Exhausted of being a niche luxury brand for the rich, the California-based electric-vehicle maker wants to take on Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) in mass-market automotion by ramping up production of its newest auto, the Model 3.
The notes announced Monday would mature in 2025, though Tesla did not disclose interest rates or other terms of the securities.
In a statement on Monday (7 August), the USA carmaker said it will raise the funds via the selling of bonds to institutional investors.
Telsa has received an average of 1,800 advance reservations per day for the Model 3 since its launch in late July.
"As a straight bond investor, it's hard for me to think I really want to do this", said Jack Flaherty, a money manager at GAM Holding AG who previously bought Tesla convertible debt.
Tesla is expected to remain free-cash-flow-negative until 2019, and it may also need quite a bit of cash in 2018 to cover existing convertible debt maturities.
Ever felt like owning a Tesla Model X but the pricing was out of your range?
When Musk was asked last week if he would like to raise more cash as a buffer, he said the company was considering a debt offering but not an offering of stocks. "Obviously, that's like the promised land right there". Tesla's revenue was up 119.6% compared to the same quarter previous year.
Tesla reported last week that its net loss in the latest quarter grew 15 percent, to $336 million, from a loss of $293 million in the year-ago period. In the last ninety days, insiders have sold 115,980 shares of company stock valued at $36,010,269.
"They are constantly spending on the next big innovation, whether the public knows what that is or not", James Albertine of Consumer Edge Research LLC. Vetr upgraded shares of Tesla from a "strong sell" rating to a "sell" rating and set a $335.62 price target on the stock in a report on Tuesday, June 13th.
The company said a week ago that it was averaging 1,800 reservations for the new auto each day.
Solar power and battery storage now make up a small percentage of Tesla revenue, but it has high hopes for both.