Tesla needs more cash to roll out new Model 3 car
PALO ALTO, Calif. - Tesla is getting critical raves for its new Model 3, its first mass market electric car. Now the automaker just needs more money to scale up production of the vehicle.
To that end, Tesla (TSLA) said Monday it is raising $1.5 billion in a senior note offering. It would use the proceeds to strengthen its balance sheet during rapid scaling of the Model 3.
Last week CEO Elon Musk said investors should have "zero concern" about whether Tesla will be able to make 10,000 Model 3s per week by toward the end of 2018. Tesla just delivered the first 30 Model 3s to employees two weeks ago.
Musk worried some investors when he warned that Tesla was about to embark on "at least six months of manufacturing hell" as it attempts to get Model 3 production to 5,000 cars per week by December. He also acknowledged in a conference call with analysts that it was "crazy hard" to predict how if Tesla would encounter problems in manufacturing the Model S, though he expressed confidence the company would meet its goals.
"[L]ast week stressed the hell out of me, but I really think that this is... probably the best I've ever felt about the company," Musk said.
Its $35,000 starting price -- half the cost of Tesla's previous models -- and range of up to 310 miles (498 km) could bring hundreds of thousands of customers into the automaker's fold, taking it from a niche luxury brand to the mainstream.
Tesla burned through $1 billion in the second quarter preparing for the arrival of the Model 3, which is central to the company's growth strategy and broader goal of popularizing electric cars.
The company said earlier this month that 518,000 people have put down $1,000 deposits for the car since March 2016.
Tesla reported last week that its net loss in the latest quarter grew 15 percent, to $336 million, from a loss of $293 million in the year-ago period. But Tesla's adjusted loss, of $1.33 per share, handily beat Wall Street's forecast of a $1.88 loss per share, according to analysts polled by FactSet. Revenue more than doubled to $2.8 billion, also beating Wall Street's forecast of $2.5 billion.