Tesla (TSLA) completes $2.7B funding round as BMW pledges more EV competition

Tesla (NASDAQ:TSLA) announced on Wednesday that it had closed its $2.7 billion offering of stock and convertible notes. The electric car maker also noted that it had oversubscribed its funding round, giving the company ample cash as it ramps up Model 3 production and prepares for other high-profile projects like the rollout of the Model Y and the Tesla Semi.

Overall, Tesla sold about $860 million in TSLA stock and $1.84 billion in debt, after the underwriters exercised their option of buying 15% in each offering. Tesla’s filings indicate that its recently-completed funding round was underwritten by Goldman Sachs, Bank of America, Societe Generale, Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse, and Wells Fargo.

The completion of Tesla’s latest funding round came just a day after Elon Musk confirmed that he purchased a total of $25 million worth of TSLA stock for $243.00 per share. Musk’s purchase involved 102,880 shares, bringing his total of Tesla stock to 33,927,560 shares, or around 19.5% of the company.

As Tesla prepares to ramp its activities with its new funding, veteran automaker BMW has expressed its intention to put pressure on the electric vehicle market. BMW had a tough first quarter, reporting earnings of $667 million, or down 75% year over year. Despite this, BMW’s management reiterated the company’s commitment to electrification.

BMW noted that the company currently holds 11% of the US luxury market, which is double Tesla’s share, thanks to its lineup of internal combustion-vehicles like the BMW 5-Series (which competes with the Model S), the X5 (which is in the same segment as the Model X), the 3-Series (which competes with the Model 3), and a variety of other models. Tesla only offers three vehicles that compete on the US luxury market, though the electric car maker has noted that the Model S outsells its equivalent BMW competitor by 2-3 times.

While BMW commands a larger portion of the US luxury market than Tesla, the German automaker lags behind the Silicon Valley company in terms of EV sales. BMW delivered more than 27,000 electric cars so far in 2019, while Tesla delivered more than 63,000 in the first quarter alone. Nevertheless, BMW notes that its electric vehicle figures will increase as it initiates its “25 by 25” program, which is aimed at rolling out 25 electric and electrified vehicles by 2025.

As the electric vehicle market enters another stage with a freshly-funded Tesla, BMW Chairman Harald Kruger expressed his confidence that the German automaker will remain competitive. “In Europe, our percentage of electrified vehicles delivered is three times the industry average. In 2018, we were the market leader for electrification in both Europe and Germany—not just in the premium segment, but in the market as a whole. We plan to maintain a leading position going forward—both in Europe and worldwide,” he said.

As of writing, Tesla stock is trading +0.93% at $249.37 per share.

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

Tesla (TSLA) completes $2.7B funding round as BMW pledges more EV competition

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CHEAP CARS TO BUY – CHEVROLET CORVETTE C4

Car depreciation can be a bitch, unless you’re a buyer of course. So come with us as we take appreciation in depreciation and check out the C4 Corvette, a car that could now be yours for just £11k!

It’s easy to knock American sports cars, when viewing them from a European perspective. There’s a general feeling that cars in the US aren’t designed for corners; that they sacrifice chassis poise and handling finesse for the quasi-solution of just shoving a massive V8 in there.

For this reason, C4 Corvette owners allow themselves a wry smile, letting everyone believe their cars are rubbish before unexpectedly leaving them in their dust.

You see, Corvettes are actually awesome. Ever since their inception in 1953, they’ve always been made of fibreglass or plastic composites, meaning they’re relatively light, and the C4 generation (1984-96) was genuinely excellent.

cheap corvette c4

It had all-independent suspension, huge brakes with aluminium calipers, and even featured a transverse fibreglass mono-leaf spring at the front in place of traditional coils; this was a third of the weight of steel springs while also acting as an anti-roll bar.

See, this wasn’t just dumb muscle-car grunt – this was an intelligent and holistic effort to build a capable sports car. Launch models had 205bhp, but the power steadily climbed over its production run, with run-out 1996 cars having 330bhp. (And the super-rare Lotus-developed ZR-1 had 375bhp!)

Prices for a decent C4 start around £11,000 today which, given that this was the equivalent of a £50k car in the mid-nineties, is a pretty bargainous way to prove people wrong on your favourite local race track or country lane.

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A niche too far: BMW 3-Series GT to die

BMW was one of the first automakers of the modern era to start exploring new niches when it launched vehicles like the original X6 and 5-Series Gran Turismo.

While some of those niches have proven popular with buyers, others haven’t fared so well. One in particular not doing so well is BMW’s Gran Turismos, which were introduced to lure buyers looking for a higher seating position and extra space but weren’t interested in an SUV—specifically older types.

Harald Krueger

Harald Krueger

But with more of its buyers choosing an SUV over one of its Gran Turismos, BMW has decided to axe the 3-Series GT after the current model reaches the end of its cycle. BMW Group CEO Harald Krueger made the confirmation during a financial results presentation in Munich on Tuesday.

The decision is part of BMW Group’s efforts to save more than $13.4 billion by the end of 2022. Other measures include reducing vehicle development times by up to a third, namely via digital simulations replacing costly prototypes; improving synergies and efficiencies; and reducing the complexity in vehicles, including cutting the number of powertrains offered in each model line by up to a half.

2018 BMW 6-Series Gran Turismo

2018 BMW 6-Series Gran Turismo

There was no mention of the larger 6-Series GT, which replaced the 5-Series GT and is now the last member of the 6-Series family, however it too will likely be phased out after the current cycle if demand for SUVs remains strong.

While it’s been rumored that BMW could introduce a new 4-Series GT to replace the 3-Series GT, given Krueger’s comments it looks like that is no longer the case. We also know that BMW plans to introduce an i4 electric car in 2021, and thanks to the extra space made possible by efficient packaging of electric powertrains the new i4 will likely fill the void left by the departing 3-Series GT.

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