Tesla said it would offer 2.65 million shares, of which Chief Executive Officer Elon Musk will buy up to $10 million in shares, while board member and Oracle co-founder Larry Ellison will purchase up to $1 million worth of Tesla shares.
Tesla’s shares were down roughly 1% in morning trading, retracing losses after sliding as much as 7% in premarket trading. The stock has tripled since October when the company posted a rare quarterly profit. Its market capitalization now exceeds the combined value of General Motors Co and Ford Motor Co.
Musk has repeatedly assured investors that Tesla will not need to raise more money for costly initiatives including production of a new vehicle model, the ramp-up of its China production and the construction of its first European factory.
“It doesn’t make sense to raise money,” Musk said during a Jan. 29 earnings call when an investor asked why Tesla does not take advantage of its favorable share price to accelerate production. Musk said the company would generate enough cash on its own to fund ambitious expansion plans.
“Diluting the company to pay down debt doesn’t sound like a wise move,” Musk said on the same call.
Musk also said Tesla needed to produce more batteries to increase vehicle production, adding that some projects like its electric semi-trailer truck program could not proceed without battery improvements.