Elizabeth Keatinge tells about Tesla's Autonomy Investor Day where robot actions were discussed.
PALO ALTO, Calif. (AP) – One week after revealing a major loss in the first quarter and the need to raise money, Tesla does just that CEO Elon Musk buys $ 10 million in new shares offered as part of a stock and debt bid that could increase more than $ 2 billion.
Tesla said Thursday that it sells $ 650 million of share capital and $ 1.35 billion in convertible senior notes due in 2024 in two separate offers. The company gives the subscription managers a 30-day opportunity to purchase up to an additional 15% of each offer.
It will add up to around $ 2.3 billion before discounts and expenses, and if the guarantors fully exercise their options.
Last year, Tesla reported its cash balance at the end of the first quarter, with $ 1.5 billion since December to $ 2.2 billion. Musk said during a conference call that Tesla would need to raise capital again.
The offer gives it enough liquidity to pay $ 566 million in notes maturing in November, and provides cash to expand the distribution of Tesla Model 3 in Europe and cover All expenses needed to soften the demand for all three of Tesla models in the United States, Moody's Senior Vice President Bruce Clark said on Thursday in a statement.
Still, Moody's held a negative view and B3 rating on the Tesla debt. There are six notches below the investment class.
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On March 30, the rating agency noted that Model 3, Tesla's lowest price model, is currently selling for an average of $ 55,000. To increase sales, the price has to fall to $ 42,000, and to earn enough money to pay the bills, Tesla has targeted a gross profit margin of 25% on Model 3, Moody says. Currently, gross profit of a $ 42,000 model 3 is "substantially" below 25%, according to Moody's.
"To achieve this margin target, the company must make significant reductions in fixed and variable vehicle costs," Moody wrote. "We expect it to be a major challenge for Tesla to aggressively increase production / deliveries, shift the product mix to the price level of $ 42,000 and at the same time reduce costs enough to achieve the 25% gross margin target."
Palo Alto, California-based Tesla lost $ 702.1 million in the first quarter, among its worst quarter for two years. Sales tumbled 31% during the period. Musk predicted another loss in the second quarter, but said that Tesla would be profitable again in the third quarter.
The surprisingly large loss followed the company's first return to the rear quarter of profitability.
Tesla has lost more than $ 6 billion since setting out to revolutionize the automotive industry. Musk expects future profits to be driven by increasing sales and the arrival of autonomous vehicles dedicated to a new vehicle service.
Tesla Inc. shares closed up 4.3% on $ 244.10 on Thursday.
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