Tesla gets $40 million in convertible debt financing
It's not all bad news for Tesla today. With the lawsuit with Fisker now over and done with, Tesla can get back to focusing on making and delivering vehicles. One way to get more Roadsters out the door is through an injection of $40 million in convertible debt financing that was recently approved by the company board. Last week, Elon Musk said the company was sitting on around $9 million and was about to close a round of funding worth $20 million.
So, what is "convertible debt financing"? Entrepreneur.com says it's "simply a loan (a debt obligation) that can be turned into equity (stock ownership), generally upon the occurrence of future financing" and is a good way for start-ups to raise money. Musk likes the process and said in a statement that, "Forty million is significantly more than we need. However, the board, investors and I felt it was important to have significant cash reserves."
UPDATE: added Tesla's official announcement after the jump.
[Source: Reuters]
PRESS RELEASE:
Financing Will Accelerate Roadster Manufacturing and Expand Powertrain Supply Business
The board of directors of Tesla Motors Inc., the leading electric vehicle manufacturer, has approved $40 million in convertible debt financing, based on commitments from almost all current major investors. The round will also be open to smaller current investors.
The financing will be used primarily to accelerate manufacturing of the Tesla Roadster, an all-electric, high performance sports car. In addition, the funds will be used to expand Tesla's electric powertrain supply business and continue future product development.
"Forty million is significantly more than we need," said Elon Musk, Tesla Chairman, CEO and Product Architect. "However, the board, investors and I felt it was important to have significant cash reserves."
Tesla has delivered more than 50 Roadsters to customers so far and is now in regular production at a rate of ten cars per week, rising to thirty cars per week early next year. More than 1,200 people have placed a deposit for the Roadster, on sale now in the United States and Europe. The Roadster's 2008 model year production run is sold out, and the company is currently taking orders for the 2009 model year.
About Tesla Motors
Tesla Motors develops and manufactures all-electric, zero-emission vehicles with exceptional design, performance and efficiency. The Roadster, which conforms to all U.S. and E.U. safety and durability standards, is the only highway-capable production electric car of any kind for sale in the United States or Europe.
With a 0 to 60 mph acceleration of 3.9 seconds and a 14,000 rpm redline, the Roadster delivers super car performance with far more energy efficiency than compact hybrids. Tesla also plans to begin manufacturing a four-door, five-passenger, all-electric, zero-emission luxury sedan in 2011. For more information, visit www.teslamotors.com
Reader Comments (Page 1 of 1)
BlackbirdHighway 7:12AM (11/04/2008)
What a big disappointment to the shadenfreude crowd that was cheering the impending demise of this company.
Looks like this one might be around for a while longer.
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Neilen Marais 11:16AM (11/04/2008)
Yeah, I just don't get it.
Sure, Elon is perhaps not the nicest guy around (don't think I'd like to work for him), but quite honestly, he has shown that he can run successful companies (spaceX making money too) and has deep pockets. Furthermore production and sales of the roadster are going pretty much as they said it would, they're making money on each one sold, no show stopper problems have come up with either the gliders or the version 1.5 drive-train, etc.
In any case, I was a bit jealous that you beat me to the punch with the schadenfreude word, such a nice one :)
Evelyn Guzman 6:13PM (11/04/2008)
With Tesla having been able to secure a convertible debt financing, perhaps the other companies will be able to the same. Now they'll be able to continue manufacturing those roadsters. We will need people to buy them though so there should be opening up for jobs. Now that stocks are also going up, perhaps there won't be that much of a recession.
Evelyn Guzman
http://www.debtchallenges.com (If you want to visit, just click but if it doesn’t work, copy and paste it onto your browser.)
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