Tesla raises $1.7bn to ramp up Model 3 production | RenewEconomy

Tesla raises $1.7bn to ramp up Model 3 production

Tesla will use $1.7 billion raised in a share offering to boost production of its mass-market Model 3 to 500,000 cars a year by 2018.


US electric vehicle maker Tesla Motors says it will use $1.7 billion raised last week in a share offer to ramp up production of its $US35,000 Model 3 sedan to half a million cars a year by 2018.

A Tesla Model 3 sedan, its first car aimed at the mass market, is displayed during its launch in Hawthorne, California, March 31, 2016. REUTERS/Joe White/File Photo

The California-based company raised the money last Thursday, through the sale of 6.8 million shares priced at $215 each by the lead managers Morgan Stanley, Goldman Sachs, Deutsche Bank, Citigroup and Bank of America Merrill Lynch.

The move to bolster production of the Model 3 follows massive pre-order sales of the fully electric vehicle, which is the luxury car-maker’s first attempt at a mass-market offering.

Earlier this month Tesla’s chief executive Elon Musk admitted he would have to “rethink production planning” of its electric cars after the company was inundated with pre-orders for the Model 3, which opened in March around the world, including in Australia.

Tesla says it received 276,000 pre-orders in the first three days after the launch and, to date, has accepted around 375,000 $US1,000 deposits from customers – amounting to $US14 billion ($A18.5 billion) in implied sales – wanting to purchase a Model 3, which is not due to hit the roads until late 2017.

“A week ago, we started taking reservations for Model 3, and the excitement has been incredible,” the company announced in a blog titled “The Week that Electric Vehicles Went Mainstream.”

“We’ve now received more than 325,000 reservations, which corresponds to about $14 billion in implied future sales, making this the single biggest one-week launch of any product ever.”

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  1. nakedChimp 5 years ago

    Somebody forgot to tell this to Reuters and their sources..

    • john 5 years ago

      Well said

  2. john 5 years ago

    The amount of reservations for a consumer item of this value is not in any way ordinary by any measure.
    Tesla has a problem.
    They have put on paper an item of such compelling value to the customer that they have generated 375 thousand orders or 375,000 ; this number of people putting their money down to buy an item is not heard of ever; for such a product.

    I mentioned a problem, which is how to produce so many vehicles in such a short time.
    So they raise capital to ensure they can deliver.

    Tesla pulls this off and the Model 4, which will be a lower cost vehicle in the $20k range, they will have to raise even more capital to produce the number of orders which will be astronomical.

    I expect that mainstream vehicle manufactures will make offerings and if they can put out a product that challenges Tesla it is possible that the outcome for Tesla will be good.

    As i see it the only challenger is GM who could sell the Bolt at about $10,000 loss per vehicle to try to undercut Tesla by say $8,000 a vehicle.
    This would cost GM for say 100,000 sales some $800,000,000.
    Lets be serious even GM can not suffer that kind of loss so it looks like Tesla has a business plan that is going to work.

    Roll on Tesla my order for the $20k vehicle is waiting to happen.

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