Tesla said to boost bond sale to $1.8B for Model 3

Tesla said to boost bond sale to $1.8B for Model 3

Tesla said to boost bond sale to $1.8B for Model 3

While Tesla previously stated the Model Y would sit on an all-new platform, the lure of sharing complex mechanical components has clearly become more attractive and founder Elon Musk has now confirmed the Model Y will share its backbone with the Model 3. It's the world's biggest battery factory and central to Tesla's plans for mass production of its new Model 3 electric vehicle. But Tesla is raising money because it's critical it has an insurance policy if the Model 3 ramp hits any unexpected issues.

"Sources talking to Fred Lambert of Electrek commented that Elon Musk recently stated that Gigafactory 1 in Nevada is "...already producing more batteries than any other factory in the world".

"The issuer will use the net proceeds from this offering to further strengthen its balance sheet during a period of rapid scaling with the launch of Model 3, and for general corporate purposes", Tesla said in the debt offering term sheet.

That news comes to us from Electrek, which has been reporting that Tesla's less focused on the battery naming scheme for the more mainstream Model 3 and more on its actual range instead in order to appeal to a wider audience.

Musk cites volume, velocity, and density as the three main factors affecting overall production.

Tesla's cash burn has prompted short-sellers like Greenlight Capital's David Einhorn to bet against the Palo Alto, California company.

The result: Buyers of these unsecured, high-yield bonds could find themselves buried under a mountain of newer, higher-priority debt sold in the future. The curb weight on the Model S is ~4,600 - 4,750 pounds for the 85kWh variants and rises to 4,960 pounds for the P100D with its larger battery.

According to Informa Global Markets (via CNBC), they secured the 2025 senior notes at a yield of 5.25 percent despite receiving junk bond ratings from S&P and Moody's.

But Tesla hopes the Model 3, which debuted at the end of July, will help the Silicon Valley company become the top carmaker on the block.

Just as most manufacturers do with small SUVs, Tesla will be basing its Model Y crossover off a compact sedan, in this case its semi-released Model 3.Previous to Tesla's second quarter earnings.

To illustrate what's at stake, let's imagine that Tesla does not raise money today, and a year from now, something unforeseen comes up: a supplier goes under, a recall happens, or there is an quake, and the company needs an additional $1 billion to fix the problem.

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