Cash Strapped Tesla Looks To Raise $20M Internal Round
A little over a week after Tesla CEO and Chairman Elon Musk said that the company had pulled back from raising a $100 million round because of the credit crunch, Musk tells Reuters (and Tesla confirmed with us this morning) that the electric car maker plans to raise over $20 million from existing investors.
Tesla Senior Communications Manager Rachel Konrad said that will be enough to support the company until it is cashflow positive, and she notes that turning to existing investors means Tesla won’t have to face the daunting task of pitching new investors in the midst of a global liquidity crisis.
Musk’s interview with Reuters was a speedy response to a post in Valleywag last night that said Tesla has $9 million in the bank and may not deliver Roadsters that customers have already paid for. Valleywag posted a note reportedly from a disgruntled employee after an all-hands meeting on the company’s financial state.
Well, the $9 million cash balance part is true, and is shockingly little given that the company has raised at least $145 million from investors. But Musk is adamant that Tesla will deliver all of its Roadster orders, and tells Reuters that he will “personally ensure” that Tesla has enough money to complete that goal. Musk has already supplied $55 million of Tesla’s funds, and he seems willing to dole out even more.
We don’t doubt that Musk and existing investors will be able to keep Tesla going in the near term and ensure Roadster orders get delivered, but of bigger concern is Tesla’s larger plans for its Model S and eventually its even cheaper (potentially $20,000) electric car for the mass market. Tesla’s Konrad says the first Model S sedans are still expected to roll off the assembly line in the second half of 2011 — six to nine months later than originally anticipated. But there have been a lot of timelines set and not met at Tesla. If the financial turmoil continues, it could spell real trouble for Tesla and its plans to disrupt Detroit.
“Pulled back” of course meaning “couldn’t raise.”
Isn’t “raising an internal round” the same thing as “firing people to cut costs?”
The Reuters story says the DOE might cough up $200 million in debt financing. How did Tesla score that?
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