(Reuters) - Facing a severe cash crunch, Tesla Motors Inc plans to raise additional money this year to help fund development and production of its new Model 3 sedan and build out a massive battery factory, the company said on Wednesday.

People visit a Tesla Model S car during the Auto China 2016 in Beijing, China, April 25, 2016. REUTERS/Jason Lee/File Photo

The electric carmaker plans to raise money through an equity or debt offering, it said in a filing with the U.S. Securities and Exchange Commission. Some of that money could also support Tesla’s planned acquisition of its money-losing sister company, SolarCity Corp.

Tesla Chief Executive Officer Elon Musk had warned the combined companies might need “a small equity capital raise” in 2017. Musk is the major shareholder in both firms.

Tesla’s cash situation has taken on additional urgency with the $2.6 billion SolarCity deal announced on Aug. 1.

Musk also said on Wednesday that Tesla plans to release an update of its partly automated self-driving system “in a few weeks.” U.S. regulators are probing a May 7 fatality in Florida in which a driver using Tesla’s Autopilot system crashed into a truck.

The timing of the SEC filing on Tesla’s fundraising plans “reinforces the need for SolarCity to have quick access to capital,” Barclays analyst Brian Johnson said.

The document also disclosed that Musk discussed a potential Tesla-SolarCity merger in February with SolarCity’s CEO, Lyndon Rive, who is also Musk’s cousin. At a subsequent special meeting on Feb. 29, the Tesla board rejected a proposal to evaluate a merger, according to the filing. On May 31, the Tesla board changed course and decided to pursue the merger.

In the meantime, Tesla’s cash position has deteriorated, despite a $1.7 billion equity raise on May 19.

Earlier this month, Tesla said it closed the second quarter with nearly $3.25 billion in cash, but in July it repaid $678 million on a revolving credit line and planned to redeem $422 million in convertible notes.

That would leave the company with $2.15 billion in cash. But it also told analysts earlier this year it planned to spend $1.75 billion in the second half on plants and equipment, primarily to get the $35,000 Model 3 ready for production next year and finish construction at the Reno, Nevada, “gigafactory.”

As a result, Tesla would have around $400 million in cash at a time when both Tesla and SolarCity have been burning through cash.

Tesla has posted operating losses in 14 straight quarters and negative cash flow since early 2014.