Tesla Motors announced plans to sell $500 million worth of additional stock to support its cash burn, but if history tells us anything, there’s a good chance the automaker will increase that offering. Analysts are reacting to news about the new stock offering, and the general consensus is that it’s no surprise, although some analysts are pointing out some interesting things.

Tesla Motors Stock Offering: Analysts React

How much money does Tesla need?

UBS analyst Colin Langan noted that in two of the past three times Tesla has raised capital, it upped the amount of capital from the initially announced amount. The first time was in May 2013 when the automaker announced plans to raise $1.08 billion in stock and debt.

At the time of the announcement, Tesla said it would offer 2.7 million shares and take out $425 million in convertible debt. By the time the offering actually rolled around, however, the EV manufacturer offered 3.4 million shares and took $600 million in convertible debt.

Then in February 2015, the company said it would raise $1.6 billion in convertible debt but later raised the amount to $2.3 billion. The third time Tesla raised capital was in June when it secured a $750 million line of credit.

Tesla shareholders see dilution

Langan said the announced amount this time around was less than he expected. The automaker is expected to see proceeds of approximately $566.5 million with the underwriter option with the next stock offering. The analyst had been expecting Tesla to raise between $1 billion and $2 billion this time around. He also said the timing of the offering is “unusual” because the company’s shares have declined approximately 16% from the recent peak.

Despite the share dilution resulting from the stock offering, shares of Tesla climbed on Thursday. As of this writing, they were up another 0.49% at $243.71 per share. One of the reasons for this is probably because CEO Elon Musk said he would be purchasing about $20 million of the new offering himself. He has long made it clear that he believes in Tesla by keeping a large part of his wealth in the company, as he is its biggest shareholder with a more than 20% stake.

Stifel analyst James Albertine said he expects minimal dilution for Tesla shareholders at only 1 cent to 2 cents per share from the stock offering.

Tesla is the first mover

The company has received praise again and again for its innovations, but unfortunately being innovative and developing new technologies requires loads of cash. Indeed, Tesla is forging ahead with innovation as in its latest earnings report, it revealed a significant amount of cash burn.

The automaker is in the process of ramping production of the Model X ahead of the first deliveries of the crossover vehicle. Tesla is also burning through lots of cash as it develops the Model 3, builds its gigafactory and continues building out its Supercharger network.

Interestingly, the EV manufacturer is lagging behind on its investments into the gigafactory. In February 2014, the $2 billion Tesla raised was supposed to fund the huge facility, but the automaker only spent $62 million on it last year and so far has only spent another $55 million on it. For the rest of this year, the company expects to spend just $300 million of that money on the gigafactory, as noted by Barclays analysts.

Innovating not only requires lots of cash but also provides a first mover advantage. However, being the first mover in a particular area can be a double-edged sword, as noted by Barclays analyst Brian Johnson. In a note dated Aug. 13, he explained why he’s optimistic on EVs in general but remains Equal weight-rated on Tesla with a bearish $190 per share price target.

Tesla’s Musk like Brunel

He noted that in the past, there have been several examples of first movers who turned out to be successes in the area of technology but failures in the area of finances. He compared 19th Century engineering master Isambard Kingdom Brunel to Tesla CEO Elon Musk, pointing out also that Musk himself has expressed respect for Brunel.

Brunel is known for innovating in the area of steamships, which at the time were a major technological innovation. Unfortunately for those who financed his work, however, they lost quite a lot of money. The Great Western Steamship Company was one of his financial backers, but it went out of business after running out of cash in 1846 following the development of Brunel’s SS Great Britain, which had run aground.

Can Tesla remain the leader?

Johnson questions whether Tesla will be able to maintain its lead in innovation in light of all the past examples of financial failures paired with technological successes. He does think the automaker stands a good chance at staying ahead of its competitors if it can cut its battery costs to “somewhere in the low $100 range,” as management has suggested they can do.

However, even if Tesla manages to do this, he notes that there’s no guarantee that the company can stay ahead. Further, he points out that it will take quite some time for the world to transition from vehicles that run on gasoline and other fossil fuels to electric vehicles. Also the company’s competitors have the advantage of scale, which is important in an industry that’s as capital intensive as the auto industry is.