Electric car manufacturer Tesla Motors Inc, the youngest publicly traded automaker in the United States, announced it decided to increase its share sale size from around $500 million to about $642.5 million.
The company announced the initial share offering level on Thursday last week and then on Friday moved to deliver to interested parties around 2.7 million shares at $242 per share, which translates into the updated total lump sum and comes at a small discount to Thursday’s closing price of $242.51. Chief executive officer Elon Musk, who announced it would invest in the offering $20 million of his own money in a show of faith also kept the sum at the previously announced level, according to the carmaker. Tesla has been losing money on each vehicle it produces and has come up with less than stellar second quarter financial results.
“Tesla’s (offering), combined with existing credit lines, will provide the company with more than enough cash for operational purposes into 2016,” commented S&P Capital IQ analyst Efraim Levy. The company has been using much of its cash reserves to expand its operations – both vehicle manufacturing and the newly introduced energy storage division. Tesla added the proceeds from the share sale would be used to increase funding for the future Model 3 project and support its Nevada-based battery gigafactory. The latter is expected to deliver significantly cheaper battery packs to be used in Tesla vehicles as well as stationary battery products sold by the energy storage business. Tesla’s Model 3, expected to be an “affordable” battery-electric vehicles, is scheduled to reach dealer lots sometimes in 2017.