Sci-tech

Tesla Discontinuing Model S 60 & 60D

In terms of the common stock offering, it was priced at $262 and Tesla ended up selling 1.33 million shares, compared to the 969,000 it initially planned to sell.

Earlier this week, Tesla announced offerings of $250 million of common stock and $750 million aggregate principal amount of convertible senior notes due in 2022 in concurrent underwritten registered public offerings. We will know within 30 days whether the underwriters decide to exercise their options to purchase, which would net Tesla an additional ~$180M.

Tesla's plan to spend $2 billion-$2.5 billion in the first half of 2017 in capital expenditures ahead of the July Model 3 launch left little cushion with $3.39 billion on the books in cash and cash equivalents at the end of 2016.

Denning was quick to point out that Tesla's former CFO Jason Wheeler said $1 billion of liquidity represents a "nice comfort level" for the company. The move is viewed as a gesture of faith in the company's prospects because some stockholders view a capital raise as dilutive to their investments.

Palo Alto-based Tesla took in $850 million from the issuance of convertible debt and $350 million from the sale of stock, according to a regulatory filing on Friday.

If true, that suggests the Model 3 production line is now complete and ready to start producing cars.

Musk was considering a number of options, including raising capital, to facilitate the manufacturing of the upcoming Model 3 sedan without drying up the funds.

No matter how one chooses to view the convertible offering, the fact that Tesla is still (second time in a year) able to tap into the debt/quity markets is testament to how far ahead of the competition Tesla really is. With production potentially starting in a few months, and ramping up later this year, Tesla may be looking to better distinguish the two in terms of pricing and range. The speculations were fueled by a statement by Musk past year in which he said that the company was "close to the edge" on its requirement for cash.

It seems Tesla will stick to that plan for these last Model S 60kWh vehicles to be sold, giving users the chance to "upgrade" to a 75kWh version down the road.



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