Tesla's capital raise is dangerously under-powered. The electric-car company run by Elon Musk will sell stock and notes worth a bit over $1 billion. Tesla is burning cash, and investing heavily to gear up for production of its upcoming Model 3. Unexpectedly small dilution pleases investors, but may miss the more important goal of capital sufficiency.
Tesla has shown it can make beautiful cars and build a rabid fan base, but it has lost money three years in a row. The firm hopes production of its first mass-market vehicle, due to begin in July, will turn things around. At a cost of $35,000 before subsidies, the new model promises to kick-start demand. Tesla plans to produce 5,000 of the cars a week by year-end, and double that in 2018.