Facing an array of expansion costs, electric car maker Tesla Motors said Thursday that it is going to issue an additional $500 million in additional shares of common stock.
In a show of confidence, Tesla’s statement also says that CEO Elon Musk says he personally plans to snap up $20 million in more Tesla stock as part of the offering. And in addition, Tesla says the underwriters will have a 30-day option to buy up to $75 million of additional common shares.
Tesla shares reacted positively to the news. They were up about 2.7% in midday trading, or $6.37 to $244.54.
Tesla, based in Palo Alto, Calif., says it will use the capital infusion to growth of open more retail stores and service centers. It says it will also enhance its network of high-speed “superchargers, invest in development of a cheaper mass-market car called the Model 3 due still a few years away and use proceeds for the sprawling battery “Gigafactory” that Tesla is building outside of Reno, Nev. That plant alone is projected to cost up to $5 billion. Some of the money would go to general corporate purposes.
Even as it faces huges costs related to electric cars, Tesla thinks it has a lucrative side business on tap in stationary energy storage devices. These would be battery packs for homes, businesses and utilities that could store power from solar power generated during the daytime for use at night.
Tesla is making the offer through two lead managers, Goldman, Sachs and Morgan Stanley.
Written by Chris Woodyard of USA Today
(Source: USA Today)