Tesla has been able to raise more funds than originally expected to back the launch of the Model 3 later this year.

The electric automaker raised about $1.2 billion on Friday, about 20 percent more than had been planned by the company. That capital came through about $350 million in common shares and another $850 million through the sale of convertible debt.

The company sold 1.3 million common shares at $262 per share to raise the $350 million. About $850 million came through the sale of convertible senior notes that are due in 2022.

CEO Elon Musk had been floating the idea of raising more capital since late 2016 to have needed funds to launch the $35,000-plus, 215-mile-plus Model 3 by the end of this year. He’d expected the carmaker was going to be “close to the edge” on the need for cash flow.

Musk has been putting a lot of his own money into the company. He purchased 95,420 common shares for $25 million in the latest stock sales. He’d already held a stake of about 21 percent of Tesla as of December.

Tesla shares were up 0.3 percent at $262.71 before the market opened Friday, and hovered around $263 late in the day.

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Tesla has been spending a lot of its capital on the initial launch of the Model 3 and the target of producing 500,000 electric vehicles a year by 2018. These will be mostly Model 3, the company’s first mass market vehicle. That’s up from 76,000 vehicle deliveries in 2016.

Musk said last year that he believes the Model 3 will bring in $20 billion in revenue per year along with $5 billion in gross profit once the full production capacity of 500,000 vehicles is reached. The company could be spending “tens of billions” in the long run to reach that production level, but would only need a “modest” capital raise to offset it.

He said that the $5 billion Gigafactory in Nevada, through a joint venture with Panasonic, could support up to 1.5 million electric vehicles per year in battery packs. That plant could bring battery cost reduction down to $100 per kilowatt hour by 2020.

Automotive News