Tesla plans RM6.4b bond to support Model 3

SOUTHFIELD, MICHIGAN • Tesla Inc is about to make its debut in the primary corporate bond market, as Elon Musk bolsters his company’s balance sheet amid an audacious bet on a more affordable electric car.

The automaker plans to offer US$1.5 billion (RM6.43 billion) in senior unsecured notes due in 2025, according to a statement. Tesla said it intends to use the proceeds to support the Model 3, its cheapest model yet, and for general corporate purposes. It would be the company’s first sale of non-convertible bonds, according to data compiled by Bloomberg.

Tesla burned through a record US$1.16 billion in cash in the second-quarter, driven by spending on capacity for the Model 3 and boosting battery output. The Model 3 starts at US$35,000, roughly half the cost of the base Model S sedan, and has racked up almost half a million net reservations since Tesla began taking refundable deposits last year. — Bloomberg