Now we know how Tesla Motors Inc (NASDAQ:TSLA) will fund the Model 3 production. Elon Musk had said at the company’s Q1 earnings call that it made sense for the company to “raise some amount of money, some combination of equity and debt.” On Wednesday, the EV maker announced that it was selling $1.4 billion in stock to accelerate the Model 3 production plan. Its CEO Elon Musk is also selling shares worth about $600 million to “cover tax obligations associated with his concurrent exercise of more than 5.5 million stock options.”

Tesla Motors Inc (TSLA) Raising $2B To Finance Model 3 Production

Model 3 reservations stand at 373,000

The Palo Alto-based company revealed in its filing that it had about 373,000 reservations for Model 3 at the beginning of this week. Another 8,000 customers had canceled their pre-orders. What’s more, the company itself had scrapped 4,200 pre-orders because they were duplicate orders from speculators. Elon Musk said earlier this month that duplicate orders would be cancelled.

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Tesla Motors Inc (NASDAQ:TSLA) plans to sell 6.8 million shares in the public offering. The number could go up to 8.24 million shares if the underwriters Morgan Stanley and Goldman Sachs exercise their options to buy additional stock. Elon Musk will be selling about 2.78 million shares. The capital raise was pretty much expected, as the company prepares for the Model 3 launch in late 2017.

Tesla (TSLA) raising the ‘just right’ amount

Robert W. Baird & Co Ben Kallo said the amount Tesla is raising is “just right.” The EV maker aims to produce as many as 500,000 cars by 2018 to meet the massive demand for Model 3. It is also stepping up production of batteries at its Nevada Gigafactory. Tesla is also expanding sales and service worldwide, and adding more supercharging stations for customers.

Yesterday, Goldman Sachs analyst Patrick Archambault upgraded Tesla Motors Inc (NASDAQ:TSLA) stock from Neutral  to Buy rating, saying the company would need only about $1 billion in additional capital. An impressive thing about Model 3 is that all the pre-orders have been coming organically without any marketing push. The number of reservations is likely to go higher before the vehicle enters production next year.