Tesla will sell shares at $ 1.4 billion to accelerate the production of Model 3

This week, Tesla Motors has announced the sale of shares totaling $ 1.4 billion. The company plans to accelerate the production of the budget Model 3, the announcement of which has caused a real stir. According to the original schedule, the release of the new Model 3 was to be held towards the end of 2017. In addition, due to the raised funds, it is planned to increase the annual production of Tesla 3 to 500 thousand cars in 2018.

In total, Tesla is going to sell 6.8 million shares or 8.24 million taking into account underwriting in the amount of $ 2 billion. To cover taxes Tesla CEO Ilon Mask plans to sell 2.78 million shares without reducing his own stake in Tesla.
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“Attracting additional capital is a logical step for Tesla. This will help defuse the current market situation caused by the concentration of shares in the hands of investors, ”says analyst Robert W. Baird & Co. Ben Callot.

At the moment, the Model 3 company received more than 373 thousand pre-orders with the cost of the car in the base configuration of $ 35 000. About 8 thousand buyers refused to pre-order, and about 4.2 thousand orders were received from speculators. After this information, Tesla shares rose 3.2% to $ 211.17 at the close of trading.

The sharp increase in the number of Model 3 cars produced by 200 thousand by the end of next year significantly increases Tesla production costs. To do this, the company decided to expand the battery gig factory in Nevada. In total, production costs this year will increase by 50% to $ 750 million.

"For us, additional investments will become a financial buffer of cash, a kind of combination of own and borrowed funds on hand," said Ilon Musk.

At the end of the first quarter, there are about $ 1.44 billion in cash and cash equivalents in Tesla accounts, compared with $ 1.2 billion at the beginning of this year. Among the main owners of Tesla shares are Morgan Stanley and Goldman Sachs Group Inc. The latter acted as an underwriter in the last sale of Tesla shares.

Goldman Sachs analyst Patrick Archambault also updated Tesla stock recommendations, changing the outlook from neutral to buy.