Feb. 26, 2014 / 5:54 PM

Tesla to offer $1.6B in bonds to fund battery factory

The yet-to-be-announced 'gigafactory' will definitely benefit from the money generated from this bond issue.

Tesla hopes cheaper batteries will bring down the cost of its cars, such as the Model S, which at present costs $69,900. (Credit:Tesla)

Tesla hopes cheaper batteries will bring down the cost of its cars, such as the Model S, which at present costs $69,900. (Credit:Tesla)

PALO ALTO, Calif., Feb. 26 (UPI) -- Tesla Motors will issue $1.6 billion in bonds to fund its battery factory, aimed at manufacturing low-cost batteries.

The bond offering will be equally divided between convertible senior notes due 2019 and another round of bonds due 2021. The car manufacturer also plans to offer underwriters a 30-day option to purchase an additional $120 million due 2019, and an additional $120 million, due 2021. This would bring the total offering to $1.84 billion.

The announcement precedes its plans to set up a battery factory in the U.S. to manufacture cheaper lithium-ion batteries that could potentially lower the costs of its cars and open its products to a mass-market. Tesla and its CEO Elon Musk have been referring to the project as a 'gigafactory.'

Tesla has been on the rise in the last few months, with both its cars and stock value doing very well. The stock closed today at $253.00, up 2 percent.

[USAToday] [Bloomberg]

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