Tesla Motors CEO Elon Musk has received praise not only for his innovations but also because he puts his money where his mouth is. Now he has announced that he’s sinking another $20 million of his money into some of Tesla’s new shares. Musk already had a 22% stake in the company.
Tesla raises funds for R&D
Tesla announced today that it is selling $500 million additional shares to fund the development of the Model 3 and construction of its gigafactory, which is currently being built in Nevada. Analyst commentary surrounding the automaker’s last earnings report suggested that a capital raise could be in the near future, and management said they were thinking about it as well.
Apparently it didn’t take them long to make up their mind, and it was a pretty easy question based on how much cash Tesla has been burning through so quickly. The EV manufacturer used approximately $360 million of its cash during the June quarter to ramp production of the Model X, which is expected to start shipping next month.
Although Musk tried to emphasize that they had plenty of cash, there have been reports that Tesla loses more than $4,000 on each Model S it sells. As of the end of June, the automaker had $1.15 billion in cash and cash equivalents, compared to the $1.91 billion it had at the end of December.
Tesla offers 2.1 million shares
Tesla said in a regulatory filing that it expected to price the new shares at $238.17, which was the stock’s closing price on Wednesday. The automaker is offering 2.1 million new shares, marking its first stock sale in over two years. As of July 30, Tesla had 127.1 million outstanding shares. Musk, who was already the biggest shareholder before this latest purchase, will purchase approximately 84,000 of the new shares.
Management also said they may raise additional cash to offset the heavy spending. Tesla has been sinking millions of dollars into building Supercharger stations in addition to buildings its gigafactory, starting production on the Model X, and developing the Model 3.
As of this writing, shares of Tesla Motors were up 1.2% at $241.03 per share.
