Tesla looks to raise $1.15 billion as it preps for Model 3

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Elon Musk, chief executive officer of the automaker headquartered in Palo Alto, Northern California, will purchase 25 million USA dollars of common stock. Tesla's warning that it would spend $2 billion-$2.5 billion in the first half of 2017 in capital expenditures left little cushion at a critical time ahead of its Model 3 production, which the company says will begin in July.

The British portal claims the latest auto by Tesla Inc. will slot between the entry-level Model 3 and the larger, more expensive Model X.

Tesla is working hard to launch its affordable Model 3 this year, but to do that, it seems the company needs additional funds.

Shares of the California-based electric vehicle company rose nearly $12 Tuesday, rising nearly 5% after a report from British automotive magazine Autocar claimed Tesla is set to unveil a "Small SUV coming next year".

The money will be used to protect Tesla as it moves into production of the Model 3.

Outspoken Tesla bear Mark Spiegel tweeted after the announcement, "Does anyone really think that another $750M of debt on TSLA 's balance sheet is preferable to a straight stock sale up here?"

Musk has been borrowing from Tesla's underwriters for years, especially Goldman Sachs Group Inc. and Morgan Stanley.

The loss-making company has raised about $6 billion in multiple rounds since its initial public offering in June 2010.

Investors expect the electric-car and solar-power systems company to tap capital markets this year to fund its expansion.

While raising cash isn't critical to releasing the Model 3, it would probably be wise, Musk said on the 22 February earnings call. The forthcoming raise "is at the low-end of the $1-2bn we expected, and could imply another raise later if the Model 3 is delayed", he wrote.

The notes in the offering will be convertible into cash and/or shares of Tesla's common stock at Tesla's election, it said. The stock is now trading at 262.16 in a light trading volume of 2700, near support 259.26.

Autocar exclusively reported this Wednesday that the next vehicle in line for Tesla Motors could debut as soon as 2019. Tesla has granted the underwriters a 30-day option to purchase up to an additional 15% of each offering.