Tesla announced on Monday that they are raising $1.5 billion in debt in order to fund the expansion of Model 3 production. Over time, there will be more optional systems that will be offered on the Model 3.
Earlier in the week, Elon Musk's luxury electric vehicle maker was expected to raise at least $1.5 billion to accelerate production of its new Model 3, but strong demand allowed the carmaker to raise more, albeit at a slightly higher yield than expected. Now, Tesla is quietly equipping new Model 3, S and X production units with upgraded Autopilot hardware (HW 2.5).
We'll get a better sense of Tesla's self-driving capabilities at the end of the year when the company will demonstrate a coast-to-coast autonomous journey.
But the newly minted noteholders might find Musk's mothership isn't much help to them if Tesla lands on hard times.
The claims, which were part of the Ashlee Vance's book "Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future", detail an exchange between Musk and his longtime assistant where he gave her a two week vacation after she asked for a raise.
Musk, 46, isn't one to dial down expectations or stay away from painting colorful imagery of his products. This measurable risk of default is one of the reasons why Tesla's bond offering is, by definition, a junk bond. Musk clearly has the mentality of someone more focused on the goal than on how to get there or how much it will cost.
The California automaker has its hands full launching the Model 3, a long anticipated compact electric vehicle that Tesla is expected to retail for around $35,000.
What's more, analysts were looking for negative cash flow and capital spending to come in far worse than CEO Elon Musk had previously provided guidance for. If successful in ramping the Model 3, Tesla's sales will rise from $7 billion in 2016 to $22 billion in 2018, at which point a middle-income family will be able to afford an electric (and eventually autonomous) vehicle.
While pitching to potential investors, Musk is also busy in making sure that the automobile market remains interested in the upcoming Tesla Model 3.