Tesla Motors Inc. billionaire entrepreneur co-founder and chief executive officer Elon Musk has said he will spend $20 million on the company’s newly announced half a billion dollars stock offering in a show of faith.
The electric automaker, the youngest publicly traded US carmaker has been burning through cash as it seeks to expand its plant in Freemont, California to produce a second model on the assembly line. It is also developing the world’s largest battery factory in the world, which ties into its newly introduced battery storage business unit initiated this year. Tesla announced on Thursday it would use the proceeds from an upcoming 2.1 million share sale that could deliver more than $500 million to fund its expansion projects, including the upcoming Model 3 affordable electric car as well as the battery gigafactory in Nevada. The offering is the company’s first equity sale in more than two years, and comes just a week after the automaker said it had lost more money during the past quarter and it may need to raise more cash to overcome the burden of numerous investments.
While at the end of last year the company had $1.91 billion in cash, at the end of June the cash lump had fallen down to $1.15 billion in cash and equivalents. A filling said the company will assume a price for the shares of $238.17. Musk will be buying around 84,000 shares in the new offering, but the latest acquisition will actually recede its holding – he now owns 22.25 percent of the company, being its biggest single shareholder.