Tesla is set to launch a US$783 million debt sale backed by auto leases from prime borrowers. This move marks Tesla’s second ABS transaction of the year and is part of a growing trend as automakers seek alternative financing methods to fuel their future growth.
According to a report from Bloomberg, the debt sale will be managed by French financial institution Societe Generale and is expected to price next week. Tesla is no stranger to the ABS market, having already issued a debt sale earlier this year, and last year, Tesla’s ABS issuances totaled almost $4 billion.
By securitizing these leases, Tesla can tap into liquidity without diluting its equity or taking on more traditional, and often more expensive, debt.
Tesla’s first ABS deal of 2024 occurred in March, raising US$750 million. The company’s use of lease-backed securities allows it to raise capital while continuing to focus on scaling its production capabilities and expanding its product lineup.
This wasn’t the only ABS deal announced on Thursday, with Ford announcing plans to raise $1.7 billion in a similar deal.
Tesla’s $783 million debt sale comes at a time when the company is set to unveil its next product – a robotaxi. Additionally, Tesla will release its Q3 2024 financial results on October 23, although those will not be impacted by this debt sale.
