Electric car maker Tesla Motors has just announced that it plans to raise US$1.6 billion in debt to finance its expansion plans. Bulk of the money would go towards building what Tesla calls a "Gigafactory", which is essentially a very big battery factory that will allow it to produce more lithium ion batteries than the total global output last year when it is finally completed in 2020.
The company has identified the lack of lithium batteries as one of the key factors limiting its ability to meet demand for its vehicles. And completion of this factory will make Tesla Motors one of, if not, the largest producer of lithium ion batteries. This will open up many new opportunities as lithium ion batteries are used in numerous products today, such as notebooks, smartphones and tablets.
The debt deal will consist of US$800 million in convertible senior notes due 2019 and another US$800 million in convertible senior notes due 2021. Tesla and its unnamed partners will invest around US$5 billion through 2020, with roughly US$2 billion coming from Tesla, to ensure completion of the Gigafactory.