Electric vehicle manufacturer Tesla announced on Wednesday that it will raise US$1.15 billion in a series of offerings. This plan comes ahead of the Model 3 launch after the company came "very close the edge" financially.
Tesla to raise US$1.15 billion ahead of Model 3 launch. To raise the US$1.15 billion ahead of the launch of the company's Model 3 electric vehicle, the company plans to offer its investors US$250 million of common stock. The electric vehicle manufacturer is also going to offer convertible senior notes worth US$750 million. This is all according to a filing with the SEC.
The money that will be raised is to be used to strengthen the company's balance sheet as well as reduce any risk in the time leading up to the launch of the Model 3. Tesla Model 3, aimed at mass market adoption, is priced at US$35,000 before federal tax incentives and is the first vehicle by the company not to carry an expensive price tag. It should be noted that company received 276,000 pre-orders of the upcoming vehicle in just two days after it was announced last year.
Speaking during the company's fourth-quarter earnings call, said, "According to our financial plan, no capital has to be raised for the Model 3." Musk also added, "But we get very close to the edge, then that's probably not the very best thing for shareholders on a risk-adjusted basis so we are considering a number of options, but I think it probably makes sense to raise capital to reduce risk." Musk himself is expected to buy US$25 of common stock which translates to 96,900 shares at the public offering price.
The company is planning to produce by the end of 2017. That number is expected to double in the next year.