Published: Mon, August 14, 2017
Money | By Oscar Reynolds

Tesla launches US$1.8bn bond

Tesla launches US$1.8bn bond

Tesla has constructed the offering to raise more money using Gigafactory 1 as collateral, pushing previous creditors lower on the totem pole.

According to Tesla CEO Elon Musk, the Model 3 will represent an enormous advance in architectural efficiency by requiring a fraction of the electrical wiring that is needed in its older vehicle, the Model S.

Considering the hype for Tesla Motors' Model 3, the company is being pressured to deliver with the fastest production possible.

Tesla already has about 500,000 pre-orders for the Model 3.

Tesla Inc.'s (NASDAQ:TSLA) CEO Elon Musk has always been a controversial and vocal mouthpiece for the electric auto company, often to the detriment of the company's stock. That represents a massive increase over Tesla's current production rate-and it may aggravate tensions with workers, according to the The Daily Beast.

Elon Musk calls Tesla's mammoth battery factory in Nevada an "alien mothership".

Tesla's cash burn has prompted short-sellers like Greenlight Capital's David Einhorn to bet against the Palo Alto, California company.

The debt pricing came amid a more than 1 percent drop this week in the iShares iBoxx $ High Yield Corporate Bond ETF (HYG), which held gains of less than 1 percent for the year Friday, as geopolitical risks soured the appetite for risky assets. The curb weight on the Model S is ~4,600 - 4,750 pounds for the 85kWh variants and rises to 4,960 pounds for the P100D with its larger battery.

Actually, that makes flawless sense since it was believed that everyone who got their new EVs already was a Tesla Inc. employee, which means they were bound by contract to keep quiet about the Model 3 until every possible issue had been ironed out.

But Musk gave analysts an even more startling product tidbit in the conversation: Tesla's next model - the Model Y small crossover - will require only 328 feet of wiring in construction, he said.

In a statement to investors, Tesla said: "The notes will be senior unsecured debt obligations of Tesla". If successful in ramping the Model 3, Tesla's sales will rise from $7 billion in 2016 to $22 billion in 2018, at which point a middle-income family will be able to afford an electric (and eventually autonomous) vehicle. Where does this put Model 3 production, and at what point might Tesla achieve this monumentally lofty goal?

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