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.