Original URL: https://www.theregister.com/2008/10/31/elon_musk_in_tesla_motors_bailout/
Elon Musk to bail out Tesla Motors with own money
Personally guarantees $100k supermilkfloat deliveries
Posted in On-Prem, 31st October 2008 14:32 GMT
Famous battery-supercar firm Tesla Motors has said that it expects to secure its financial position by raising further investment within a week, following rumours that it might not be able to deliver cars it has already taken deposits on.
The company's new CEO and primary financial backer, PayPal multimillionaire and tech visionary Elon Musk, appeared to pledge his personal fortune to meeting Tesla's commitments if necessary.
Reuters quotes Musk as saying last night:
"I am personally standing behind delivering the cars and the deposits for the company.
"I have the means and wherewithal to do so. So people should have absolutely zero concern about their deposit."
Musk also confirmed that Tesla at present has just $9m in the bank. With 1200+ orders placed for the electric Roadster sportscar, each one involving a deplosit of $5k to $60k, this would not be sufficient to pay back customers in the event of the Roadster going out of production.
At present less than 60 cars have been delivered, and most have "intermediate" transmissions which do not produce the neck-snapping acceleration for which the Roadster is famous. The company has pledged to replace these inferior, 0-60 in six seconds transmissions at no extra charge - another expensive commitment.
The proper, full-spec 0-60/four seconds acceleration is the Roadster's one truly supercar-like ability, comparing well with a similarly priced ($100k) Porsche 911 Carrera S. In other respects such as range (as little as 150 miles before needing a four-hour recharge) and top speed (less than 130mph) the Roadster is hugely outclassed by petrol-fuelled cars in the same price bracket, so the transmission issue is significant.
A company spokesperson confirmed to the Reg this morning that the Roadsters shipping now are definitely full-spec, full-acceleration ones.
Musk told Reuters that recent layoffs and temporary shelving of plans to produce a more affordable "Model S" electric saloon had followed the company's failure to secure a planned $100m investment round earlier this month, an occurrence he said resulted from the ongoing global credit crunch.
Having taken the helm personally as CEO, Musk now believes that the firm can achieve positive cash flow with a further investment of no more than $20m, which he expects to have in place shortly.
"We still need to raise some money to get to cash flow positive," he 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."
Musk reportedly said that he expected the $20m to come from existing Tesla investors. As he himself is known to be the firm's primary backer, presumably he means that much of the new money will come from his personal funds.
Tesla also hopes to secure a further $200m in loans from the US government, which might permit its more ambitious plans for mainstream cars to proceed.
The Reuters report is here. ®