DETROIT Nov 3 Tesla Motors Inc said on Monday
that its board had approved $40 million in convertible debt
financing to push ahead with stepped-up manufacturing of its
battery-powered Roadster sports car.
Last week, Tesla founder Elon Musk had said the electric
car start-up was moving to close a new financing round from
existing investors to bolster a cash balance that had dropped
to $9 million.
San Carlos, California-based Tesla said it had commitments
for the new convertible debt financing from most of its
current, major investors.
"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 markets the $109,000 Roadster, the first
battery-powered performance car and a vehicle that has become a
symbol of both the promise of electric cars and the financial
risks of rushing the new technology to the market.
Tesla has delivered just over 50 Roadsters despite having
received more than 1,200 orders. The company ran into a series
of problems with the car's transmission that caused cost
overruns and production delays.
When Tesla failed to secure a $100-million investment round
last month, Musk moved to cut 24 percent of the company's work
force and to delay development work on the electric sedan,
known internally as the "Model S."
Musk, who became a billionaire from founding PayPal, has
promised to see to it personally that the start-up has enough
cash to deliver all of its Roadster orders.
Although Tesla is among the most high-profile manufacturers
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)
(Reporting by Kevin Krolicki; Editing by Lisa Von Ahn)