Tesla seeks to raise $1.5 billion to fund Model 3 production

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(Reuters) – Tesla Inc (TSLA.O) said on Monday it intends to raise about $1.5 billion in a bond offering as the U.S. automaker seeks to ramp up production of its newest electric sedan, the Model 3.

The debt offering comes as Tesla receives thousands of advance reservations for the Model 3, which were averaging at about 1,800 per day since the car’s launch in late July.

Elon Musk-led Tesla is counting on the Model 3, its least pricey car, to become a profitable, mass market electric car maker.

At the launch event, Musk said the company would face “at least six months of manufacturing hell” as it increases production of the Model 3, which has a $35,000 base price.

Tesla had over $3 billion in cash on hand at the end of the June quarter, compared with $4 billion at the end of the previous quarter and $3.25 billion a year earlier.

Tesla’s cash burn, expected to top $2 billion this year, has prompted short-sellers like Greenlight Capital’s David Einhorn to bet against the Palo Alto, California company.

Shares of Tesla, which have risen 67 percent this year, were up 0.5 percent at $358.50 in premarket trading.