Tesla Raising $2 Billion

Tesla announced plans to raise $2 billion (2.65 million shares) in a stock offering.

Elon Musk did say two weeks ago in a quarterly conference call that Tesla did not need to raise capital. However, Tesla shares were about $500-600 per share when Elon said new capital was not needed. This raise will be at a 50% higher share price.

Here is the 10-K filing.

The new Tesla guidance is they are increasing capital expenditures from $2-2.5 billion per year to $2.5 to $3.5 billion per year.

Manufacturing Facilities in the Bay Area, California [Fremont]

They build cars and certain parts and components that are critical to their intellectual property and quality standards, at the manufacturing facilities in the Bay Area in California, including the Fremont Factory, and other local manufacturing facilities. The Bay Area facilities contain several manufacturing operations, including stamping, machining, casting, plastics, body assembly, paint operations, seat assembly, final vehicle assembly and end-of-line testing for our vehicles, as well as production of battery packs and drive units for Model S and Model X. Some major vehicle component systems are purchased from suppliers; however, they have a high level of vertical integration in our manufacturing processes at our Bay Area facilities.

Gigafactory Nevada

Gigafactory Nevada is a facility where they work together with suppliers to integrate battery material, cell, module and battery pack production in one location. They use the battery packs manufactured at Gigafactory Nevada for Model 3, Model Y and energy storage products. They manufacture Model 3 and Model Y drive units at Gigafactory Nevada. Finally, the assembly of Megapack systems takes place at Gigafactory Nevada, allowing them to ship deployment-ready systems directly to customers.

They have designed Gigafactory Nevada to allow us access to high volumes of lithium-ion battery cells while achieving a significant reduction in the cost of our battery packs. Panasonic is a partner on Gigafactory Nevada with investments in production equipment that it is using to manufacture and supply us with battery cells. Tesla continues to invest in Gigafactory Nevada to achieve additional production output there.

Gigafactory New York

They have primarily used their manufacturing facility in Buffalo, New York, which they refer to as Gigafactory New York, for the development and production of their Solar Roof and other solar products and components, energy storage components, and Supercharger components, and for other lessor-approved functions. The manufacturing operations at Gigafactory New York are increasing significantly as they ramp the production of the third generation of their Solar Roof there.

Gigafactory Shanghai

In December 2019, Tesla started cproduction of Model 3 vehicles at Gigafactory Shanghai, which they have established in order to increase the affordability of their vehicles for customers in local markets by reducing transportation and manufacturing costs and eliminating certain tariffs on vehicles imported into China from the U.S. At Gigafactory Shanghai, they have installed annual production capacity for 150,000 Model 3 vehicles that we believe we will eventually be able to push to actual rates of production in excess of such number, subject to local production of battery packs, which they began ramping there later than other processes. They have started construction of the next phase of Gigafactory Shanghai to add Model Y manufacturing capacity at least equivalent to that for Model 3. Much of the investment in Gigafactory Shanghai has been and is expected to continue to be provided through local debt financing, including a RMB 9.0 billion (or the equivalent amount in U.S. dollars) fixed asset term facility and a RMB 2.25 billion (or the equivalent amount in U.S. dollars) working capital revolving facility that our subsidiary entered into in December 2019. They are supplementing such financing with limited direct capital expenditures by us, at a lower cost per unit of production capacity than that of Model 3 production at the Fremont Factory.

Other Manufacturing

Tesla continue to expand production capacity at their existing facilities. They also intend to further increase cost-competitiveness in their significant markets by strategically adding local manufacturing, including at our planned Gigafactory Berlin.

NOTE: Brian Wang owns Tesla shares

3 thoughts on “Tesla Raising $2 Billion”

  1. In January 2020, BYD sold only 7,133 electric cars (pure electric cars and plug-in hybrids), a drop of 75 per cent compared to January 2019 and a decline of 46 per cent compared to the previous month of December 2019.

    BAIC BJEV, the electric vehicle subsidiary of the Chinese BAIC Group, also recorded a sharp drop in sales in January 2020 – by 56 per cent compared to January 2019 and by 95 per cent compared to December 2019 to just 2,006 vehicles. For the whole of last year, the company sold 150,601 units, which represents a decline of 4.7 per cent compared to 2018. 

     Speaking of Tesla, the company’s sales figures for China are not known, but production in Shanghai has started well: In Gigafactory 3, 2,625 Model 3 were produced in January (until the start of the New Year holidays on January 25).

  2. Not a bad idea, now is the time to milk the crazy high valuation (before people realize that the Chinese are more concerned with getting a virus free food ration than they are with buying a Model 3).

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