Electric vehicle and solar cell maker Tesla Inc. wants to raise over $1 billion in new capital by selling stock and five-year convertible notes.
The $1 billion will be used to strengthen the balance sheet as.
A recent run-up in Tesla stock-including a almost 5% bump on Tuesday-created ideal conditions for the company to raise more money by selling more shares.
"No capital needs to be raised for the Model 3, but we get very close to the edge", Musk said. But the company has said that it will spend $2 billion-2.5 billion to launch the Model 3 mass-market vehicle later this year. So the latest capital raise - following an August 2015 raise and a May 2016 raise of about $600 million each, all equity - suggests two things.
CEO Elon Musk will purchase $25 million in common stock, the company said. Musk told investors during the third-quarter earnings call that Tesla's "current financial plan does not require any capital raise for Model 3 at all".
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The base model Lucid Air will have "all hardware necessary for autonomous driving", according to Lucid, but the company steers clear of saying whether it will cost more to activate the feature. Lucid says the Air also comes standard with the hardware needed for autonomous driving, though we're guessing that phrasing means the company, like Tesla, will charge owners to turn the system on.
UBS analyst Colin Langan, who has a Sell rating on the stock, thinks it "could imply another raise later if the Model 3 is delayed".
Unveiled about a year ago and priced at 35,000 dollars, about half the price of Tesla's Model S, the Model 3 is scheduled for delivery by the end of 2017. Barclays had said that a $2.5 billion stock offering wouldn't be a surprise.
The company lost just under US$675m previous year but revenue rose 73 per cent to just over $7b. Combined with 30-day underwriters' options for an additional 15% on both offerings, the total take rises to $1.15 billion.
Read: Will Tesla Be Able To Ramp Up Gigafactory Production Quickly?