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Tesla Motors secures $40 million investment

Electric avenue: Tesla Roadster is now on sale in the US and Europe.

US electric car marque secures cash to sure-up roadster production

11 Nov 2008

ELECTRIC car manufacturer Tesla Motors last week announced that its board had approved $US40 million ($A58 million) in convertible debt financing to boost the manufacturing of its Roadster sportscar, which is now on sale in the US and Europe.

Tesla has delivered more than 50 Roadsters to customers, and with more than 1200 orders has sold out its MY2008 production run and is now taking orders for MY09.

However, the Californian-headquartered niche manufacturer, which has relied on investors and the personal wealth of founder Elon Musk (who is Tesla’s chairman, CEO and product architect), last month failed to secure a $US100 million ($A144.8 million) investment it had sought and was forced to retrench 24 per cent of its workforce – 80 people – and to postpone development work on its forthcoming electric sedan, known as the Model S and due for release in 2010.

The $40 million secured last week from “almost all current major investors” will bolster Tesla’s cash balance, which according to overseas reports had fallen to $US9 million ($A13 million).

“Forty million is significantly more than we need,” Mr Musk said. “However, the board, investors and I felt it was important to have significant cash reserves.”

55 center imageIn addition to accelerating production of the Lotus Elise-based Roadster from its UK operations in Hethel, England, which is working towards 40 vehicles per month, the financing will be used to expand Tesla’s electric powertrain supply business and continue its future product development.

Currently the world’s biggest-selling and arguably highest-profile electric car manufacturer, Tesla must contend with falling oil prices and an ever-increasing number of competitors who have set their sights on producing all-electric vehicles from 2010.

The company also lost a long-running legal battle with archrival Fisker Automotive last week. Tesla attempted to sue Fisker for allegedly stealing its hybrid technology and developing its own model, known as the Karma. The arbitrator last week issued an interim award finding in favour of Fisker.

“The evidence is overwhelming that Fisker did nothing wrong,” the judgment read. “Tesla’s assertion of violations of the Uniform Trade Secrets Act by Fisker were baseless and neither brought nor pursued in good faith.” Former Aston Martin and BMW designer, and now Fisker Automotive CEO, Henrik Fisker said the company was pleased with the ruling and still on track to release the Karma late next year.

“Despite the burden and expense of Tesla’s lawsuit, Fisker Automotive has been able to continue with its business plan and production schedule,” he said. “We are still on schedule to deliver our first production vehicle, the Fisker Karma plug-in hybrid, four-door luxury sports sedan by fourth quarter 2009.

“Today’s world needs new alternative energy vehicles, and the focus should be to build and deliver these vehicles as soon as possible.”

Read more:

Tesla, Fisker to beat Volt

Tesla sedan coming

Electric car wars

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