Tesla bids for $1.5bn to drive car sales

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On Monday, the company announced that it's planning to raise $1.5 billion in its first-ever debt offering to fund production of the Model 3 EV sedan and its Nevada battery Gigafactory.

Some observers have predicted that the company, which has yet to make a profit, will use up at least $2bn this year, hence the need for more cash.

Ratings agency Standards & Poor's reportedly gave the proposed bond issue a B- rating.

The Model 3, marketed as a car for the masses, begins at $35,000 before incentives, but a longer-range version is priced at $44,000, to compete with high volume luxury sedans such as the Audi A4, BMW 3 Series or Mercedes C-Class.

One potential explanation for the choice to take a different route is that Tesla wishes to avoid diluting investors' stakes any further.

Tesla ended the second quarter with a little more than $3 billion in cash, the lowest on hand in more than a year.

On Tesla's website, you can calculate the range of various models based on a number of conditions (weather, speed, etc.). He did disclose though that he expects the cost of Model 3 battery packs produced at Gigafactory 1 to drop below the cost of Model S and Model X packs starting in Q4 2017, when the volumes are expected to increase. Now, the base Model X rings in at $79,500.

Shares rose 0.05% to US$357.10 in US pre-market trading.

The faster pure-electric BMW M3 rival meanwhile, is tipped to come with dual motors, potentially lifting its powertrain from the Model S P110D. The carmaker plans to make 500,000 vehicles in 2018 and a million in 2020.

The company reported $3.04 billion in cash and equivalents at the end of the second quarter and $7.12 billion in long-term debt and $2.26 billion in other long-term liabilities.

"The major challenge facing the company during the next twelve months will largely be the considerable execution risks associated with the rapid ramp-up in production of a totally new vehicle", Mood's senior vice president Bruce Clark said in a statement.