Tesla’s Capital Raise Nets $1.2 Billion, Mostly For Model 3

1 week ago by Jeff Perez 27

Tesla Emblem On Model S

Tesla raises $1.2 billion for Model 3 launch

That’s 20 percent more than originally planned.

Elon Musk and Tesla have raised $1.2 billion in preparation of the launch the new Model 3. The company announced Wednesday that it would be selling new stock and convertible securities in preparation for the debut of the new sedan, and that numbers would total more than $1 billion. The company exceeded expectations by roughly 20 percent.

After the announcement was made earlier in the week, the Palo Alto-based automaker saw its stock rise 2.5 percent to close Thursday at $262.05, a 0.3 percent increase. The company sold 1.3 million common shares at $262 a piece to raise $350 million, and raised another $850 million through convertible senior notes.

The 1.3 million in shares sold represent about 0.8 percent of Tesla’s total outstanding shares, as recently as December 31. Elon Musk meanwhile, the company’s CEO, still holds a majority share of the company at about 21 percent.

Tesla Model 3

Tesla Model 3

When it does go on sale, the Model 3 is expected to have a starting price of around $35,000, which would make it the most affordable option in the lineup. The company reportedly has logged more than 325,000 pre-orders since its debut (~373,000 in the last unofficial report in May of 2016), and has a plan in place to make it the “most American” car in the country.

Already we’ve seen Tesla testing its new Model 3 on public roads. Last week, a video caught an early prototype in broad daylight out on the streets of California, and gives us our clearest look yet at the upcoming EV. Production is expected to begin in July, with deliveries taking place later in the year. Tesla hopes to produce as many as 5,000 cars per week sometime in the fourth quarter of the year, and 10,000 cars per week “at some point in 2018.”

Source: Reuters

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35 responses to "Tesla’s Capital Raise Nets $1.2 Billion, Mostly For Model 3"

  1. (⌐■_■) Trollnonymous says:

    “The company reportedly has logged more than 325,000 pre-orders”

    Anyone know exactly how many by chance?

    Just curious.

    1. ffbj says:

      Somebody does, but that would be telling.

      1. leafowner says:

        I have seen reservation numbers that range for 375k all the way to 650k. They disclosed in their past filing they had somewhere likd $650M in “deposits” which certainly many are for Model S, X and maybe some of the PowerWall stuff. If I had to make an educated guess though — I would say they has somewhere around 550k reservations totak.

        1. ffbu says:

          You’re in the ballpark.

        2. needa says:

          Do they take in deposits on their utility grade powerpacks? Just saying that those would be some sizable deposits if they do.

  2. Doggydogworld says:

    21% is not a majority stake. It could be called a controlling stake.

    1. ffbj says:

      True, though a controlling interest is a bit fuzzy, because depending on circumstances, it can mean different things.

      Though clearly with his cronies he, Musk has a controlling interest. To say nothing of the many Muskites who will hardly go against him.

      Should probably change it to, as a single person he holds the most shares. 21%

      1. Nix says:

        More than 60% of the outstanding shares are held by Institutional Investors (as in major banks, brokerages, major hedge funds, etc).

        So control is firmly in the hands of market professionals.

        1. ffbj says:

          Yeah, right as evidenced by the major moves they have made regarding he company.

          But, Anders notes, Tesla’s corporate bylaws contain “a bunch of super-majority provisions that make it impossible for shareholders to do anything too drastic without getting 66-2/3 percent support, i.e. rearrange the board, agree to a merger, etc.”

          Finally, Anders points out that of Tesla’s six-member board, two members are named Musk: not only Elon himself, but also his brother Kimball.

        2. ffbj says:

          Institutional owners, such as Vanguard, hold stock for individual clients.

  3. Nix says:

    This gives Tesla plenty of money to get well through the

    This puts their cash on hand at around $4.7 Billion, and they are on the record saying the Model 3 launch is estimated at $2 Billion to $2.5 Billion. Tesla now has roughly double the amount of cash needed for launching the TM3.

    http://finance.yahoo.com/news/teslas-latest-capital-raise-suggests-145500891.html

    This puts Tesla well out past their $1 Billion dollar cushion, almost to the point of having too much cash on hand. It makes you wonder if they have something new up their sleeves to announce in the next 3-6 months besides the Model 3?

