Tesla Is Raising $1.15 Billion to Fund Its Model 3

Tesla Model 3 prototype

Electric auto and solar cell maker Tesla Inc. wants to raise over $1 billion in new capital by selling stock and five-year convertible notes.

LO ALTO, CA - (Marketwired) - 03/15/17 - Tesla (NASDAQ: TSLA) today announced offerings of $250 million of common stock and $750 million aggregate principal amount of convertible senior notes due in 2022 in concurrent underwritten registered public offerings.

From a technical analysis standpoint, Tesla stock bounced off important support that could offer traders and investors a good reference area around which to build their trades. But the company has said that it will spend $2 billion-2.5 billion to launch the Model 3 mass-market vehicle later this year.

Tesla will have spent about $10 billion in R&D and capital expenditures since 2014, according to Morgan Stanley.

The Silicon Valley-based company also said Musk will participate by purchasing US$25 million of the company's stock.




However, in October, Musk tweeted that the company "probably" would not have to raise funding in the first quarter of 2017.

Musk, 45, is Tesla's chairman and largest shareholder, with a 20.8 percent stake.

As U.S. policies promoting EVs are weakened, combined with relatively cheap gasoline that's depressing demand for highly fuel efficient vehicles, Musk has his fingers crossed that there are enough Tesla fans and friendly investors to keep backing a visionary company with the promise of a bright future - and so far just two profitable quarters. The Model 3 is priced at a moderate $35,000 in the United States, much below the price of its initial models S and X electric vehicles. Barclays had said that a $2.5 billion stock offering wouldn't be a surprise. The company's $41 billion market value makes it nearly as big as Nissan Motor Co. and not far off from Ford Motor Co., rival automakers that sell millions of cars a year.

Tesla had US$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 US$1 billion in draws on its credit facilities.

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