Tesla is to raise up to $5bn selling new shares, as the electric carmaker takes advantage of an almost 900% surge in its share price over the last 12 months.
The move comes three months after Tesla last moved to raise $5bn, at the time its biggest issue of new stock in a decade, and just weeks before the company is due to enter the blue-chip S&P 500 index. Entry to the benchmark index is likely to further fuel Tesla’s stock market run as passive investors that track the S&P 500 will be compelled to buy shares in the business.
Tesla’s shares have surged 850% over the past year giving the business a market value of $600bn (£450bn) and making Elon Musk, its maverick chief executive, one of the world’s richest men. Last month, Musk, who has seen his personal fortune swell by $100bn this year as investors embrace electric car technology, overtook Microsoft founder Bill Gates to become the world’s second-richest person worth $128bn. Last month, the UK government confirmed it is to accelerate a ban on the sale of new petrol and diesel cars by five years to 2030.
Tesla said in a filing to the market on Tuesday that deciding to occasionally sell new shares on the open market gave it more pricing flexibility than making a formal second offering of stock.
The company is on track to set a record by producing more than 500,000 cars this year, as traditional carmakers step up competition. Volkswagen, the world’s largest carmarker by volume, is to invest €35bn (£32bn) in electric vehicles with the aim of achieving 20% of global sales by 2025.
Tesla has a number of capital intensive projects on the go, including the construction of its first European manufacturing and battery centre in Germany and a new factory in Texas, while another factory recently opened in China.
Tesla’s shares have climbed to record levels this year, making the company more valuable than traditional automotive firms such as Toyota, which it passed as the world’s biggest car company by stock market value in July. It has also overtaken some of the world’s biggest listed businesses including Visa, and the largest US company by revenue, Walmart.
Musk is in line to receive a record $55.8bn, the largest corporate pay deal ever struck between a chief executive and a company’s board, if he can continue to keep Tesla charging ahead.