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Home News Tesla to raise more cash for Model 3 expansion

Tesla to raise more cash for Model 3 expansion

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Tesla is borrowing another $1.5 billion to fund production of its new, broad-market Model 3 sedan.

The electric vehicle and clean energy company has raised cash in 4 of the last 5 quarters, while struggling to meet analyst expectations. Tesla plans a wide launch of its lower-cost electric car next year, and to boost overall vehicle production from 100,000 vehicles this year to 400,000 in 2018.

“Tesla intends to use the net proceeds from this offering to further strengthen its balance sheet during this period of rapid scaling with the launch of Model 3, and for general corporate purposes,” the company said in a statement Monday before the markets opened.

Chief financial officer Deepak Ahuja said last week capital spending by the company has hit “historic highs” — about $100 million a week. Most of the spending is paying for Model 3 manufacturing equipment.

Tesla is also building a solar factory in Buffalo, NY, a battery plant near Reno, NV, and adding capacity to its Fremont auto plant. The company also plans to triple the size of its fast-charging network to accommodate new Model 3 customers.

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CEO Elon Musk outlined an aggressive growth plan to analysts last week, adding 3 to 6 more “gigafactories,” including facilities in China and Europe.

The company expects cash flow to improve as it starts selling Model 3s. The Palo Alto-based automaker has received about 455,000 reservations for the Model 3, Musk said.

The electric sedan has room for five adults, a 220 mile range on a single charge and a base price of $35,000. Early, premium editions were delivered to 30 company employees and investors on July 28.

Tesla stock rose sharply after the event to near record levels. Shares dropped slightly Monday on the news.

Efraim Levy of CFRA Research said the company was seeking cash earlier than expected, but could receive attractive financing rates. “Cash should support needs to fund scaling of the Model 3 launch,” Levy said, but still believes shares are overpriced.

Photo: Tesla Motors unveils the new Model 3 sedan at the company’s design studio in Hawthorne, Calif., Thursday, March 31, 2016. (Justin Pritchard/Associated Press)

Tags: elon musk, Model 3, tesla

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