So, what is "convertible debt financing"? Entrepreneur.com says it's "simply a loan (a debt obligation) that can be turned into equity (stock ownership), generally upon the occurrence of future financing" and is a good way for start-ups to raise money. Musk likes the process and said in a statement that, "Forty million is significantly more than we need. However, the board, investors and I felt it was important to have significant cash reserves."
UPDATE: added Tesla's official announcement after the jump.
Financing Will Accelerate Roadster Manufacturing and Expand Powertrain Supply Business
The board of directors of Tesla Motors Inc., the leading electric vehicle manufacturer, has approved $40 million in convertible debt financing, based on commitments from almost all current major investors. The round will also be open to smaller current investors.
The financing will be used primarily to accelerate manufacturing of the Tesla Roadster, an all-electric, high performance sports car. In addition, the funds will be used to expand Tesla's electric powertrain supply business and continue future product development.
"Forty million is significantly more than we need," said Elon Musk, Tesla Chairman, CEO and Product Architect. "However, the board, investors and I felt it was important to have significant cash reserves."
Tesla has delivered more than 50 Roadsters to customers so far and is now in regular production at a rate of ten cars per week, rising to thirty cars per week early next year. More than 1,200 people have placed a deposit for the Roadster, on sale now in the United States and Europe. The Roadster's 2008 model year production run is sold out, and the company is currently taking orders for the 2009 model year.
About Tesla Motors
Tesla Motors develops and manufactures all-electric, zero-emission vehicles with exceptional design, performance and efficiency. The Roadster, which conforms to all U.S. and E.U. safety and durability standards, is the only highway-capable production electric car of any kind for sale in the United States or Europe.
With a 0 to 60 mph acceleration of 3.9 seconds and a 14,000 rpm redline, the Roadster delivers super car performance with far more energy efficiency than compact hybrids. Tesla also plans to begin manufacturing a four-door, five-passenger, all-electric, zero-emission luxury sedan in 2011. For more information, visit www.teslamotors.com