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20 March 2017, 01:48 | Patty Hardy
A view of the Lucid Air outside of Lucid Motors headquarters in Menlo Park California
Tesla shares were up more than 3 percent in after-hours trading.
Tesla said that it planned to offer $250 million in common stock and $750 million in convertible notes, with underwriters being given the option to buy an additional 15 percent of each offering.
The capital raise comes as Tesla invests heavily in battery and vehicle factories, as well as charging stations and solar tile production. These it said would be "in concurrent underwritten registered public offerings".
Elon Musk must to raise at least US$1.15 billion more to bring his more affordable Model 3 to market.
Tesla said last month that it was on track to start producing the Model 3 in July and to reach volume production by September. Morningstar expected Tesla to raise $3 billion to fund Musk's ambitions. With a bevy of options, including batteries that significantly boost how far you can go, it could run you "above $100,000", a gleefully non-specific number that makes one wonder if we're talking house down-payment numbers. "However, liquidity and cash burn remain key near-term risks, and investors may grow tired of continued raises as this is the second capital raise in a year". Within two days of the electric auto being announced a year ago, Tesla received 276,00 pre-orders for the Model 3. "However, liquidity and cash burn remain key near-term risks, and investors may grow tired of continued raises as this is the second capital raise in a year".
A recent regulatory filing made by Tesla contains plans for the issuing of $750m in convertible debt, as well as $250m in stock to ensure consistent progress and trajectory.
The offering will cushion the balance sheet of the youngest publicly held vehicle maker as it boosts spending to introduce the Model 3. "If the launch is delayed (note the Model 3 beta prototype is not yet approved by the board), cash burn would be worse, putting them close to the $1 billion cushion they need". But is it too small?
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