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By Chris White

Tesla said Wednesday it will raise more than $1 billion to produce the Model 3 and to quell concerns SolarCity is dragging down the company’s financials.

The California automaker plans to offer $250 million of common stock and $750 million of senior notes to prop up Tesla’s beleaguered electric coupe. Elon Musk, the company’s chairman, also promised to purchase $25 million of the stock.

Tesla’s stock slagged prior to the money injection, dropping to $255.73 a share Wednesday, down $2.27 for the day. It then jumped 2.2 percent to $261.40 after the announcement.

The moves are aimed at allaying investor concerns the company is facing a financial freefall as it begins producing the Model 3 and puts the finishing touches on the Gigafactory battery factory in Nevada. Musk also wants to inject more capital into the company before it officially absorbs floundering SolarCity.

Tesla and SolarCity merged last year, Musk said, so the company could more effectively incorporate technology like electric vehicles, solar panel production, and battery storage.

Musk’s ventures have tumbled thanks in part to Goldman Sachs’s decision in February to downgrade Tesla due to concerns the company’s business model is built upon shifting sand.

“[O]ur concerns are more near-term oriented with respect to operational execution on the Model 3 launch, an unproven solar business, and cash needs,” David Tamberrino, an analyst with Goldman Sachs, wrote in a memo at the time.

Tamberrino was also worried the company would have to sell stock to raise $1.7 billion to make room for a possible loss if the Model 3 doesn’t make the grade. The financial institution ultimately downgraded the company from “neutral” to “sell.”

Tesla has traded between $180 and $280 recently, but Goldman Sachs’ sell grade pushes the company’s stock toward the bottom of that range, he added. The highly-leveraged company is still up 14 percent in 2017.

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