The Model S sedan is a "must" for upstart Silicon Valley car maker Tesla Motors.

The designer of the Roadster luxury sports sedan will broaden its lineup in 2012 with the $49,900 (after federal rebates) Model S, putting its electric cars within reach of buyers who can't shell out more than $100,000 for the Roadster. 

The new car also is a bonanza for Tesla CEO Elon Musk. The San Carlos company awarded its top exec 20,135,920 million stock options in December and tied half of them to milestones in the development and delivery of Tesla's all-important second vehicle, according to documents filed with the Securities and Exchange Commission last week. The grants equal about 8 percent of the fully diluted shares of the company before the grant. The other half of the options -- representing ten million shares, or four percent of the fully diluted shares -- were given to Musk for accomplishments to date.

In January, Tesla filed documents with the Securities and Exchange Commission as a prelude to an IPO. In a revised S-1 filing last week, the company updated its paperwork, announcing Musk's options grants and admitting that it lost more money last year than previously disclosed.

According to the filing, the options are valued at $2.21 each, or $44.5 million.

Musk get his options in two grants. In the first, 10,067,960 options are to be awarded monthly over the next three years, with 2.6 million granted last December. The other ten million worth of options Musk will earn as the Model S meets certain milestones: 25 percent when the engineering of the Model S is completed, 25 percent when a prototype is finished, 25 percent when production begins, and 25 percent when the 10,000th Model S rolls off the assembly line.

The company hopes to make up to 20,000 Model S cars each year. The car will be built on a modular platform so that with just a few design tweaks, engineers at the company can start producing sport utility vehicles or commercial vans.

The SEC filing goes on to report that Tesla lost $55.7 million last year, less than the $82.8 million it lost in 2008. This brings to $260.7 million the company's accumulated losses. Tesla had previously disclosed 2009 loses of $31.5 million through September and cumulative losses of $236.4 million.

Also included in the document is a response to the Toyota Prius recall. Tesla says it implemented several algorithms in its vehicle software to reduce the likelihood of unintended acceleration due to a mechanical or electronic failure.

"We stop the flow of electricity to our motor when the car is placed in neutral or the key is rotated from the 'on' position. We also stop the flow of electricity to the motor during normal vehicle operation when the brake pedal is depressed for more than two seconds," the company says.

The next few years should be interesting ones for Tesla. Although it's been the only freeway-legal electric car maker for three years, Nissan, General Motors, Ford, Toyota, Fisker Automotive and others will all release plug-in cars in 2010 and 2011. And while Tesla has grabbed lots of attention, it hasn't sold as many of its Tesla Roadsters as earlier anticipated.