Sunday, 30 April, 2017

Tesla raises $1.2b, tapping market again for funding

Garry Little | 19 March, 2017, 00:59

Elon Musk and Tesla have raised $1.2 billion (all figures USD) in preparation of the launch the new Model 3.

"It is also part of the Dubai Smart Autonomous Mobility Strategy aimed at transforming 25 per cent of total journeys in Dubai into autonomous journeys by 2030".

The transaction could be worth as much as $1.4 billion to Tesla if underwriters Goldman Sachs, Deutsche Bank, Citigroup, Morgan Stanley, Barclays, Merrill Lynch and Credit Suisse exercise all their options.

The maker of electric vehicles had signaled in recent weeks that it was eyeing a fresh raise of capital.

The Model 3, a $35,000 all-electric sedan aimed at the mass market, is the linchpin of the company's expansion goals, which include ramping up production to a rate of half a million vehicles by the end of next year.

It did, however, reaffirm its pledge to deliver 500,000 vehicles in 2018 and one million in 2020, when its £3.8 billion (Rs 24,004 crore) Gigafactory is expected to reach full capacity - a sharp rise from the 80,000 delivered in 2016. The $350 million came from the sale of roughly 1.34 million shares at $262 each.

SAN FRANCISCO Tesla Inc's (TSLA.O) $1.2 billion share and convertible debt offering on Friday demonstrates once again the unflagging ability by the luxury electric carmaker and its high-profile head, Elon Musk, to tap Wall Street for sorely needed cash.

News of a big stock sale typically depresses a company's share price because it dilutes the value of investors' holdings. The notes will mature on March 15, 2022, Tesla said.

According to the carmaker, the sum exceeds its internal expectations and plans by 20%, which means that the Model 3 should follow its launch schedule without any concerns. And with the introduction of Model 3 on the horizon, the decision to remove the entry-level Model S from Tesla's range is likely a deliberate move to widen the gap even more between the brand's entry-level auto and its more premium offering.

Musk has been putting a lot of his own money into the company.

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