Tesla to float new stock offering to fund electric SUV [Photo Gallery]
By Canadian PressGeneral Automotive electric car Model X tesla
Electric car company to raise up to $214.3 million for forthcoming Model X.
Palo Alto, Calif. — Electric car maker Tesla Motors Inc. says it plans to raise up to $214.3 million by selling common stock, partly to fund development of a crossover vehicle as it seeks to expand its offerings beyond its Roadster sports car.
Tesla plans to sell 5.3 million shares to the public, and up to 795,000 more to the underwriter, at $26 each, according to a regulatory filing. That would raise up to $158.5 million. The $26 price is a 3 per cent discount to Tuesday’s closing price of $26.72.
CEO and co-founder Elon Musk will also buy 1.5 million shares at the same price in a private sale. Blackstar Investco LLC, an affiliate of Daimler AG, will buy 644,475 shares directly from Tesla at the public offering price. That would bring total proceeds of $214.3 million.
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Executives typically buy shares in their own company to show investors their faith in the future of their company.
Tesla sells one model, the Roadster. Deliveries of a second car, the Model S, begin next year. Tesla also makes technology like battery packs and chargers for Daimler and Toyota.
When the company went public in June 2010, it was the first automaker to go public since Ford Motor Co. held its initial public offering in 1956.
It has posted losses since the initial offering as it invests heavily in research and development, but some analysts believe the company could eventually become the fourth largest automaker as the electric vehicle market, now tiny, expands.
Crucial to its success is developing more electric car models that appeal to a broader demographic.
It has delivered about 1,650 of its Roadster sports cars as of the beginning of the month and received more than 4,600 reservations for its forthcoming Model S sedan.
Now in development is the Model X, which is an SUV. Tesla currently plans to show a prototype of the Model X crossover by the end of 2011 and start selling it in the fourth quarter of 2013.
Shares rose $1.68, or 6.3 per cent, to $28.40 during midday trading. After closing at $23.89 in its June IPO, the stock hit a low of $14.98 on July 7 and has risen since then.
© 2011 The Canadian Press