Tesla Is Raising $1.15 Billion to Fund Its Model 3

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Tesla Inc said on Wednesday it expects to raise about $1.15 billion from stock and senior notes offering, as the electric auto maker accelerates the launch of its new Model 3 electric sedan.

The company plans to offer $250 million worth of common stock and $750 million in notes due in 2022.

Tesla said it would use the proceeds to "strengthen its balance sheet and further reduce any risks associated with the rapid scaling of its business due to the launch of Model 3, as well as for general corporate purposes".

Tesla stock is up more than 3 percent today.

Tesla said last month that it was on track to start producing the Model 3 in July and to reach volume production by September.

Tesla will have spent about $10 billion in R&D and capital expenditures since 2014, according to Morgan Stanley.

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Tesla shareholders cheered Thursday after the company announced it plans to raise $1.15 billion in cash from investors.

The notes in this offering will be convertible into cash and/or shares of Tesla's common stock at Tesla's election. But this is Musk, whose clean-energy company has captured imaginations on and off Wall Street even as Palo Alto, California-based Tesla has struggled to be profitable.

Tesla produced nearly 84,000 vehicles in 2016 and plans to make half a million in 2018, then 1 million in 2020. According to its latest financial report, revenue for the quarter that ended on December 31 came to $2.28 billion, a leap from the $1.22 billion taken a year ago.

Tesla said underwriters were granted a 30-day option to buy up an additional 15% of each offering, and that Tesla Chief Executive Elon Musk would purchase $25 million of the stock.

"Bears will likely say the deal is too small, although we believe this displays (Tesla's) confidence in the Model 3 timeline and anticipate shares will move higher", the analysts said, reiterating that Tesla is one of the bank's favorite investment ideas for this year.

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