Tesla to sell $2 billion in stock to speed up the production of its Model 3 sedan
Tesla Motors Inc. plans to sell $2 billion worth of stock — $1.4 billion held by the company, and the rest by its chief executive, Elon Musk — to fund faster production of its Model 3 sedan.
Tesla said in a Securities and Exchange Commission filing that it would begin “volume production and delivery” of the battery electric car in late 2017.
Increased capacity will make it possible for its factory in Fremont, Calif., to build Model S, Model X and Model 3 vehicles at the rate of 500,000 a year by late 2018 — two years ahead of earlier estimates, it said in the filing.
The Palo Alto electric car company unveiled the Model 3 in March, positioning it as an electric car for the masses with a starting price of $35,000.
Industry publication Green Car Reports said the success or failure of the vehicle “will almost certainly make or break Tesla.”
One threat is that the Model 3 won’t be made fast enough, pushing customers to look elsewhere for an electric car.
Tesla’s exotic “falcon wing” Model X sport utility vehicle had production difficulties that delayed its delivery more than 18 months. Several analysts have said they expect the same to happen with the Model 3.
The automaker has acknowledged the possibility, saying in a separate SEC filing that it “may experience delays in realizing our projected timelines and cost and volume targets for the production, launch and ramp of our Model 3 vehicle.”
In disclosing risks, it also warned that delays or complications surrounding that car or other products “could harm our brand, business, prospects, financial condition and operating results.”
Shakeups in personnel could exacerbate such risk. Tesla confirmed May 4 that it was losing two key manufacturing executives: its vice president of production and vice president of manufacturing. But it announced Friday that a veteran Audi executive, Peter Hochholdinger, has signed on as its new head of production.
Musk said within days of the Model 3 unveiling that Tesla had received $1,000 deposits for nearly 400,000 of the cars.
The deposits, however, are refundable. If would-be buyers grow impatient, they can simply get their money back from Tesla and buy a vehicle from a different manufacturer instead.