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Summary:

Tesla’s CEO Elon Musk speaks out on why Tesla is raising more money, why the production has been pushed back and just what were the changes to the DOE loan agreement.

Line of Model S cars

Tesla CEO Elon Musk has turned to Tesla’s blog to add some more context and color about why the company has been making Model S cars more slowly than expected, and why the company plans to raise more money. Musk said Wednesday that the pessimistic scenario described in the filings are potentially unlikely (just worse case) and that the company raised money “simply for risk reduction,” not out of necessity.

Tesla is on the verge of becoming cash flow positive, said Musk, and thus “will not have to spend any of the money raised, at least until we embark upon a major new vehicle program.” In the short run, he said, the funds could help cover any potential unforeseen disasters, like a recent crisis that occurred when a supplier had a flood in their factory and caused delays in Model S production.

Musk also gave context for how the difficult the task that Tesla faces over the rest of 2012:

While we are indeed a few weeks later than we would like, this is perhaps not a terrible outcome for a product as advanced and complex as the Model S, particularly given that Tesla is doing manufacturing of full vehicles for the first time with a new team and new suppliers.

Musk explained the change in the DOE loan payback agreement as an adjustment of making payments to a reserve account, and also an acceleration of payments if Tesla had them in early 2013:

We did suggest that holding nine months worth of principal payments in *advance* in a reserved account was a bit extreme and, moreover, was never part of our original loan agreement. The DOE agreed and reduced the advance payment reserve account to six months.

  1. CleanEnergyAuthority Thursday, October 4, 2012

    I suggest they donate one S model to the Romney campaign to follow their bus around with.

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