Tesla raises $1.2B ahead of production of Model 3 sedan
- Author: Joe Gonzales Mar 19, 2017,
Mar 19, 2017, 1:03
The capital hike followed chief executive Elon Musk commenting in February that Tesla could be close to the edge on its cash needs.
In addition to an increase in the common stock offering, Tesla also raised $850M from a convertible debt sale with an additional $127.5M available to the underwriters.
Ahead of the rollout of the Model 3 electric sedan in the second half of 2017, Tesla is discontinuing the cheapest variant of the Model S. The two versions of the 60 kWh battery option of the Model S - 60 and 60D - can be ordered only till April 16, the company announced Friday night.
Goldman, Sachs & Co., Deutsche Bank Securities, Citigroup and Morgan Stanley are acting as lead joint book-running managers for the offering, with Barclays, BofA Merrill Lynch and Credit Suisse acting as additional book-running managers.
Tesla's raising capital is not such a surprise for analysts who had been expecting some kind of similar move for a few months, as the company has been bleeding cash ahead of the much-anticipated Model 3 launch.
Elon Musk, CEO and CTO of SpaceX, CEO and product architect of Tesla Motors, and chairman of SolarCity, attends the Allen & Company Sun Valley Conference on July 7, 2015 in Sun Valley, Idaho.
Preparing to produce the Model 3 is expected to cost billions.
Things are promising for the company when pre-orders are concerned, but many fear that the automaker will not manage to get the Model 3 in showrooms on time.
Tesla's bond offering of $850M consisted of 2.375% Convertible Senior Notes due March 15, 2022.
Tesla has raised roughly $1.2 billion in a quest for capital ahead of the auto company's launch of the increasingly important Model 3 vehicle.
While Tesla hasn't issued any updated figures as of late, it's widely believed that the total number of Model 3 reservations now falls somewhere in the 390,00-400,000 range. Then, the customer will be expected to just present the correctly filled documents and take the possession of his Model 3 (or any other Model) in just minutes. Musk reportedly said that advanced analytical techniques are allowing the company to skip the usual beta phase. Also, the company is not completely opposed to the idea of building new delivery centers.