Avoiding Insolvency, Tesla Motors Borrows $40 Million

America’s all-electric car maker – Tesla Motors – has been wowing fans ever since its small two seat sports car finally rolled off a British assembly line earlier this summer. Lots of delays pushed back the car’s release, resulting in Tesla bleeding through more cash than it had expected to before production got going.

As a result of the delays, Tesla’s financial picture suddenly became very bleak as cash reserves dwindled to below ten million dollars, a small amount of money on hand even for a tiny automaker. Talk that the company would seek bankruptcy protection began to surface, but those fears have now been allayed thanks to new funding that has become available.

Prior to its most recent announcement, Tesla Motors had received cash injections of $145 million from private investors including tens of millions of dollars contributed by Elon Musk who is the company’s chairman and chief executive officer. Indeed, it was Musk and a team of private investors who coughed up the most recent forty million dollars which should be enough money to keep the car company going for the long run.

So far, just fifty Tesla Roadsters have been produced, an all-electric sports car with a phenomenal zero to sixty speed of just 3.5 seconds. Priced at $109,000, the Roadster has some 1200 buyers on its waiting list, people who have put down deposits for the rare sports car.

Tesla says that the new funding will be used to speed up Roadster production while freeing up funding for a second vehicle, the S Model. The “S” is a four door sedan that the company plans to build at a new factory being assembled near San Jose, California. That car was to make its debut near the end of 2010, but production isn’t likely to begin much before summer 2011.

The Tesla Roadster is the first of what will likely become several electric cars produced by a variety of manufacturers worldwide. Fisker Automotive has a sedan in progress, while General Motors will be producing the Chevrolet Volt, a small sedan that should be ready late 2010. Toyota, Nissan, and Chrysler each have several models in the planning and/or production pipeline, while other manufacturers including BMW are currently testing pre-production models of their own.