Please ensure Javascript is enabled for purposes of website accessibility

West Bank Town Becomes ‘Big Prison’ as Israel Fences It In

3 days ago

Trump Says He’s Willing to Let Migrant Farm Laborers Stay in US

3 days ago

US Electric Vehicle Tax Breaks Will Expire on Sept. 30

4 days ago

Eyeing Arctic Dominance, Trump Bill Earmarks $8.6 Billion for US Coast Guard Icebreakers

4 days ago

Trump’s Sweeping Tax-Cut and Spending Bill Wins Congressional Approval

4 days ago

Americans Celebrate Their Independence With Record-Breaking Travel Numbers

4 days ago

US Supreme Court to Decide Legality of Transgender School Sports Bans

4 days ago

Nvidia Set to Become the World’s Most Valuable Company in History

4 days ago

Poll: 41% in US ‘Extremely Proud’ to Be American, Near Historic Low

4 days ago
Tesla Raises Goal in Capital Hunt and Musk Doubles Down
gvw_ap_news
By Associated Press
Published 6 years ago on
May 4, 2019

Share

DETROIT — Just one day after announcing plans to sell notes and stock to raise much-needed capital, Tesla boosted the size of its offering to as high as $2.7 billion on Friday.

The Palo Alto, California, electric car and solar panel maker said it’s increasing the offer due to the positive response from Thursday’s announcement that it would try to raise $2.3 billion.

Also, CEO Elon Musk more than doubled the amount of stock he would buy from $10 million, to $25 million.

The offer, detailed in a filing Friday with the U.S. Securities and Exchange Commission, includes up to $1.84 billion in notes that pay 2% annual interest and convert to Tesla common stock in 2024. Also included are more than 3.5 million new shares worth as much as $866 million. The new numbers include underwriting brokers exercising their full options to buy additional notes and shares.

Last week, Tesla reported its cash balance at the end of the first quarter shrunk by $1.5 billion since December, to $2.2 billion. Musk said during a conference call that Tesla might need to raise capital again.

The company will use the proceeds to “further strengthen our balance sheet, as well as for general corporate purposes,” the filing says.

But the offerings would raise the company’s debt from $9.79 billion to as high as $11.63 billion, with the company admitting in its filing that it may not be able to generate enough cash to make all of the payments.

Tesla’s Shares Would Have to Reach $309.83 by May 15, 2024

“If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, refinancing or obtaining additional equity capital on terms that may be onerous or highly dilutive,” the company wrote in the part of the filing that discusses risk factors.

“If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, refinancing or obtaining additional equity capital on terms that may be onerous or highly dilutive.” — Tesla statement

Musk likely raised his own stake to show shareholders that he’s putting more of his own money into the company and taking the same risk that he’s asking investors to, said Gartner analyst Michael Ramsey. But he’s also guarding against dilution of his ownership stake, Ramsey said. Musk is by far the company’s largest shareholder with about a 20 percent stake.

Tesla’s shares would have to reach $309.83 by May 15, 2024 for the notes to be converted to stock. That’s a 21% increase over the current price. If they don’t hit that price, Tesla is on the hook to repay the notes largely in cash, according to the filings.

In a statement on the offering Thursday, Moody’s Senior Vice President Bruce Clark wrote that the offering will give Tesla enough liquidity to pay $566 million in notes that mature in November, plus provide cash to expand distribution of Tesla’s Model 3 in Europe and cover spending needed from softening demand for all three of Tesla’s models in the U.S.

Moody’s kept a negative outlook and B3 rating on Tesla debt. That is six notches below investment grade.

In a March 30 note, the ratings agency wrote that the Model 3, Tesla’s lowest-price model, currently sells for an average of $55,000. To increase sales, the price has to drop toward $42,000, and to make enough money to pay the bills, Tesla has targeted a 25% gross profit margin on the Model 3, Moody’s said. Currently gross profits on a $42,000 Model 3 are “materially” below 25%, according to Moody’s.

California-Based Tesla Lost $702.1 Million in the First Quarter

“In order to achieve this margin target the company will have to undertake significant reductions in fixed and variable costs associated with the vehicle,” Moody’s wrote. “We expect that it will be a major challenge for Tesla to aggressively increase production/deliveries, shift the product mix toward the $42,000 price level, and simultaneously lower costs enough to achieve the 25% gross margin target.”

“In order to achieve this margin target the company will have to undertake significant reductions in fixed and variable costs associated with the vehicle. We expect that it will be a major challenge for Tesla to aggressively increase production/deliveries, shift the product mix toward the $42,000 price level, and simultaneously lower costs enough to achieve the 25% gross margin target.” — Moody’s

Tesla, Moody’s wrote, has no sustainable technical advantage over competitors. “Essentially all of the technologies incorporated in Tesla vehicles (or some similarly effective alternative technologies) will largely be available to competitors,” according to Moody’s.

The Palo Alto, California-based Tesla lost $702.1 million in the first quarter, among its worst quarters in two years. Sales tumbled 31% in the period. Musk predicted another loss in the second quarter but said Tesla would be profitable again by the third quarter.

The surprisingly large loss followed the company’s first back to back quarters of profitability.

Tesla has lost more than $6 billion since setting out to revolutionize the auto industry. Musk expects that future profits will be driven by rising sales and the arrival of autonomous vehicles dedicated to a new ride-hailing service.

