Tesla said on Monday it intends to raise about $1.5 billion in a bond offering as the U.S. automaker seeks to ramp up production of its newest electric sedan, the Model 3.
The debt offering comes as Tesla has delivered the first few Model 3s to customers, and it's generating the first driving impressions and buying assessments. Founder Elon Musk says Tesla holds 455,000 advance reservations for the Model 3, which were averaging at about 1,800 new reservations per day since the car's launch in late July. At the same time, Tesla is burning through prodigious amounts of cash and has yet to make a profit.
Tesla is counting on the Model 3, its least pricey car, to become a profitable, mass-market electric car maker.
At the launch event, Musk said the company would face "at least six months of manufacturing hell" as it increases production of the Model 3, which has a $35,000 base price.
Tesla had over $3 billion in cash on hand at the end of the June quarter, compared with $4 billion at the end of the previous quarter and $3.25 billion a year earlier.
Tesla's cash burn, expected to top $2 billion this year, has prompted short-sellers like Greenlight Capital's David Einhorn to bet against the Palo Alto, Calif., company.
Shares of Tesla, which have risen 67 percent this year, were up 0.5 percent at $358.50 in premarket trading.
Reporting by Narottam Medhora and Laharee Chatterjee