| LOS ANGELES/DETROIT
LOS ANGELES/DETROIT Oct 31 Tesla Motors Inc
expects to close a financing round of over $20 million from
existing investors as soon as next week to bolster a cash
balance now at $9 million, said Elon Musk, founder and chief
executive of the electric car start-up.
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.
"I've gone on record as saying that I am personally
standing behind delivering the cars and the deposits for the
company," Musk told Reuters late on Thursday.
"I have the means and wherewithal to do so. So people
should have absolutely zero concern about their deposit."
Tesla has delivered less than 60 Roadsters despite having
taken over 1,200 orders.
It has taken deposits of between $5,000 and $60,000 for
those Roadster orders under a contract that specifies those
funds can be used for Tesla's working capital, Musk said.
But like established automakers, Tesla has been hit hard by
the recent turmoil in financial markets as well as cost
overruns and production delays for the Roadster.
When Tesla failed to secure a $100-million investment round
earlier this month, Musk cut 24 percent of the company's work
force and delayed development work on a battery-powered
electric sedan, known internally as the "Model S."
He also took the CEO post from Tesla's former chief
executive, Ze'ev Drori.
"We didn't raise the $100 million but we still need to
raise some money to get to cash flow positive," Musk said. "We
actually probably only need on the order of $20 million to do
that. We're going to raise more than that, but we only need
about $20 million."
He added that the financing would come from existing
investors in Tesla.
"My expectation is next week is likely," Musk said when
asked about the timing.
Musk was speaking after an apparently disgruntled Tesla
employee posted a letter to a Silicon Valley blog that
suggested Tesla was running out of funds after a financial
briefing for employees this week.
"It's a bit silly. If we had almost no money in the bank
then one could say that we are about to run out of money. But I
think it's kind of silly to say that with $9 million in the
bank," Musk said.
In addition to the new financing round from investors,
Tesla also expects to secure another $200 million in
still-pending loans from the U.S. Department of Energy.
The San Jose, California-based company is counting on the
taxpayer-backed loans to offset up to 80 percent of the
development cost of the Model S. Tesla has said it expects that
car to cost $60,000 and compete against the likes of the BMW
5-Series for luxury and performance.
Though Tesla is among the most high-profile makers of
electric vehicles, it faces intense competition from
established automakers like General Motors Corp (GM.N) and
Nissan Motor Co Ltd (7201.T), and upstarts like Chinese battery
maker BYD Co Ltd (1211.HK)
(Editing by Kim Coghill)