Tesla Mo­tors An­nounces Plan to Raise US$1.6 Bil­lion

Bulk of the Money goes into build­ing a ‘gi­gafac­tory’

HWM (Malaysia) - - TELEPORT -

In late Fe­bru­ary, Tesla Mo­tors an­nounced that it will be rais­ing US$1.6 bil­lion in debt to fi­nance the ex­pan­sion of its elec­tric car busi­ness, de­velop its up­com­ing mass mar­ket ve­hi­cle and build the com­pany’s bat­tery plant.

The plans for the new bat­tery plant, called the Gi­gafac­tory, was re­leased separately on Tesla’s com­pany blog, say­ing that the new fac­tory will be able to pro­duce more Lithium-ion bat­ter­ies in 2020 than last year’s to­tal global out­put. The plant will also ad­dress one of the com­pany’s chal­lenges, a sup­ply crunch for car bat­ter­ies that con­tains the com­pany’s abil­ity to meet the de­mand for its ve­hi­cles. The fac­tory should also bring down pro­duc­tion costs.

Tesla will be of­fer­ing US$800 mil­lion in con­vert­ible se­nior notes due 2019 and an­other US$ 800 mil­lion in con­vert­ible se­nior notes due 2021. Ad­di­tion­ally, the com­pany plans to give the un­der­writ­ers a 30-day op­tion to pur­chase additional notes worth US$240 mil­lion, which would push the to­tal to US$1.84 bil­lion. Some of the raised funds will go to­wards gen­eral cor­po­rate pur­poses. The notes will also be con­vert­ible into cash, com­mon stock or some com­bi­na­tion thereof, gen­er­ally at Tesla’s dis­cre­tion.

An­a­lysts have been keen to hear more about Tesla’s plans for the Gi­gafac­tory, as it re­moves a curb on pro­duc­tion and helps di­ver­sify the busi­ness, as be­com­ing a ma­jor­ity part­ner in the world’s largest Lithium-ion bat­tery plant opens up many new busi­ness op­por­tu­ni­ties. Such op­por­tu­ni­ties in­clude grid stor­age, mil­i­tary op­er­a­tions and un­manned aerial ve­hi­cles, wrote Dougherty & Co. an­a­lyst An­dre James in a re­search re­port.

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