Electric car company Tesla Motors, which has raised more than $140 million in venture funding since 2004, has taken substantial cost-cutting measures as the result of market turmoil.
Tesla is laying off an unspecified number of employees, delaying its production schedule by six months and closing offices in Detroit and London. The company’s chairman Elon Musk also has stepped in as chief executive while previous chief executive Ze’ev Drori becomes vice-chairman.
“This was a very measured, reasonable decision by Elon and the former CEO is completely supportive of it,” Nancy Pfund, managing partner at venture backer DBL Investors told PEO.
Tesla raised $7.5 million venture funding during its 2004 Series A financing round from Musk and early stage venture firm Compass Technology Partners. Valor Equity Partners then joined in during the 2005 Series B round that raised $13 million.
The 2006 Series C round raised $40 million and the 2007 Series D round raised $45 million. Institutional investors who joined in the two most recent rounds include: Capricorn Management, Google, DBL Partners, VantagePoint Venture Partners and Draper Fisher Jurvetson.
Musk contributed roughly $40 million in additional capital.
“What Tesla’s doing is what all prudent CEOs and boards should be considering in terms of managing their burden during times like this and making sure that they have a path to growth and profitability,” Pfund said.
The moves are the result of the global financial crisis, which will affect nearly every company including those in Silicon Valley, Musk said in a statement.
“We’re fortunate. We have sales, we have cars, we have customers,” Pfund said. “Not all companies can claim that.”
Tesla aspires to be cash-flow positive within six to nine months. Musk said if it takes longer for the company to become cash-flow positive, he will do whatever necessary to ensure the company has the capital to reach profitability.
“Companies like Tesla will be part of the early crew that comes out and when the markets recover will be very successful because it’s a big story, it’s a big impact, it’s a game-changing company and concept,” Pfund said.
Tesla develops and produces vehicles which are 100 percent electric. The Roadster, which is in production at a retail price of $109,000, has a zero to 60 miles per hour acceleration of 3.9 seconds and can travel 244 miles on a single charge.