Tesla got its first attention when they produced Tesla Roadster, an electric sports car in 2008, followed by the Model S, an electric luxury sedan car which was launched in 2012. Now Tesla is coming up with their third model of electric car which is considered to be a mass market car in 2017. Model S managed to be the number second plug-in electric sedan car consecutively for 2 years in 2015 and 2015 with a record breaking sales of 150,000 units in November 2016. Currently the market value of the company is $41 billion with 373,000 reservations for the cars.
Elon Musk has come up with a new edition to the electric car model and also its first mass-market car model –Model 3 and looking to raise $1.15 billion in both stocks as well as in debt to launch the Model 3 sedan. The company released its decision yesterday about the $1.15 billion split in 2 parts. $250 million in stocks and $750 million in convertible debts, where in the underwriters will have rights to buy additional 15% apart from the actual ones of the other two.
The normal trend for any company after announcement of the stock raising news and issuing of new stocks, the share prices for the company falls as it reduces the value of the shareholder’s holdings. But in case of Tesla, the share price climbed 3.5%. Wall Street and shareholders have always been amazed and impressed with Musk’s clean-energy Company which fades the less successful and struggling to make profits–Palo Alto, a California based Tesla.
Although Tesla claims that they have sufficient funds and does not need to raise capital; however they are playing very closely and just wanted to avoid any kind of risk that would arise and raising capital is one of the options to avoid risk. Musk also informed that among the $1.15 billion capital raised, $25 million stocks would be purchased by himself.
Using the funds, the company will initiate its Model 3 production in July this year. According to a letter released to the shareholders in February, Tesla will be producing 5,000 vehicles per week in the fourth quarter and 10,000 cars per week in 2018. By raising so much funds, company has been showing positive confidence in its new model and seems to be promising to the market. Hopefully the launch of Model 3, the mass-market sedan car would get Tesla’s share price on the higher side of the stock exchange.