Tesla dismisses funding fears

Electric car manufacturer Tesla yesterday moved quickly to quash rumours it is facing a funding crisis, announcing it is on track to close a financing round of more than $20m (£12.5m) from existing investors as early as next week.

Reports had surfaced on a number of Silicon Valley blogs that the company held an emergency meeting with staff earlier this week at which it was revealed it had just $9m left in the bank – a relatively small sum given the company has delivered fewer than 60 of the 1,200 electric sports cars on which it had taken orders, and despite taking deposits ranging from $5,000 to $60,000.

The news prompted speculation that the company, which earlier this month laid off 24 per cent of the workforce and announced it was delaying production of its second-generation electric sedan car known as the " Model S", was facing a cash flow crisis after failing to secure an expected $100m funding round.

However, the company's founder and chief executive Elon Musk, last night moved to downplay concerns, telling Reuters that the company was poised to receive a cash injection of more than $20m from existing investors.

Musk, the billionaire founder of PayPal, said he would personally guarantee that the company would deliver on its orders to date.

"I've gone on record as saying that I am personally standing behind delivering the cars and the deposits for the company," he told the newswire. "I have the means and wherewithal to do so. So people should have absolutely zero concern about their deposit."

He also insisted that the company would address any cash flow issues it faces, dismissing claims on the Valleywag blog that the company was "running on fumes".

"If we had almost no money in the bank then one could say we are about to run out of money. But I think it is kind of silly to say that with $9m in the bank, " Musk said, adding that the company only needed to raise about $20m to become cash flow-positive, but "was going to raise more than that".