Signaling plans for a broad expansion of its business, Tesla has increased the size of its public stock offering and now could raise up to $750 million through the sale of the company’s shares, according to a new regulatory filing Friday.
Tesla filed a prospectus with the Securities and Exchange Commission that outlines a plan to raise at least $652 million. On Thursday, Tesla had filed papers with the SEC for a stock sale that would raise at least $500 million. The current sale is based on a Tesla stock price of $242.
“The increase in the offering shows what a challenge it is to produce and sell vehicles in a global market,” said Akshay Anand, an analyst with Kelley Blue Book, which researches the automotive sector. “The offering makes sense. Tesla is increasing revenue significantly, but they also are spending quite a bit of cash, doubling and tripling their cash burn.”
Tesla said it was planning to sell 2.6 million shares, according to the latest prospectus. On Thursday, the maker of electric vehicles said it was planning to sell 2.1 million shares.
If underwriters exercise their options to buy all of the shares allotted to the public stock sale, the offering could raise $750 million.
Net proceeds to Tesla would be at least $641.9 million, the automaker calculated. The net proceeds could reach roughly $738.3 million if the underwriters for the stock sale exercise options to buy all of their allotments.
“We intend to use the net proceeds from this offering to accelerate the growth of our business in the U.S. and internationally, including the growth of our stores, service centers, Supercharger network and the Tesla Energy business, and for the development and production of Model 3, the development of the Tesla Gigafactory and other general corporate purposes,” Tesla said in the prospectus. The stock sale would be in addition to the more than $4 billion that Tesla has raised since the start of 2013.
Tesla could soon face direct competition from Fisker Automotive, a maker of electric vehicles. Fisker had issues with vehicle batteries, which were ordered recalled. It has signed a lease in the Southern California city of Moreno Valley to occupy a new manufacturing facility.
The company said it hopes to begin sales of the vehicles in 2016. Fisker plunged into bankruptcy in 2013 after selling 2,500 cars at a price of $100,000 each.
Over the 12 months that ended in June, Tesla lost $520.8 million on revenue of $3.7 billion. Tesla in recent years has steadily increased revenue but has also produced a string of quarterly losses.
After Tesla announced the first version of the stock offering, the company’s shares jumped 1.8 percent Thursday. On Friday, Tesla rose again, up 0.3 percent, to close at $243.15 after disclosing the expanded offering.
Tesla intends to sell 500,000 vehicles a year by 2020. Much of that will depend on a successful launch of the Model X this year and the Model 3, which is due to launch by 2017 or 2018.
The Model 3 will be priced around $35,000 to $40,000, Anand said. It will be targeted at a broader and more mainstream group of motorists than the Model X or Tesla’s current vehicles.
“The Model 3 is the one that will be doing the heavy lifting for Tesla,” Anand said. “That’s the vehicle that will really ramp up their sales.”
This year, Tesla expects to sell 50,000 to 55,000 vehicles. The company manufactures its cars in Fremont.
“It’s going to be a challenge for Tesla to get to 500,000,” Anand said. “I think the Model X will be well received. The key is whether Tesla can meet the 2017 time frame to launch the Model 3. It’s a very lofty goal, and they will have to knock everything out of the park to do it.”