To-the-point: Tesla raising United States dollars 1.15bn in stock, notes offerings

  • To-the-point: Tesla raising United States dollars 1.15bn in stock, notes offerings

To-the-point: Tesla raising United States dollars 1.15bn in stock, notes offerings

Tesla has announced plans for another public stock offering in which it hopes to raise about £1.15bn to strengthen its balance sheet as it ramps up production of its Model 3 electric auto. And with the introduction of Model 3 on the horizon, the decision to remove the entry-level Model S from Tesla's range is likely a deliberate move to widen the gap even more between the brand's entry-level auto and its more premium offering. Tesla does have access to a line of credit, worth up $1.8 billion, however, it has already borrowed $1.36 billion of this leaving just $440 million to play with.

The $850 million component of the capital raise came from the issuance of convertible notes that would be due in 2022. "According to our financial plan, no capital needs to be raised for the Model 3, but we get very close to the edge".

As for Model 3, it looks like its beta prototype is not ready yet.

Underscoring the challenge Tesla faces with upwards of 400,000 reservations on the books, consider this: the company past year sold 76,230 vehicles. Musk himself is expected to buy US$25 of common stock which translates to 96,900 shares at the public offering price.

If the company manages to do what it says, then it will surely provide a much more convenient process for consumers. It leaves room for higher-end Model 3 variants to not compete with the entry-level Model S.

The quick transition to early release candidate cars has some people on Reddit concerned. Full-scale production is slated to start in September. Normally you have a fleet of production intent cars driving in all conditions to get data.

Those who were able to listen in on the conference call report one other interesting tidbit.

According to the proposed plan, Tesla will produce around 5000 of Model 3 vehicles per week, which suggests that it would take the company ample time to deliver it to all customers. Tesla's 2170 lithium ion cells are now being manufactured at Gigafactory 1 and being used in its commercial and home energy storage systems.