Tesla Motors not in financial trouble, CEO Musk affirms

Article by Anita Panait, on October 6, 2012

Elon Musk, the chief executive of Tesla Motors Inc., rejected concerns that that electric automaker is experiencing financial troubles. Musk noted that Tesla was making an advance payment on the US federal loan used to develop and produce its Model S sedan. Last week, Tesla reduced its revenue target for the full year 2012 due to the slower-than-expected rollout of the Model S.

At the same time, Tesla announced that it was raising $150 million through a share offering. Tesla likewise announced last week that it had fully drawn down its $465 million U.S. Department of Energy loan facility, and the loan agreement had been amended to defer the repayment of a fraction of the funds. Tesla agreed to make additional early payments starting 2013 and said it would collaborate with DOE officials to draft an early repayment plan.

Republicans have disparaged the Obama administration for the DOE’s support of new-technology firms, citing the difficulties of electric carmaker Fisker and electric battery maker A123 Systems Inc., and the collapse of solar panel maker Solyndra.

During the presidential debate Wednesday night, Republican nominee Mitt Romney grouped Tesla with Fisker and Solyndra, calling them "losers." Musk, in a blog posted prior to the debate, remarked that misconceptions had surfaced after Tesla’s disclosures.

Tesla’s CEO said he wanted to correct the media's "wrong impression" that Tesla was in financial trouble. In the blog, Musk said they only described a relatively pessimistic scenario for Tesla, and that was incorrectly interpreted as the most possible scenario.

Musk defended the raising of funds through share offering, saying it was for risk reduction. He disclosed that the electric carmaker was on the verge of becoming cash-flow positive by the end of November.

Tesla’s CEO added that the company would not have to spend any of the fresh funds until it commences a major new vehicle program.

Considered as the first fully electric sedan, the new Tesla Model S marks a new chapter – an evolution – of automotive engineering. It isn’t only a car with superb levels of efficiency and performance, but also excellent degrees of safety and range. Aside from earning the highest possible safety ratings, the new Tesla Model S also boasts of being able to travel the longest – using just a single charge – among any electric vehicles. Likewise, the Tesla Model S gets better without sending it to a dealer or shop, thanks to over-the-air software updates.

The architecture employed for the new Tesla Model S allowed it to have its battery located on the floor – a layout that gives this luxurious electric sedan a low center of gravity. This means that the risk of rollover has been reduced while its performance and handling is greatly improved. Since the Tesla Model S features no engine, its crumple zone on the front end is significantly larger than other performance sedans.

The new Tesla Model S has been proven to be safe, as proven by the highest safety ratings given by the National Highway Traffic Safety Administration and the Euro NCAP (five stars). These rating are proof that the Tesla Model S is one of the safest cars on the road, thanks to its distinct electric drivetrain that is located beneath the car. This gives the Model S a low center of gravity, thereby reducing the risk of a rollover. Interestedly, the Model S has set – following tests in the United States – a record of lowest likelihood of occupant injury.

Helping make the Tesla Model S much safer is a plethora of standard active safety features like automatic emergency braking, blind spot detection and collision warning as well as lane departure warning. Tesla is also offering optional convenience features like autosteer, autopark and traffic-aware cruise control as well as a summon feature.

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