‘Ottawa’ Tesla Motors Inc to Sell US$1.4 Billion Worth of Shares to Help Fund Expanded Model 3 Production
Tesla Motors Inc. plans to sell about US$1.4 billion in stock to help pay for an expansion that includes its Model 3 car and boosting annual production to 500,000 vehicles in 2018.
The total stock sale will be about US$2 billion, with the remainder of the shares to be sold by Chief Executive Officer Elon Musk to cover tax obligations on stock options he’s exercising, the company said Wednesday in a statement.
The shares fell 3.2 per cent to US$204.50 at 4:12 p.m. after the close in New York.
Tesla faces a sharp rise in spending for its production plan, which includes as many as 200,000 of its Model 3 cars by the second half of next year, as well as to complete its battery factory in Nevada, expand sales and service globally and add more charging stations. For this year, capital expenditures will increase by about 50 per cent, or US$750 million, from the company’s original budget, Musk said on a first-quarter earnings conference call on May 4.
“It’s going to make sense for us to raise some amount of money, some combination of equity and debt and make sure the company has a good buffer of cash on hand,” Musk said on the call.
The company had US$1.44 billion in cash and equivalents at the end of the first quarter, up from US$1.2 billion at the end of 2015.