The next part of Tesla’s future will be fueled by debt.
Elon Musk’s automaker is issuing $1.5 billion in debt to fund its plans. That means that instead of raising funding from investors, the company will offer $1.5 billion of debt a a form of capital.
It’s a new move for Tesla, which has always sold off pieces of the company to fund its operations.
Tesla will use this $1.5 billion to strengthen its balance sheet as the company prepares to bring the Model 3 to market, it said in a press release.
Musk suggested this plan could be in the works during a recent earnings call, as pointed out by Business Insider.
“There may be some wisdom in having a cash cushion for unexpected events. You just never know if there’s going be some significant force majeure events in the world. It could be an earthquake in California, for example. But we’re not at this point considering an equity raise. We are thinking about debt, but we’re not thinking about an equity raise,” Musk said.
Tesla has enjoyed a strong 2017, thanks in part to plenty of hype around its new Model 3, which is meant to appeal to a bigger chunk of the car-buying public. The car is a big bet that Tesla can step out of the luxury market and into the… slightly less luxury market.
That has been enough to convince investors that it’s a strong bet. Tesla shares have rise more than 70 percent this year. It’s now worth more than many of its much larger competitors like Ford and General Motors by market capitalization, which calculates a company’s worth based on its stock price.
Tesla announced its plans on Monday, the same day news broke that Musk and Amber Heard broke up.
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