Tesla Bags $82.5M for Retail Stores

The electric automaker didn’t seek out the money but was approached by investors who see a good bet in the startup, which has selected a SoCal site to make the Model S.

Ucilia Wang September 15, 2009

Ucilia Wang

Tesla Motors has raised $82.5 million to fund the opening and operation of its retail stores in North America and Europe.

The San Carlos, Calif.-based electric automaker snagged the funding after being approached by investors, said Rachel Konrad, Tesla's spokeswoman Tuesday.

"It's linked to the acceleration of our retail strategy, which consisted of opening regional sales and service centers on two continents," Konrad said.

Fjord Capital Management led the round. Daimler, which previously invested $50 million in Tesla, also put in additional money to keep its near 10 percent stake in Tesla, Konrad said. Tesla's CEO Elon Musk, who has plowed millions of his money into the company, didn't pony up for this round.

Tesla, founded in 2003, has experienced lots of ups and downs over the past year. Almost a year ago, the company realized just how difficult it was to raise after the Lehman Brothers filed for bankruptcy and hell broke loose in the financial market (see Musk: Tesla Hit by Market 'Freefall').

Musk took over as CEO then and announced the delay of its Model S, a four-door sedan that the company hopes would appeal to a wider range of buyers than its $109,000 Roadster. The company was able to raise $40 million in loans from existing investors to keep going.

Financially, the company is in better shape. Tesla has received $465 million in loans from the U.S. Department of Energy to build a powertrain factory and a Model S assembly plant. The money posted a profit for the first time in the month of July.

Aside from raising money for manufacturing, it also needs lots of capital to operate retail stores and service operations. The company currently has those facilities in cities such West Los Angeles and Menlo Park in California, Seattle, New York City and London. Its planned stores including those in Chicago, Washington, D.C., Monaco and Toronto.

The company is looking for a site to assemble its Model S, a four-door sedan that it hopes would appeal to a wider audience than the $109,000 Roadster. The Model S is scheduled for market launch in late 2011, and will be sold at starting price of $57,400 (without government rebates).

Tesla is in the final stages of negotiations for land in two Southern California cities, Long Beach and Downey, Konrad said. The company is carrying out multiple negotiations with more than just the two locations but will choose one site in order to ensure that it will not face delays in opening the factory, she added.

The company is looking for a 500,000 square-foot property that has previously been used for manufacturing.

Last month, Tesla said it had found a 369,000 square-foot, three-building complex on 23 acres in the Stanford Research Park in Palo Alto, Calif. that it would use as its powertrain factory and new headquarters (see Tesla to Build Powertrains in Palo Alto).

Image of the Model S via Tesla.