Tesla to raise capital for e-car, energy projects | News | DW | 13.08.2015
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Tesla to raise capital for e-car, energy projects

US e-car maker Tesla has said it would sell millions of new shares to develop the Model 3 and a giant battery manufacturer called Gigafactory. Tesla is struggling to keep investors' confidence as it burns through cash.

Tesla Motors announced Thursday it was planning to sell 2.1 million new shares in hopes of raising about $500 million (450 million euros). Tesla said it imagined the shares would be sold at Wednesday's closing price of $238.17.

Chief Executive Elon Musk would be ready to buy nearly 84,000 shares for about $20 million in the offering, according to a company statement.

Musk is already the company's largest shareholder with a 22.25 percent stake. He intends to use the fresh cash to boost the development of Tesla's energy business, its upcoming Model 3 project and its Gigafactory battery manufacturer.

Book-running managers for the offering included Goldman Sachs, Morgan Stanley, JPMorgan and Deutsche Bank Securities.

Tesla burns cash

The offering comes a week after Tesla reported a huge loss in the second quarter. The Silicon Valley-based e-car maker delivered 11,532 cars in the second period and said it had an operating loss of about $47 million, meaning a loss of $4,000 on every car it sold.

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Tesla's shares fell almost 9 percent on Thursday last week and slipped another 2 percent on Friday as investors and analysts weighed the risks of Musk's ambitious plans. The shares, however, recouped some of the losses this Thursday, as it gained 2.2 percent at $243.50 in premarket trading.

Tesla's lofty promise?

Musk has taken investors on a thrill ride since taking Tesla public in 2010. Now he's given himself a deadline, promising that by the first quarter of 2016 Tesla will be making enough money to fund a jump from making one expensive, low volume car to mass producing multiple models. Moreover, he announced the company would massively expand a venture to manufacture electric power storage systems.

The company plans $1.5 billion in capital spending this year, mainly to launch its Model X, battery powered sport utility vehicle with eye-catching, vertical-opening "falcon wing" doors.

In 2017, it also wants to launch its Model 3 line, which the company says will start at about $35,000 and push total sales toward the goal of 500,000 vehicles a year by 2020.

Musk said Tesla was expecting to have $1 billion in cash over the next year, and told analysts "there may be some value" in raising capital "as a risk reduction measure."

Tesla's stock is still about 70 percent higher than it was two years ago, and with a market capitalization of $31 billion is valued more than Fiat Chrysler Automobiles.

uhe/cjc (Reuters, dpa)

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