Monday, November 03, 2008

NYT: Tesla Promised Another $40 Million

"Tesla Motors, the beleaguered electric car start-up in Silicon Valley, announced Sunday that investors have committed $40 million in financing to help the company out of its latest financial trouble.

The money will come in the form of convertible debt, loans that can be turned into equity upon a future financing round. Companies that raise convertible debt avoid setting a valuation on the company.

Elon Musk, Tesla’s chief executive, said Sunday Tesla would use the new cash to speed up manufacturing of the Roadster. Tesla has delivered some 50 Roadsters, which sell for $109,000, and is now shipping 10 per week. Another 1,200 have been ordered.

Almost all the current major investors in Tesla will participate in the fundraising round. Tesla has not disclosed which investors are contributing, but past investors include Mr. Musk, who founded PayPal; Larry Page and Sergey Brin, Google’s co-founders; Jeff Skoll, former eBay president and venture firms VantagePoint Venture Partners and Draper Fisher Jurvetson. Tesla has previously raised $146 million.

The vast majority of the commitments were made during a meeting Sunday morning, and a small number of investors are expected to commit within the next few days. The round is expected to close within 30 days.

The money comes during a difficult period for Tesla. On Oct. 15, Mr. Musk, its biggest investor, replaced Ze’ev Drori as chief executive. The company announced it would lay off 87 workers, 24 percent of its staff, and delay production of its Model S sedan. It also shelved plans to raise $100 million, citing the financial crisis.

In an interview with The New York Times on Oct. 24, Mr. Musk said Tesla would raise a smaller round — the financing announced Sunday — and wait for low-interest loans from the Department of Energy, scheduled to arrive in six to eight months. Those loans are reportedly worth around $200 million. He said he plans to raise another $50 million next year."


Anonymous said...

with the price of gas coming down, this investment looks really smart....actually know a few folks on the waiting list

Anonymous said...

from the company

"At Tesla, we have decided that the wise course of action is to focus on our two revenue producing business lines - the Roadster and powertrain sales to other car companies. In the Roadster, Tesla has a unique product with a large order book that continues to grow, despite softness in the automobile sector. Our powertrain business is profitable today and is also growing rapidly."

Tesla's latest round of troubles, following previous delays to the Roadster and problems with its power train, came into view last week. A planned $100m+ financing round failed as global credit dried up, and it was revealed that Tesla had only $9m in the bank - having taken multiple tens of millions in deposits from 1200 customers reserving their Roadsters.

However, the company has thus far delivered fewer than 60 cars, mostly with an inferior "intermediate" transmission which doesn't deliver the specified, supercar acceleration: 0-60 quicker than four seconds. The intermediate transmissions are to be replaced in future at Tesla's expense. Company reps have confirmed to the Reg that the Roadsters now shipping have the full, promised neck-snapping performance - though a similarly-priced Porsche 911 Carrera will still beat the Roadster by a large margin on top speed, range and time to top off.