Tesla to raise NZ$3b

Tesla aims to raise about US$2 billion (NZ$3.02b) through the sale of stock and debt after chief executive officer Elon Musk overestimated the Model 3’s ability to provide enough money for the company to be self-sustaining.

It filed this week to sell US$1.35b in convertible notes and about US$650 million in shares.

Tesla shares jumped about 5% following the announcement.

“We view this as a clear net positive for Tesla,” Wedbush Securities analyst Dan Ives says, Bloomberg reports

The electric-car maker needed to “take its medicine and clear the air of the very real investor worries,” he says

Musk has previously said Tesla would no longer need to raise capital as Model 3 production ramped up, but a record decline in EV deliveries and Tesla’s biggest debt payment reduced its cash balance to US$2.2b.

He’s expected to buy up to US$10m in stock himself, while the share offering is likely to be underwritten by a number of major banks.

Most of the offering will come in the form of convertible bonds due 2024, Bloomberg says.

After reporting a loss per share double what Wall Street expected, Musk assured investors on Tesla’s April 24 earnings call the company would return to profitability in the third quarter.

He told analysts there was “merit to the idea of raising capital” to expand.

Tesla is planning up to US$2.5 billion in capital expenditures this year as it develops new vehicles, including the Model Y crossover, Semi truck and Roadster. It’s also building a battery and vehicle factory near Shanghai to produce Model 3s later this year.