Tesla Dumps $2 Billion Of Stock To Finance Model 3, Pay Down Elon Musk’s Loan Debt

(REUTERS/Stephen Lam/Files)

Daily Caller News Foundation logo
Chris White Tech Reporter
Font Size:

Tesla Motors will sell $2 billion worth of stock so it can finance the production of its supposedly inexpensive Model 3 electric vehicle as well as cover tax obligations for the options exercised by the company’s CEO, Elon Musk.

The California-based automaker will cough up $1.4 billion in common stock to cover the expenses associated with the production of its coming Model 3, which has racked up more than 320,000 pre-orders and is priced at $35,000. Company officials said Wednesday the automaker aims to build a half million vehicles within the next two years.

Tesla says it expects to raise a total of nearly $1.7 billion after fees, and Musk will receive the remaining portion, all of which will go toward covering the $5.5 million in stock option — he will not receive any cash from the deal. The company disclosed the stock dump at 4 p.m. Wednesday, shortly after shares of Tesla gained less than one percent in after-hours trading on Nasdaq.

Musk owes a sizeable amount of money on loans and options he exercised to inject capital into Tesla.

As a result, the titular head of Tesla will owe taxes on 5,503,972 stock options he exercised totaling nearly $36.5 million. The stock options were set to expire by the end of 2016.

Musk used a loan from Morgan Stanley, according to a securities filing obtained by the Wall Street Journal, to bankroll the purchase of the exercised options. The total amount of the loan is $299 million, or more than a quarter-billion dollars.

Analysts are skeptical of Musk’s ability to deliver nearly 350,000 Model 3s to the market.

Nissan’s CEO Carlos Ghosn, for instance, announced in 2010 a lofty goal of producing more than 500,000 units for its Leaf EV. Ghosn sunk $5.6 billion into three plants around the world. The results were underwhelming; the Leaf has performed well in the electric vehicle market, but it still has not yet sold more than 300,000 units cumulatively over the past six years.

Follow Chris on Facebook and Twitter

All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact