TSLA Tesla Inc

By John D. Stoll 

Tesla Inc. is fundraising again, looking to raise $1 billion in capital ahead of the launch of a lower-priced electric car called the Model 3.

The Silicon Valley company said Wednesday it is offering $250 million in common stock and $750 million in convertible notes due in 2022. The $1 billion will be used to strengthen the balance sheet as Model 3 production ramps up and provide a cushion as Tesla scrambles to transition from a low-volume manufacturer of pricey vehicles to a more mainstream player.

Shares of the company gained 2.1% to $261.05 in after-hours trading.

The Model 3 is expected to debut with a price tag under $40,000 and achieve more than 200 miles on a charge. It will compete most directly with General Motors Co.'s Chevrolet Bolt. Tesla's current products -- the Model X and Model S -- challenge Porsche AG, BMW AG and other premium nameplates.

Tesla executives have indicated more capital will be needed to bolster operations. While the auto maker consistently increases its year-over-year revenue on a quarterly basis, it struggles to turn a profit due to the high costs of its technology, including batteries.

The company, based in Palo Alto, Calif., has raised financing several times in recent years amid cash outflows. It aims to significantly increase its output through 2018 and will likely boost capital spending if it makes good on its plans to add capacity and introduce more products.

Write to John D. Stoll at john.stoll@wsj.com

(END) Dow Jones Newswires

March 15, 2017 17:28 ET (21:28 GMT)

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