Tesla's new convertible

San Carlos, Calif.-based Tesla Motors said today it has raised $40 million in convertible debt financing from most of its existing investors.

The news comes after several turbulent weeks for the electric automaker, which has delivered about 50 of the 1,200 Roadsters that customers have ordered. Transmission problems have delayed the production of the $109,000 Roadsters.

Last week, Tesla CEO Elon Musk said the company had just $9 million in the bank, and some customers began to fear they wouldn't get their cars or deposits.

And on Oct. 15, Tesla announced it was laying off 24 percent of employees and delaying the manufacturing of its electric sedan by about six months (see But... doesn't a superhero need arch enemies? and Cleantech deals in garbage, lighting and batteries).

Musk attempted to quell fears by taking the helm of the company, of which he is one of the primary investors. Musk attributed the layoffs and delay to the difficulty raising capital at advantageous terms during the credit crunch (see Tesla CEO says carmaker is bouncing back). The money was planned to build a sedan factory in San Jose, Calif.

Tesla plans to use the new $40 million round to step up production of the Roadster, expand the company's powertrain supply business and continue product development.

The round will remain open to small investors, the company said. Convertible debt is a loan that can be turned into equity, generally at the time of future financing.

"Forty million is significantly more than we need," Musk said in a release. "However, the board, investors and I felt it was important to have significant cash reserves."

Tesla said the company is producing 10 Roadsters a week and expects to reach 30 a week next year.

Tesla is waiting for the results of an environmental impact assessment to determine whether it qualifies for a $100 million U.S. Department of Energy loan guarantee for the balance needed to build the $250 million plant in San Jose (see Tesla to build factory, new HQ in San Jose).

In addition to Musk, Tesla's investors include Draper Fisher Jurvetson, Technology Partners, Capricorn Investment Group, VantagePoint Venture Partners, JP Morgan Bay Area Equity Fund, Valor Equity Partners, Compass Venture Partners, Larry Page, Sergey Brin, Jeff Skoll and Ira Ehrenpreis.

Cleantech developments making news in the past 24 hours

• AES raises $1.58B with China Investment

View the last week of cleantech developments here | Subscribe to full feed