Tesla Motors Moneyman Revs His Mouth on Camera
A mysterious video of a Tesla investor talking about a rumored investment in the company has popped up on YouTube. Valleywag has identified the blabbermouth: Victor Morgenstern, chairman of a Chicago private-equity fund.
Morgenstern runs Valor Equity Partners, which led a $40 million investment in Tesla in February 2008 and controls a seat on the board. The badly mismanaged electric-car startup quickly blew through Valor's money; by October, it was down to $9 million in cash. Despite raising more money from investors, Tesla is running on fumes, and collecting deposits for its Model S electric sedan, a car which exists only as a barely drivable quasi-prototype. Tesla requires hundreds of millions of dollars more than it has to make the Model S a reality — which is why Morgenstern's talk of new money is so interesting.
Morgenstern is briefly visible in the video, apparently recorded by an unknown Tesla fan who hopped in with Morgenstern when offered a test drive, and his face matches another published photo. A Mexican restaurant in Highland Park, a suburb north of Chicago, briefly appears in the shot. According to public records, Morgenstern's family foundation is based in Highland Park. The car is one of Tesla's Founders Series, the first built, and Morgenstern has been reported as one of the buyers in that series. He did not return a message left for him at Valor.
As he pulls away from the restaurant, Morgenstern takes a call and mentions that he's driving around Highwood, a nearby suburban district. During the ride, Morgenstern took a call and discussed Tesla's finances, including rumors previously reported in Valleywag that Tesla was about to take money from a strategic investor. Morgenstern expressed confidence that the deal would be announced Monday or Tuesday. Other sources Valleywag spoke to are less sanguine. Tesla CEO Elon Musk is loathe to surrender control of the company to someone — and yet a new investor would be understandably reluctant to invest if Musk's replacement as CEO weren't a condition of the deal.
So here's the question: Is the video a genuine scoop — or a hoax staged by Tesla?
It does seem curious that Morgenstern's phone just happened to ring seconds after he starts cruising down the street. But if it's a hoax, it's a very foolish one. For one thing, investors don't like their deals getting leaked before the ink is dry. A leak like this, if intentional, may well scuttle the deal, or weaken Tesla's negotiating stance.
And then there's this: Morgenstern uttered something particularly damning on the phone. He said the investment will "make people believers that the sedan will be produced."
Not, mind you, actually allow Tesla to produce its new Model S. It will merely make people believe that it will. That could be read as encouraging optimism among potential buyers. Or it could be read as an intent to deceive people into handing over deposit money for a car that Tesla currently cannot build. Would he really have said that if he knew he was being taped?