Update: As of 25 May 2016, Tesla raised $1.7 billion from the expanded offering.

Building a lot of cars takes a lot of money, and Tesla's selling $1.4 billion worth of stock to do just that. With 373,000 reservations for the Tesla Model 3, the automaker has a huge challenge in front of them, and raising all that additional money will help to finance overcoming that challenge. The reservations came in at $1,000 apiece, which raised well over $350 million for Tesla, but CEO Elon Musk was clear that those funds would not be nearly enough to pay for ramping up the Model 3 production line.

The Tesla Model 3's slick door handles

The offering will come from the sale of 6.8 million shares. Musk himself is also selling another $600 million worth of shares to cover the taxes on options he's exercising. An additional 1.44 million shares are also available, should underwriters Goldman Sachs and Morgan Stanley desire. Goldman Sachs was previously the underwriter on Tesla's IPO in 2010, as well as on expanded offerings in the years since.

The Tesla Model 3 is poised to be Tesla's biggest challenge yet. They plan to build up to 200,000 of them in 2017, and to hit 500,000 cars a year in 2018. Funding all of that will require an enormous investment — this $1.4 billion equals out to roughly $3,700 per car, far less than the $35,000 selling price. It'll come in on top of the approximately $1.44 billion in cash reserves that Tesla already has on hand, but the primary point of this is to finance the infrastructure needed to build those cars, namely, equipping the Fremont Factory with the tools and machines and staffing to build the cars and the Gigafactory in Nevada to build all of the required battery packs.

Paying for the cars themselves? That'll be the job of the customers ordering the cars — Tesla won't be building anybody's car until they've got the money.