Tesla to raise $500 million – wait, make that $650 million – with new stock offering

Tesla Model S

Tesla has big plans – expensive plans. Tooling up for volume production of Model X, developing Model 3 for an unveiling next year, the Gigafactory, the new energy storage business, more charging infrastructure, the Snakebot charger, a new Roadster, the James Bond submarine/car, Hyperloop…good grief, this is going to require a pile of cash!

To no one’s surprise, Tesla (NASDAQ: TSLA) has announced that it plans to raise $500 million by issuing additional shares of common stock [Update: a couple days later, the company increased that amount to around $650 million]. Elon Musk plans to purchase $20 million worth for himself.

Once again, Tesla has chosen to lead an expedition through the Valley of Death, that arid and unforgiving region where huge capital expenditures are required, but there is no product revenue until you get to the other side. The company says it burned up $1.12 billion in the first half of this year, bringing cash reserves down to around $1 billion.

The potential revenue is there and waiting. Musk says demand for Tesla’s energy storage products is “really crazy,” with firm orders “well in excess of a billion dollars,” and more than 20,000 prospective buyers have put down deposits for a Model X.

While the Gigafactory seems to be coming along, the new ESUV has been plagued by delays. Production is to start in September, but many observers believe that the line won’t crank up to full volume for another couple of months.

Musk has promised the X will be a tour de force, with its unique falcon doors, towing capability, and groovy seats. “Our biggest challenges are with the second row seat, which is an amazing seat, like a sculptural work of art, but a very tricky thing to get right,” said he.

 

Source: Tesla, Green Car Reports, Fortune