Tesla Motors has looked a bit shaky lately, starting with a staff layoff and an ouster of its CEO a little over two weeks ago and following with reports that the company had only $9 million left in the bank. But lead investor and new CEO Elon Musk has come through on his promise to find more funding for the company, picking up $40 million from existing investors.
The company issued a terse press release last night noting the funding, which is for convertible debt, not equity. That means the investors will have the option to convert their money to shares in the company later, depending on valuation — but for now, it seems that one side or the other is uncomfortable quantifying precisely what Tesla is worth.
That’s not an unreasonable stance, given uncertainty over when, if ever, Tesla will be selling more than one model of car. The nearly $100,000 Roadster has received some amazing reviews from car critics, and sold over 1,000 units to date, although only a few dozen have been delivered. But the real money is on the Model S, a mainstream sedan the company originally planned to have in production by 2010.
To bring down the cost for that next vehicle to a modest $60,000, Tesla is building its own production line for the Model S in San Jose — many parts of the Roadster are made by the boutique car manufacturer Lotus. But with money looking tight, the design and testing of both the new car and factory have been slowed.
Running contrary to that statement is a quote by Musk from the release, in which he called $40 million “significantly more than we need.” That’s because the company is hoping it will only need the funds to maintain a holding pattern while it waits for a $200 million Department of Energy loan that will allow real work to resume.
Following that loan, if it is secured, Tesla will continue searching for more funding. Car manufacturing is an expensive business.