New York — Tesla plans to sell as much as $5bn of shares, capitalising on its high-flying price and on a recent stock split that made it more accessible to individual investors.

The electric-car maker will sell the shares “from time to time” through an agreement with several banks, according to a regulatory filing. The Palo Alto, California-based company plans to use the proceeds to strengthen its balance sheet and for general corporate purposes.

Tesla is raising money while it expands with new factories going up in Germany and Austin, Texas, after the recent completion of a plant in Shanghai. It’s a pivotal time for the manufacturer, which faces more competition from established carmakers and start-ups alike aiming to chip at its lead in electric-vehicle sales.

The plan is a form of “weaponising” Tesla’s cheap cost of capital, Evercore ISI analysts Chris McNally and John Saager wrote in a research note published on Tuesday.

The new programme could be the largest equity raise ever for Elon Musk’s company if it sells at least $2.34bn under the plan. Until now, Tesla had raised about $14bn over the past decade through secondary stock offerings, most recently in February. The sales have helped bolster cash during its transition from a niche electric carmaker to the mass market.

Tesla shares fell 3.2% to $482.44 in New York. The stock has climbed almost 500% in 2020, accounting for the five-for-one stock split that became official on August 31, and in the process made Musk the world’s third-richest person.

As of last September, $5bn would have represented a significant portion of Tesla’s market capitalisation, which dipped just below $40bn at the time. Today it is about 1% of the $460bn market value, which exceeds that of Toyota Motor and Ford Motor  combined.

Tesla had about $8.6bn of cash and equivalent as of June 30.

Banks in the $5bn programme include Goldman Sachs, Bank of America, Barclays Capital, Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse, SG Americas Securities, Wells Fargo and BNP Paribas.


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