Tesla Motors Inc (NASDAQ:TSLA) just announced a second round of financing to fund Model 3 production and equipment for its gigafactory, which it’s hoping to complete before the Model 3 release.
The news broke via an SEC filing for the proposed merger with another Elon Musk property, SolarCity Corp (NASDAQ:SCTY).
According to the filing, Tesla had $3.25 billion in cash and equivalents to fund the combined company, and it must pay $422 million in cash to pay off shareholders with conversion notices for 2018. This comes on top of TSLA’s $224 million in outstanding notes.
What’s more, Tesla intends to spend another $1.75 billion building out its plants and equipment in the second half of the year, which leaves the company with well under a billion dollars while it takes on leaky ship SCTY.
From the filing:
“While Tesla expects that its current sources of liquidity, including cash and cash equivalents, together with its current projections of cash flow from operating and retail financing activities, will provide it with adequate liquidity based on its current plans through at least the end of the current fiscal year, Tesla is currently planning to raise additional funds by the end of this year, including through potential equity or debt offerings.”
Tesla states that these funds would “be used primarily for tooling, production equipment and construction of the Tesla’s Model 3 production lines, equipment to support cell production at Tesla’s Gigafactory, as well as new Tesla retail locations, service centers and Supercharger locations.”
Tesla has yet to achieve profitability (although, that’s not what Tesla stock trades on), relying on the sale of cars to finance itself. Deliveries of approximately 29,222 vehicles, however, failed to meet projections in the first half of 2016. That’s where investors’ eyes are, and the problem of scaling could be a huge one for Tesla Motors.
TSLA stock is down nearly half a percent in early morning trading Wednesday.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
