Published in News

Tesla raises $1.2 billion in stock and debt for Model 3 production

by on29 March 2017

Federal tax rebates in some states will bring prices even lower

Tesla has announced that it is raising $1.2 billion to fuel its coming Model 3, an all-electric, entry-level sedan that is set to enter mass production later in July.

The company said in SEC filings last Friday that it raised about $350 million via stock sales and brought in an additional $850 million in convertible debt. In addition, the company said that stock offerings include $250 million of common stock and $750 million in convertible senior notes due in five years – in concurrent underwritten registered public offerings.

Underwriters will be given a 30-day option to purchase up to an additional 15 percent of each offering, with CEO Elon Musk participating by purchasing $25 million of common stock. The funds will be used to strengthen its balance sheets and “reduce any risks associated with the rapid scaling of its business due to the launch of the Model 3,” as well as for general corporate purposes.

Tesla’s five-seater Model 3 electric sedan accelerates as fast as some of the best-selling “junior executive” luxury sports sedans in the United States, including the Audi A3/S3 and the BMW 2 series. In early prototype runs, Musk said the base Model 3 can do 0 to 60mph in under 6 seconds, or roughly on par with current Audi A3 or BMW 228i models. A later release with a dual-motor option arriving next year is expected to perform in an even slimmer acceleration timeframe, while a right-hand drive option is scheduled to appear sometime next summer.

The state of New York has already begun releasing details of a new EV incentive plan that allows owners of the Chevy Bolt and upcoming Tesla Model 3 to take advantage of a full $2,000 rebate program beginning April 1st. The vehicle requirements to receive the full rebate include an MSRP of less than $60,000 and a range of over 120 miles. The second requirement will strategically eliminate owners of the Nissan Leaf, BMW i3 or Ford Focus Electric from qualifying for the rebates, though these models will still receive a $1,700 rebate despite falling short on range requirements.

The upcoming Model 3 launch later this year is expected to bring the potential base price down to $25,500 in the state of New York after federal tax incentives. The company added the Model 3 to appeal to consumers that are not able to afford its six-figure Model S and Model X sedans, which do not qualify under the range requirement.

In addition, Tesla is in the process of building out a billion-dollar Gigafactory battery plant in Nevada approximately 455,225 square meters (4.9 million square feet) that will house facilities used in the manufacture of its PowerPack 3 and PowerWall 2 battery units, along with battery packs for Model 3 vehicles. The Nevada plant is expected to bring in another $350 million to the state and at least 550 more jobs to the region. On its own, Gigafactory 1 is expected to employ roughly 6,500 people by 2022. This type of job generation and investment is creating healthy competition among European nations that are eager to be part of Tesla’s Gigafactory 2 endeavors.

Back in December, Dutch Economy Minister Henk Kamp announced to parliament that the government would strive to convince Tesla to build its second Gigafactory operation in the Netherlands to “strengthen the automotive sector in Noord-Brabant and other regions” of the country. While the current regional office is located in Amsterdam, Musk has stated that in the long term, “there is no question” that Europe will receive at least two or three battery factory locations as investment begins to shape and supply begins to ramp up for more factory production.


Last modified on 29 March 2017
Rate this item
(0 votes)

Read more about: