Tesla Inc (TSLA) Model 3 Is Being Built Through Production Tooling

Cheryl Sanders
March 17, 2017

There had been quite a bit of uncertainty over the recent quarters as to whether or not Tesla was going to raise more capital ahead of the Model 3 launch. Unlike the other cars that were manufactured by the company, Tesla took a different approach with Model 3 by building tools for the production of the auto which will make the manufacturing process efficient.

Analysts have also noted of the company's apparent confidence in the launch of the vehicle including the on-track production of the sedans still set to start this coming July with a target of 5,000 cars by December. The speculations were fueled by a statement by Musk previous year in which he said that the company was "close to the edge" on its requirement for cash.

Full details of the unit have been undisclosed although it poses a huge threat to other electric vehicles in terms of battery size, technology, and performance in addition to advanced driver assistance services as most predicted. Musk has been borrowing hundreds of millions from Morgan Stanley and Goldman Sachs in order to participate in nearly all of Tesla's new capital raises and maintain his large stake in the company, which is now worth about $9 billion out of a total valuation of $42.5 billion.

The company has now received around 400,000 pre-orders of the Model 3 and is set to increase production from 5,000 to 10,000 next year.

Tesla has raised $1.2 billion in new cash from sale of common shares, and convertible notes that come due in 2022.

The money that will be raised is to be used to strengthen the company's balance sheet as well as reduce any risk in the time leading up to the launch of the Model 3.

The raise also includes a personal purchase of $25 million in common shares by Elon Musk, who is already the top shareholder at Tesla with around 21 percent ownership in the company.

Tesla said it sold 1.3m common shares at $262 each, raising $350m.

Musk bought 95,420 shares in the capital raise, equating to about $25m worth.

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