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Tesla (TSLA) bonds were oversubscribed by $300 million, $1.8 billion raised for Model 3 production

Tesla announced on Monday that they are raising $1.5 billion in debt in order to fund the expansion of Model 3 production.

Now we learn that their bonds were oversubscribed by $300 million – bringing the total raised to $1.8 billion.

If anyone still had doubts about Tesla and CEO Elon Musk’s abilities to efficiently raise money, it’s again being disproved by the terms that they are able to secure.

According to Informa Global Markets (via CNBC), they secured the 2025 senior notes at a yield of 5.25 percent despite receiving junk bond ratings from S&P and Moody’s.

As we recently reported, Tesla brought a Model 3 to New York to sell its new bonds and Musk held conference calls with investors during which he revealed some interesting information:

Last week, Tesla said that it was planning to spend about $2 billion in capital expenditures during the second half of the year as they ramp up the production of Model 3.

The new capital they raised will help finance this expansion of Tesla’s production capacity.

It will also significantly increase the company’s long-term debt through 2025, but as Musk discussed this week, the Model 3 program alone could generate ~$30 billion in revenue by that time with a demand for over 700,000 units per year.

The company expects the Model 3 to quickly reach positive gross margins as they reach volume production in late 2017 or early 2018, but they stay vague when it comes to guidance about being profitable.


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