Tesla Motors secures $40 million in funding

Tesla Motors on Sunday said it has finalized $40 million in convertible debt financing, which it will use to accelerate production of its Roadster electric sports car.

The company last week said it was seeking money to overcome a low-cash position of $9 million. Elon Musk, its chairman, CEO, and product architect, also indicated that Tesla had tried, but failed, to raise $100 million.

The Tesla Roadster

(Credit: Tesla Motors)

"Forty million is significantly more than we need, Musk said in a statement. "However, the board, investors, and I felt it was important to have significant cash reserves."

Tesla has shipped about 50 of the $109,000 Roadsters, but there is a waiting list of 1,200 people who have placed deposits.

The latest round of financing will be used to speed up manufacturing of the Roadster, further develop Tesla's powertrain business, and develop future products. The company recently said it will build its headquarters and a plant in San Jose, Calif., to make the Model S, a luxury electric sedan.

The $40 million came mostly from existing investors, which include Musk, VantagePoint Venture Partners, and Draper Fisher Jurvetson. Tesla is said to have raised $145 million in venture capital before the last debt round.

Musk last month replaced its former CEO, and said the company will lay off employees and delay introduction of the Model S for about six months, to 2011.

[photog_7]

We don't need an expensive sports car! We need a $19,999.00 electric plug in that goes 60 MPH for 70 miles without a charge. Is that too much to ask?

[Grumpypaul]

I've posted on this company and my feelings about it in the past, but I'd like to address your point. I agree with you, except you need to realize that even the first automobiles were beyond the reach of everyman. It was only after some perfection of product and the assembly line that John Q Public was able to get on his pony and ride. I don't know how old you are, but I recall the early VCR's (I know, I'm dating myself!) were well in excess of $2500 each. It was only after mass production and improved volumes that the prices started falling. I remember buying one at the then bargain basement price of $699. Within a few years, they were under $400 and then even lower.

The point I'm trying to make is that the high end electric is probably going to beget the lower end mass produced car. I'm just not certain that Tesla will be the pioneer. Having 1200 deposits is nice, but having 1200 cars on the road that work is better and I'm not sure if they can achieve that goal.

[lezstar]

Hear hear ,couldn't agree more, why go for the quirky,' high-end' market with the tesla roadster(,the sort of people that buy sports cars can afford the high gas prices and dont really represent the core potential buyers made up of the middle class and environmentally aware),people are screaming for affordable,environmentally friendly ,vehicle options,we just need the car manufactureres to catch up with public opinion(.By the way congrats on a new prez,the rest of the world might just start respecting you all a bit more , rather than just fearing you.)

[knowles2]

photog_7 true they really need to get down to the lower end and mass produce prices levels. The first company to do this will make bucket loads of money.

The one that always surprise is why in the hell are they manufacturing the car in American, when most car companies are racing to move their production capabilities to cheaper countries like china.

To me I think Tesla is to much lacking ambitions to actually succeed in becoming the next big car manufacture, I personally think they just waiting to get bought out.

[heromotors]

My company, Hero Motors (Nanjing, China), is building a new e-car factory in Rolante, Rio Grande do Sul, Brazil. Our new e-car factory in Brazil will begin production in the summer of 2009. Our e-car technology and manufacturing are based on existing e-cars in China. I am not in business to bail-out competitors, but the Tesla products are clearly more marketable than any e-car thus far produced in China. My company could dramatically reduce the production costs for Tesla if we could source out the parts and components in China. Or if Tesla goes completely belly-up, I would like to buy out their existing patents, manufacturing processes and equipment, and rights to build Tesla cars. By the way, our existing e-cars sell for less than $5000 USD in China today. With lithium batteries the car costs much more, but the range is dramatically improved too. We can build a car very similar to those produced by Tesla at MUCH lower cost.