DETROIT, Nov 3 (Reuters) - 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)