Tesla Motors intends to raise finance to complete its projects, including new factory and cheaper electric vehicles.
Tesla Motors would take a step to improve its financial position. Tesla news reported that the Californian manufacturer is about to offer an additional 2,100,000 shares, which would allow it to raise $500,000,000. It plans to utilize the received funds to pioneer a more affordable powered car, Model 3, as well as growing its charging infrastructure and developing its world’s largest battery manufacturing plant, it stated in a Security Exchange commission filing.
On Thursday, Tesla announced a plan to collaborate with two dozen garages around Manhattan to install its higher speed, 240-volt chargers for Tesla vehicle owners. CEO Musk has realized that the organizations need large injections of funds to establish its so-called gigafactory in Nevada, which would manufacture lithium-ion batteries.
The production of a new economical electric vehicle would be expensive. Tesla news today informed that the sports utility vehicle is scheduled to launch next month. The company previously attempted to lure financiers when it raised $226,000,000, then reached markets to raise an additional $1,080,000,000 in May 2013. The South African entrepreneur indicated his preliminary interest to purchase $20,000,000 of this offering or around 84,000 shares, a step that reinforced his commitment to the organization.
Tesla stock, which decreases by 4% from last year, rose on Thursday. Tesla Motors news reported that the enterprise has never earned money and lost $47,000,000 in its latest quarterly report to the end of June. The vehicle manufacturer’s chief financial officer (CFO), Deepak Ahuja, has stated that in the first quarter of 2016, the acceleration in the production of Model X Sports utility vehicle would help it become free cash-flow positive.
Tesla aims to supply 500,000 automobiles a year by 2020, a manufacturing level that would let company to benefit from economies of scale required to operate in a profitable manner. When asked last week during the organization’s second quarter earnings call whether if Tesla intended to raise funds, Mr. Musk stated that it might reduce risk. He does not believe that company should have at least $1,000,000,000 in cash-on-hand in the year-end.
Stifel analyst, James Albertine, has stated that the offering should have a minute impact on earnings per share. Industry professionals believe that the automaker’s fund raising initiative would not only finance its projects but also allow it to assess its image in the stock market. It is probable that company’s financing plan would threaten the interests of its rivals.
Tesla’s officials should now promote its fund raising initiative in the most effective manner to inject funds into the tech organization. It is looking forward to raise funds to manage its projects and proceed towards further developments. This practice is common among many corporate giants. However, Tesla is determined to obtain funds to produce build battery factory and cheaper electric automobiles.