Tesla will raise the money by selling bonds to professional investors, despite the company having $3bn in cash.
The company says it has 518,000 orders for its new car, whose price starts at $35,000. Initial production of the Model 3 started in July, with a target of 400,000 to be made next year.
Tesla, which also makes batteries and solar panels, has been burning through its cash at a rapid rate.
The company's founder and boss, Elon Musk, said at the vehicle's formal launch in July that making the Model 3 would lead to "six months of manufacturing hell", as it tries to make 100,000 of the cars this year at its California factory.
Some observers have predicted that the company, which has yet to make a profit, will use up at least $2bn this year, hence the need for more cash.
The Tesla bonds will have to be repaid to investors in eight years but the interest rate on offer to investors has not yet been decided.