Tesla CEO Elon Musk thinks demand could reach 700,000 Model 3s per year

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Following the trend of Tesla’s “rapid scaling” after the launch of its Model 3, CEO Elon Musk said he thinks demand could one day hit 700,000 Model 3 cars per year.

Musk made the statement on a call with investors to discuss yesterday’s bond offering news, according to The Street.

The EV CEO had previously pegged annual peak production estimates at around 500,000.

“They are constantly spending on the next big innovation, whether the public knows what that is or not,” James Albertine of Consumer Edge Research LLC told the news outlet. “The market should want to give innovative companies more capital as long as they perform, and Tesla is clearly performing.”

Musk aims to produce cars at a rate of 500,000 per year by the close of 2018. Last year the company produced 84,000 vehicles, a 64% gain from 2015.

This comes on the heels of yesterday’s news about Tesla raising capital through its issuing of bonds. The capital will be used for this exponential Model 3 ramp.

“Tesla intends to use the net proceeds from this offering to further strengthen its balance sheet during this period of rapid scaling with the launch of Model 3, and for general corporate purposes,” the company said in a prepared statement.

This is the first time the company is selling non-convertible bonds.

Tesla CEO Elon Musk has previously made statements about how the company would be enduring “production hell” in the near future, a reference to Tesla’s production S-Curve and the resources required to get the wheels turning early on.

The $1.5 billion bond can also be seen as part of the Model 3 S-Curve. The S-Curve, which features a diffusion of innovation and allows for a company to explore the most efficient way to make its product, requires big-time investment and resources early on.

Tesla had $3 billion in cash at the end of the second quarter and is expected to burn around $2 billion this year.

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