming that “reductive charging” scheme to be innovative when my 20 year old UPS does the same thing. What few patents they hold are so weak that they’d be easily challenged, were they to get in the way of an actual car company. The company is, IMO, little more than a painfully drawn out stock swindle attempt.

    I’ve been involved in two start-ups. Smaller and mundane but successful. My mind boggles at what I could do with a fraction of the money they’ve blown through. This whole thing is simply more proof of the old adage “A fool and his money are soon parted”.


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    Elon Musk was paid US$1.8 billion for PayPal. $1.8 billion is sufficient to satisfy anyone’s personal desire for money and the power coming from it. Once you have this kind of money it seems absurd to consider a pump and dump scam, which would be of dubious legality and might endanger your reputation and even your freedom.

    For that reason alone, I think Elon was sincere in investing in Tesla. I have to admit that some of his behavior makes him look a little silly, but I don’t doubt his desire to create a viable company and vehicle.

    I would credit Tesla in enormously increasing the profile of the electric car. Before Tesla, everyone thought electric cars could only be awful city cars or distant memories of failure like the EV1. Tesla showed that electric cars that were fun to drive could be made with adequate range and speed.

    Just because it was an obvious idea in hindsight to combine a few thousand laptop battery cells into enough oomph to drive a car doesn’t mean it was obvious before it was attempted; as far as I know, Tesla is the first and only company that has done it.

    A story in cnet today mentioned that Tesla is going to seek government financing of $100-200 million through a loan program. I find it a little curious that this is as much or more than they’re planning to raise from the IPO. So the IPO may go only to pay back their government loan, which seems more than a little iffy for an IPO.

    I don’t claim to have dug deep into the financial mechanations or understand them. But it does seem like a tie-in with a company with a spare sedan body might be a better bet than a wholly original White Star. What would a Tesla powertrain be like in a Mercedes, BMW or Jaguar? Jaguar in particular might be keen on a deal since it has a lot of unused capacity.

    I think Tesla could do fine as a niche company making roadsters but if it cost $100 million-odd to develop the Roadster it seems like it would take at least a billion to develop a wholly original car, and it doesn’t look like their IPO or government loans would get them that far.

    Since Elon is still claiming an entirely original WhiteStar and planning an actual assembly plant for it, I do wonder what he’s thinking in view of his present capitalization.


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