Tesla raises $1 billion capital ahead of Model 3 production

Tammy Harvey
March 18, 2017

The capital raise comes after Tesla CEO Elon Musk said on an earnings call that while it could've finished the process of ramping up for Model 3 production later this year with the funds it had on had, doing so would put it near "the edge" in terms of on-hand cash.

The company announced Wednesday that it would be selling new stock and convertible securities in preparation for the debut of the new sedan, and that numbers would total more than $1 billion.

Tesla had $3.39 billion in cash and cash equivalents at the end of 2016, but most comes from a May stock offering, cash from its SolarCity acquisition and almost $1 billion in draws on its credit facilities.

The company has succeeded in raising 1.2 billion in cash from the sale of common shares and convertible notes.

Tesla's shares were up 0.3 per cent at $262.71 in premarket trading on Friday.

The company's shares, which are down 9 percent since a 52-week year high in February, rose 2.1 percent to $261.11 in after-hours trade. Musk himself is expected to buy US$25 of common stock which translates to 96,900 shares at the public offering price.

Widely recognized for its efforts to execute a smooth transition into a clean energy company, Tesla is reportedly turning to investors for fresh capital.

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

The 1.3 million shares sold represents about 0.8 percent of Tesla's outstanding shares as of December 31.

Tesla said it aimed to deliver a combined total of 47,000 to 50,000 Model S and Model Xs in the first half of this year, but did not give a figure for Model 3 target sales.

The electric auto company said on Wednesday it planned to sell $250-million worth of stock and $750-million in notes.

Several analysts forecasted a capital raise closer to $2.5 billion.

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