The board of directors of Tesla Motors Inc. 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. However, the board, investors and I felt it was important to have significant cash reserves.—Elon Musk, Tesla Chairman, CEO and Product Architect
In an interview with Reuters last week, Tesla founder and CEO Elon Musk said that he was expecting to close a financing round of more than $20 million from existing investors as soon as this week to bolster its $9 million cash balance.
Musk, who became a billionaire by founding PayPal, said he would personally ensure that the San Jose, California company would have enough cash to deliver all of its orders for the $109,000 Tesla Roadster, the first battery powered sports car.
Tesla to date has delivered more than 50 electric Roadsters to customers and is now in regular production at a rate of ten cars per week, projected to rise 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.