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Tesla to Sell $1.4 Billion in Shares for Expanded Production

  • Musk also to sell shares, for total stock sale of $2 billion
  • Automaker also says it has about 373,000 deposits for Model 3

Tesla Motors Inc. said it will sell about $1.4 billion in stock to help pay for an expansion that includes its forthcoming Model 3 electric car and boosting annual production to 500,000 vehicles in 2018.

The total sale will be about $2 billion, with the rest of the shares to be sold by Chief Executive Officer Elon Musk to cover tax obligations on stock options he’s exercising, the company said Wednesday in a statement. Tesla plans to sell 6.8 million shares in the offering, or 8.24 million if the underwriters use an option to buy additional stock from the company, according to a prospectus. Musk plans to sell 2.78 million shares.

Tesla had been planning to raise more cash to prepare for the launch of its Model 3 sedan, which will start at $35,000. The electric-car maker needs to add production because it has received more interest than expected in its Model 3 sedan, which is supposed to go on sale late next year.

“The capital raise was expected. Sooner is better than later and the amount...