Tesla Plans to Raise 5 Billion to Ease Debt Pressure, Market Cap Soars 13% after 5-for-1 Stock Split

(Source: Teslarati)

Tesla, the world’s largest electric vehicle manufacturer, announced on September 1 that it would sell up to $5 billion in new stocks to ease future debt pressures, Reuters reported.

“We intend to use the net proceeds, if any, from this offering to further strengthen our balance sheet, as well as for general corporate purposes,” Tesla stated.

SEE ALSO:Tesla Announces Model Y Presale Price, Shanghai Gigafactory Almost Complete

Tesla revealed in a filing that ten major banks including Goldman Sachs, Bank of America Securities, Citigroup Global Markets, and Morgan Stanley will act as underwriters, but stopped short of specifying a deadline for completion, according to Reuters.

Reuters added that Tesla is seeking a large scale expansion in its production of existing vehicles through the establishment of new factories near Berlin, Germany, and Austin, Texas. The company also plans to launch a new vehicle series, including a semi-truck called Tesla Semi and its futuristic Cybertruck model.

On August 11, Tesla submitted a plan to conduct a “5-for-1 stock split” plan. Accordingly, following the close of markets on August 28, each share held by Tesla investors was converted into five shares.

After its first share split took effect, Tesla’s stock price once again experienced a surge. As of the close of markets on September 1, Tesla’s value soared nearly 13%, with a total market capitalization of $464.3 billion (approximately 3.2 trillion yuan), firmly establishing its position as the world’s most valuable auto company.

Since the beginning of this year, Tesla’s stock price has risen nearly 500%.

Tesla has taken aggressive measures this year in an attempt to expand its presence within the Chinese domestic automobile market.

Pandaily reported earlier that Tesla’s Gigafactory in Shanghai is nearing completion, and has launched the Model Y with a presale price ranging from 488,000 yuan to 535,000 yuan.

Ren Zeping, Lian Yixi, and Xie Jiaqi of Evergrande Research Institute have speculated that Tesla’s other localized product, the Model 3, may have a huge impact on China’s mid-to-high-end traditional automobile and new energy vehicle market, Chinese media Egsea reported.

Evergrande believes that the primary competition targets for the Model 3 are the BYD Tang and NIO ES6.

Within the new energy vehicle market, the total sales volume from January to November 2019 amassed 10.43million, of which the sales of pure electric models amounted to 832,000 vehicles, mainly in the low-end and mid-end models.

Currently, Tesla’s Shanghai plant has a production capacity of 150,000 vehicles per year. It is expected that Model 3 will account for more than 12% of China’s new energy vehicle market in 2020, Egsea reported.