Tesla to raise more than $1b to bring Model 3 to market

Mar 17, 2017, 01:19
Tesla to raise more than $1b to bring Model 3 to market

Vetr downgraded Tesla Inc. from a "hold" rating to a "sell" on Tuesday, citing a price target of $244.13 on the company's stock. Autocar notes that Tesla will likely not unveil the Model Y until next year and production will likely kick into gear the year after that. The beta prototype of the Tesla Model 3 is therefore being manufactured and road tests Will start in the coming weeks.

The first true rival to the Tesla Model S, the Lucid Air has been priced competitively, as the Chinese-backed company seriously wants to steal a slice of Elon Musk's pie.

Shares in Tesla rose by more than 3 percent in after-hours trading.

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.

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The Model 3 is the key to Musk's push to reach mainstream consumers.

The following month, it announced its ambitious and controversial proposal to acquire sister company SolarCity in an all-stock deal, which many expected to be cash flow negative.

Although not a lot of information is available yet regarding the Tesla Model Y, Musk reportedly confirmed that the vehicle will have "Falcon Wing" doors like the Model X. Underwriters are being given the option to buy an additional 15% of each offering, so the total value of the capital raise will be well over $1 billion.

During the earnings call, Tesla also said it planned to produce 5,000 cars-per-week by the end of the year, and 10,000-per-week in 2018. But if "more expensive" still keeps the Model Y at under $45,000, it's still a win - and a breakthrough for Tesla given the popularity of crossovers throughout the United States. "Deutsche Bank Securities, Citigroup and Morgan Stanley are acting as lead joint book-running managers for the offering, with Barclays, BofA Merrill Lynch and Credit Suisse acting as additional book-running managers". The company last tapped bond markets in 2014, when it sold $2bn of convertible notes to help fund its Gigafactory for battery production east of Reno, Nevada, according to data compiled by Bloomberg.