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Tesla Hopes to Raise $1.5 Billion to Ramp Up Model 3 Production

By
David Meyer
David Meyer
By
David Meyer
David Meyer
August 7, 2017, 7:31 AM ET

Tesla wants to raise $1.5 billion to help with the rollout of its relatively affordable Model 3 electric car.

Elon Musk’s company said Monday that it hoped to raise the cash in a bond offering “to further strengthen its balance sheet during this period of rapid scaling with the launch of Model 3, and for general corporate purposes.”

The move comes a week after hedge fund manager David Einhorn warned that the Model 3 could cause cash problems for Tesla, as the company was “currently only capitalized for the next three quarters,” and the model will naturally require more scale than earlier Tesla vehicles.

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Tesla (TSLA) plans to make half a million cars next year, compared with the almost 84,000 it produced last year. The Model 3 is Tesla’s bid for the mainstream, priced at $35,000 for the standard version and $49,000 for a longer-range version that can travel 310 miles, rather than 220 miles, on a single charge.

The company said a week ago that it was averaging 1,800 reservations for the new car each day. Deliveries for non-employees will begin in the fourth quarter of this year.

“Based on our preparedness at this time, we are confident we can produce just over 1,500 vehicles in Q3, and achieve a run rate of 5,000 vehicles per week by the end of 2017. We also continue to plan on increasing Model 3 production to 10,000 vehicles per week at some point in 2018,” Tesla said in an update letter to investors.

Investors seem mollified by the company’s ambitious plans, with Tesla’s share price continuing to rise despite the fact that the company is burning through $100 million a week.

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By David Meyer
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