Tesla raises $1.7bn to ramp up Model 3 production

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.

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.”