Tesla to get a $2+ billion cash injection through stock, bond offerings

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Elon Musk said over an over again last year that Tesla would not need to raise additional cash once the ramp of the company’s model 3 got underway. But as it turns out, the launch has been more complicated than anyone expected.

With Q1 Model 3 production only 3% higher than during the previous quarter, Tesla has turned to the capital markets for an injection of fresh cash. A filing with financial regulators this morning reveals that the company has launched offerings of $737 million in stock and $1.58 billion in convertible notes, which will net Tesla a cool $2.32 billion, and up to $2.67 if these two offerings are over-subscribed.

This comes as Tesla is burning through cash. While the $2.2 billion in cash that the company had at the end of the quarter would be comfortable for any other manufacturer that pv magazine reports on, Tesla went through $1.5 billion during the quarter. This makes the raise a timely move, and an analyst quoted on Yahoo! Finance described this as a “clear net positive” for the company.

The filing also comes as Tesla appears to have sharply reduced the price of its residential solar offerings; however it is likely that the very nature of selling solar through its website makes up for the cost reductions that the company is promising.

Tesla has not provided a lot of detail as to what exactly it will use the funds for, and instead put out boilerplate about “strengthening its balance sheet” and “general corporate purposes”.

Ultimately, despite Elon Musk’s frequent brushes with the SEC and his war with short-sellers, capital markets have remained a well-spring of funding to a company that is growing rapidly and disrupting the automotive space. And that takes a lot of cash.