With a rise in demand, more funds including debt will be required says Musk.

Earlier in May when Tesla was talking about its earnings from the last financial year, the question on everyone’s mind was – how will the company afford to make hundreds of thousands of Model 3s given its cash position. The answer to that complex question is rather simple and obvious- by raising tons of investment money, of course.

As a more concrete example of how seriously it is going to pursue its intentions, Tesla has now announced that it will be selling $2 billion in stocks to pay for the much needed expansions. This includes $600 million from Elon Mush himself.

As a response to burgeoning deposits it received for the Model 3, it already has had to move up its goal of producing 500,000 of these electric cars to 2018. This will naturally mean having a “good buffer of cash” (as Musk himself said during the earnings call) to keep things humming.

Tesla has now acknowledged that it had not previously correctly gauged the massive demand for the Model 3. Under the circumstances there is no way it can maintain its existing production plans and keep all of those customers happy. To make matters even worse, its existing plans includes getting its advanced battery plant in full swing by 2020.

The next obvious question is – will this new influx of funds will be enough to steamroll its operations? Musk suggests that there may be some need for debt sometime in the future, and further fundraising will be required especially if the demand for the Model 3 and mainstream EVs where to rise.