    1. ThombdBhomb says:

      Model Y?

      1. Someone out there says:

        By the time the model Y becomes relevant I expect Tesla to make its own money and no longer have to rely on selling stock, or do you expect Tesla to live on handouts forever?

        1. (⌐■_■) Trollnonymous says:

          I think EM mentioned that “Model à trois” was a do or die.

          1. Someone out there says:

            I would say it definitely is. If Tesla can’t make money on model 3 how many investors are going to give Elon more money to have another go? Not many. That said, Tesla has built up a big organization already with the supercharger network and lots of service centers. The expansion phase is coming to a close so Tesla will be able to focus more on profitability going forward.

    2. unlucky says:

      I don’t think it’ll be plenty (meaning far more than enough) and if Model 3 is delayed or ramp is delayed I don’t think it’ll even be enough.

      I do expect significant delays and thus I expect another raise to complete the Model 3 rollout.

    3. needa says:

      I don’t think that 4.7 number is correct. For one thing they wouldn’t have any reason to go after another funding round right now if they had 3.5 bil sitting around. Seems like a the end of the year they were down to just over a bil.

      Not saying I am right, just putting it out there.

      1. Nix says:

        needa — Yea, it’s a huge amount of cash, right? Even you can see it. Crazy, eh?

        I posted my source. Please follow the link if you want to confirm. It only takes a little clicky-click with your finger…..

        1. needa says:

          That’s just it, your link is wrong. “Tesla said it had $3.08 billion in cash and cash-equivalents as of Sept. 30, compared with $3.25 billion at the end of the second quarter.” Google the quotes if you care to see. After all… It only takes a couple of clickety clicks. Douche. So what you and your link is saying is that Tesla has not spent a dime since then. In fact, you are saying that they added half a bil to their bottom line. It makes zero sense. We know that Tesla has spent half a bil in the gigafacory since that date, for permits. We know that solarcity is costing them, and we know that they have been tooling their factory for the Mod3. Much less any other expenses at the gigafactory.

          1. Nix says:

            You are behind by a quarter. Yes, Tesla added to their cash in Q4 2016:

            12/31/2016 $3,498,735 (Q4 2016)
            9/30/2016 $3,107,968 (Q3 2016)
            6/30/2016 $3,270,826 (Q2 2016)

            This is straight from the official Primary Source, NASDAQ’s site for TSLA:

            http://www.nasdaq.com/symbol/tsla/financials?query=balance-sheet&data=quarterly

            If you don’t know WHY Tesla added to their cash on hand in Q4, you’ve proven why you know nothing about Tesla financials.

            1. needa says:

              Thumbs up

  4. pjwood1 says:

    Previous terms for Tesla’s convertible bonds: A $360 conversion price, 00.25% interest rate.

    If they go bonds, I can see why the stock moved up. People are optimistic there are takers at, or near, previous terms. Even if they had to pay 1%, that’s unbelievably close to crowd funding 😉

    1. unlucky says:

      No need to guess. Tesla had to file the terms publicly before offering. It’s 2.375% interest annually.

      http://ir.tesla.com/secfiling.cfm?filingID=1193125-17-86226&CIK=1318605

      And I expect most buyers were looking at least as much about the conversion possibilities as the coupon.

  5. ffbj says:

    Say goodbye to the bard and the sage, and the 60 kWh Tesla Model S. Last day you order one is April 16th, I think.

    1. (⌐■_■) Trollnonymous says:

      2 days before tax day!!!!

  6. Murrysville EV says:

    “Already we’ve seen Tesla testing its new Model 3 on public roads.”

    Well, to parse that statement a bit… it’s not clear how ‘new’ that car was in the video. It may have been the identical one used in the reveal, or that same car reworked, or it could have been a Feb 20 pre-production unit.

    The same silver color makes one think it’s the same old car, but maybe it wasn’t.

    1. ffbj says:

      It was the same one.
      Though they are not producing Beta vehicles, so we should see some soon.

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