Tesla increases credit lines by $500 million

Tesla Motors has struck deals with its lenders to increase its credit lines by a half-billion dollars, a move that seems at odds with assurances issued in October by CEO Elon Musk.

The disclosures came in a recent filing by the company with the Securities and Exchange Commission.

The push by the maker of electric vehicles to borrow more cash may run counter to a tweet on Oct. 9 from CEO Elon Musk.

“Would also like to correct expectations that Tesla/SolarCity will need to raise equity or corp debt in Q4,” Musk tweeted. “Won’t be necessary for either.”

Yet about two months later, in a Dec. 15 SEC filing, the electric vehicle company said it had reached agreements to expand two credit facilities, both with Deutsche Bank.

“The credit agreement amendment increased the revolving commitments by $200 million, thereby increasing the total revolving commitments from $1 billion to $1.2 billion,” Tesla said in the filing.

That credit agreement amendment also enables the company to obtain up to another $50 million.

In a separate agreement with Deutsche Bank, the carmaker doubled another credit line with the banking giant.

“The warehouse agreement amendment increased the maximum facility limit by $300 million,” Tesla stated in the SEC filing.

That boosted the total borrowing limit for that credit line to $600 million.

All told, Tesla could obtain an additional $550 million beyond the prior agreements if all the options were exercised under the respective amendments to the credit lines.

Palo Alto-based Tesla may need to tap the additional borrowing capacity in the wake of its merger with SolarCity, a solar energy company. That combination, which recently went into effect, could be a cash drain.

Tesla also is laying plans for a major expansion of its operations in Fremont, where it manufactures electric vehicles.

Palo Alto-based Tesla currently employs about 6,200 people in its Fremont auto factory. The existing complex has 5.3 million square feet of production and office space.

The larger Tesla factory is expected to bring 3,100 new jobs to the East Bay and would add 4.6 million square feet to the existing complex. A time frame for the expansion wasn’t disclosed in Tesla’s filings with Fremont city officials.

The plant could employ at least 9,300 workers after the expansion is complete, according to a master plan for the project filed with Fremont.

In 2015, Tesla produced 50,580 new vehicles, according to a Fremont city staff report. Completion of the master plan would increase production to 500,000 new vehicles a year. Tesla has told analysts it hopes to reach the half-million mark for vehicle production in Fremont by 2018.

“Tesla has announced a new vehicle model, the Model 3, and has a need to expand their current facility,” according to the Fremont staff report.

 

Photo: The inside of a Tesla vehicle is viewed as it sits parked in a new Tesla showroom and service center in Red Hook, Brooklyn on July 5, 2016 in New York City. (Spencer Platt/Getty Images)

 

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