Tesla Motors seeks cash to keep moving forward

Elon Musk, CEO of the all-electric luxury car maker, says Tesla is raising more than $20 million, which less than it had hoped but enough to meet its basic needs.

Martin LaMonica Former Staff writer, CNET News
Martin LaMonica is a senior writer covering green tech and cutting-edge technologies. He joined CNET in 2002 to cover enterprise IT and Web development and was previously executive editor of IT publication InfoWorld.
Martin LaMonica
2 min read

High-profile electric car company Tesla Motors has a bit of a money problem, but CEO Elon Musk says he has a plan.

In an interview with Reuters on Thursday, Musk said he expects to raise more than $20 million in the next week to bolster its cash reserves and make the company cash-flow positive.

Tesla Motors CEO Elon Musk in a Roadster Tesla Motors

The company had been seeking to raise $100 million but failed, Musk told Reuters.

"We didn't raise the $100 million but we still need to raise some money to get to cash flow positive," Musk 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."

The luxury car upstart, maker of the $109,000 Tesla Roadster sports car, is going through a rough patch.

Two weeks ago, Musk replaced the previous CEO and announced that it would have to delay introduction of its second car, the Model S, which will be a luxury all-electric sedan.

In an employee meeting, Musk shared the company's finances, which indicated that Tesla has about $9 million in cash.

The disclosure of that low cash position for an auto maker apparently prompted one employee to e-mail a variety of blogs and say that Tesla is at risk of not fulfilling orders for the Roadster.

Musk, who become wealthy after selling PayPal to eBay, said that he will personally ensure that all Roadsters on order will be delivered. So far, 60 customers have received them, out of more than 1,000 orders.

To finance construction of its corporate headquarters and Model S manufacturing plant, Tesla intends to secure government-backed loans worth $200 million.

VentureBeat speculated that current investors have grown cautious about putting more money into Tesla and that the company could be a takeover target by Ford.