Electric car maker, Tesla Motors is selling $1.4 billion worth of shares to help pay for an expansion that includes it’s forthcoming Model 3 electric car and boosting annual production to 500,000 vehicles in 2018.
The total stock sale will be around US$2 billion, with the remainder of the shares to be sold by Chief Executive Officer Elon Musk to cover tax obligations on shares options he is exercising, the company said Wednesday in a statement in Auto Xpedia.
Tesla faces a sharp rise in spending for its production plan, that includes as many as 200,000 of its Model 3 cars by the second half of next year, as well as to complete it’s battery factory in Nevada, expand sales and service globally and add more charging stations. For this year, capital expenses will increase by about 50 per cent, or US$750 million, from the company’s original budget, Musk said on a 1st _quarter earnings conference call on May 4.
Analysts had expected the move after Tesla company announced this month it wants to produce 500,000 cars per year in 2018, two years earlier than planned.
The company wants to meet sturdy demand for the Model 3, which goes on sale at the end of 2017. Tesla began taking reservations for the $35,000 car on 31st March 2016, more than 373,000 customers have put down a $1,000 deposit.
Tesla had $1.44 billion in cash at the end of the 1st quarter, up from $1.2 billion at the beginning of this year. As of 2016 April 29 , the Palo Alto, California-based company had 133.9 million shares outstanding.