Shares of Tesla Inc. rose nearly 5 percent in midday trading Friday to $255.60. They are down 23% so far this year.

DON'T MISS

What Are Fresno Real Estate Experts Predicting for 2025 and Beyond?

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

California’s Politics Drifts Right While New York’s Leans Left

DON'T MISS

How Trump’s ‘Big, Beautiful Bill’ Will Make China Great Again

DON'T MISS

What’s Caitlin Clark Worth to the WNBA? A Lot More Than Her $78,066 Salary.

DON'T MISS

Trump to Sign Tax-Cut and Spending Bill in July 4 Ceremony

DON'T MISS

Madre Fire Spurs Evacuations Across 3 Counties, Grows to More Than 70,000 Acres

DON'T MISS

Clovis, Sanger, Madera, and Bass Lake Will Light the Sky With Fireworks Shows Tonight

DON'T MISS

Oil Dips Ahead of Expected OPEC+ Output Increase

DON'T MISS

613 Killed at Gaza Aid Distribution Sites, Near Humanitarian Covoys, Says UN

DON'T MISS

Fresno County Authorities Investigating Suspicious Death of Transient Man

DON'T MISS

West Bank Town Becomes ‘Big Prison’ as Israel Fences It In

UP NEXT

Fresno Crash Involving Unlicensed Teen Driver Sends Woman to Hospital

UP NEXT

Madre Fire Burns More Than 52,000 Acres in San Luis Obispo County

UP NEXT

Americans Celebrate Their Independence With Record-Breaking Travel Numbers

UP NEXT

San Luis Obispo’s Madre Fire Grows to 35,000 Acres, More Evacuations Ordered

UP NEXT

Poll: 41% in US ‘Extremely Proud’ to Be American, Near Historic Low

UP NEXT

Poorest Americans Dealt Biggest Blow Under Senate Republican Tax Package

UP NEXT

CHP Officer Dies in Line of Duty After Medical Emergency While on Patrol

UP NEXT

Downtown Housing Could Rise in Many California Cities, but Barriers Remain

UP NEXT

Poll: Most Americans Say National Divide, Political Violence Threaten Democracy

UP NEXT

Trump Pulls Back 150 Guard Troops From Federal Duties in California

Trump Administration Acknowledges Lack of Evidence From Epstein Documents

2 hours ago

Dollar rises after Trump announces Japan, South Korea tariffs

2 hours ago

Merced Man Gets More Than 15 Years for Meth Trafficking, High-Speed Chase

3 hours ago

Man Dead After Firing at US Border Patrol Station in Texas

4 hours ago

Tulare County Flume Fire Burns 65 Acres in Sequoia National Forest, Evacuation Order Issued

4 hours ago

Fresno County Fish Fire Burns 15 Acres Near Avocado Lake, 50% Contained

5 hours ago

Wanted Fugitive Found Hiding in Attic Arrested in Chowchilla

5 hours ago

Trump Says US Will Impose 25% Tariffs on Japan, South Korea

6 hours ago

Wall Street Knocked Lower by Tariff Jitters, Musk’s Political Plan Hurts Tesla

6 hours ago

Trial Over Free Speech on Campus, and Trump’s Student Crackdown, Begins

6 hours ago

July 4 Weekend Was No Picnic for Fresno-Area Firefighters. How Bad Did It Get?

How busy were Fresno-area fire departments on July 4 weekend? Some local departments that GV Wire spoke with were still compiling numbers, b...

1 hour ago

1 hour ago

July 4 Weekend Was No Picnic for Fresno-Area Firefighters. How Bad Did It Get?

Tulare County fire investigators seized about 300 pounds of illegal fireworks and issued multiple citations during a Fourth of July enforcement operation with the sheriff’s office. (Tulare County SO)
1 hour ago

Tulare County Seizes 300 Pounds of Illegal Fireworks Over Fourth of July

Model of natural gas pipeline and U.S. flag, July 18, 2022. (Reuters File)
2 hours ago

US Proposes Rules That Could Boost Oil, Gas Output in US West

Attorney General Pam Bondi speaks during a news conference at the White House in Washington, June 27, 2025. For months, Bondi promised the release of documents on the disgraced financier Jeffrey Epstein that could reveal damaging details, drumming up anticipation over the files, long a source of speculation and conspiracy theories — but on Monday, July 7, a memo by the Justice Department undercut her own statements. (Pete Marovich/The New York Times)
2 hours ago

Trump Administration Acknowledges Lack of Evidence From Epstein Documents

U.S. dollar banknotes are seen in this illustration taken May 4, 2025. (Reuters File)
2 hours ago

Dollar rises after Trump announces Japan, South Korea tariffs

A U.S. Justice Department logo or seal showing Justice Department headquarters, known as "Main Justice," is seen behind the podium in the Department's headquarters briefing room before a news conference with the Attorney General in Washington, January 24, 2023. (Reuters File)
3 hours ago

Merced Man Gets More Than 15 Years for Meth Trafficking, High-Speed Chase

Photo of caution tape
4 hours ago

Man Dead After Firing at US Border Patrol Station in Texas

The Flume Fire in Sequoia National Forest has burned 65 acres near Highway 190 with no containment as of Monday, July 7, 2025, prompting evacuations in Tulare County. (CalFire)
4 hours ago

Tulare County Flume Fire Burns 65 Acres in Sequoia National Forest, Evacuation Order Issued

Help continue the work that gets you the news that matters most.

Search

Send this to a friend