Tesla announced it will raise $US1.15 billion in a series of offerings on Wednesday.
The automaker will offer roughly $US250 million in common stock and $US750 million in convertible senior notes that are due in 2022, according to an SEC filing.
Tesla CEO Elon Musk plans to purchase 96,900 shares of common stock, which is worth approximately $US25 million at the public offering price.
Tesla wrote in a press release that it intends to use the net proceeds from the latest round of offerings to strengthen its balance sheet and reduce risk as it prepares for the Model 3 launch.
Musk said during the company’s fourth-quarter earnings call that it was financially prudent for Tesla to raise capital to reduce risk ahead of Model 3 production.
“According to our financial plan, no capital has to be raised for the Model 3,” he said. “But we get very close to the edge, then that’s probably not the very best thing for shareholders on a risk adjusted basis so we are considering a number of options, but I think it probably makes sense to raise capital to reduce risk.”
Goldman, Sachs & Co., Deutsche Bank Securities, Citigroup, and Morgan Stanley are leading the stock offering.
The Model 3 is Tesla’s first mass-market vehicle priced at $US35,000 before federal tax incentives. The automaker began preparing its Fremont factory for Model 3 production in February and deliveries are expected to begin by the end of this year.
Tesla plans to produce 5,000 Model 3 vehicles per week at some point in the fourth quarter, Musk said during the company’s fourth-quarter earnings call. The automaker will ramp production up to 10,000 vehicles per week at some point in 2018.
Pressure is on for Tesla to meet its Model 3 deadline. Tesla’s Model S was slated to enter production in 2010, but was delayed to mid-2011. The Model X suffered three years worth of delays before finally launching in October 2015.