The Strategist

Tesla to attract $ 1.5 billion for production growth

08/07/2017 - 14:52

On Monday, Tesla Inc. said that it intends to raise about $ 1.5 billion by issuing bonds. The American automaker is seeking to increase production of its latest sedan model - Model 3, Reuters reports.

David van der Mark
David van der Mark
The offer of debt is explained by the fact that Tesla has been receiving thousands of pre-orders for Model 3 in the amount of about 1.8 thousand per day from the moment the model was launched in late July. Elon Musk, head of Tesla, counts on Model 3, and also on a cheaper model so that the company would become a profitable manufacturer in the market of electric cars.

Model 3 is positioned as a "budget" Tesla Model S. By the end of July, Tesla planned to produce 30 cars, by December the company intends to reach the level of 20 thousand units monthly. The first customers will be able to choose the color of the car and the size of the wheels.

Model 3 is Tesla’s third model of electrocars for the general market. Its price, $ 35 thousand, is lower than the cost of Model X and Model S. In 2008-2012, the company also sold the Tesla Roadster sports car for $ 110,000. Model 3 was introduced in 2016. During the first week, 325,000 people stood in line to purchase the car.

Elon Musk’s company managed to sell about 22 thousand sedans Model S and crossovers Model X for three months to the end of June, which is approximately 53% more than a year earlier.

In particular, Tesla supplied customers with 12,000 Model S sedans and 10,000 Model X crossovers. In April-June, the company produced 25,700 cars. With about 47,100 vehicles in the first half of the year, Tesla achieved its goal of selling between 47,000 and 50,000 cars. However, the quarterly results were weaker than the average of 23,655 units, according to four analysts interviewed by The Wall Street Journal.

Tesla said that sales could have been stronger. However, everything was impeded by "serious production deficit" of batteries, because of which production before the beginning of June lagged behind demand by an average of 40%. "After this issue was resolved, the June orders and supplies reached a high level and became one of the best in the history of Tesla," the company said in a statement.

The company expects to increase shipments due to the start of production of the new Model 3. By December, Tesla expects to increase production to 20,000 cars per month - about as many cars the company now produces per quarter.