Tesla Motors has done right by U.S. taxpayers.
The fast-growing electric car company has repaid the entire $465 million loan it received from the U.S. Department of Energy, in a vindication for company co-founder Elon Musk, the billionaire mogul and rocket-ship enthusiast. The loan repayment, made nine years ahead of schedule, was completed Wednesday when Tesla wired $451.8 million to the federal government.
Tesla’s loan was part of the government’s 2010 Advanced Technology Vehicle Manufacturing Program, a $25 billion fund authorized by Congress, signed by President George W. Bush, and awarded under President Obama. The loan program, which was separate from the U.S. auto bailouts to GM and Chrysler under the Troubled Asset Relief Program (TARP), was designed to get fuel-efficient vehicles to consumers faster.
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With its loan payment, made using a portion of the $1 billion it raised last week in a stock and debt offering, Tesla becomes the only American car manufacturer in the DOE program to have fully repaid the government, the company said. “Today’s repayment is the latest indication that the Energy Department’s portfolio of more than 30 loans is delivering big results for the American economy while costing far less than anticipated,” U.S. Energy Secretary Ernest Moniz said in a statement. “Today, Tesla employs more than 3,000 American workers and is living proof of the power of American innovation.”
The loan repayment is a major victory for Tesla, which was branded as a “loser” company by Mitt Romney during his unsuccessful 2012 Republican presidential campaign. “I would like to thank the Department of Energy and the members of Congress and their staffs that worked hard to create the ATVM program, and particularly the American taxpayer from whom these funds originate,” Musk said in a statement. “I hope we did you proud.”
Founded in 2003, Tesla was originally funded entirely with private funds, led by Musk, a billionaire who co-founded PayPal. For many years the company struggled to gain traction, because building a car company from scratch is extremely capital-intensive. As recently as last year, Tesla was still hemorrhaging cash, losing $89.9 million in the first quarter of 2012.
But this year, Tesla’s business has accelerated, thanks in part to the success of the company’s Model S vehicle, its most affordable offering. Tesla recently reported its first profitable quarter, and Consumer Reports gave the Model S a near-perfect rating of 99 out of 100 points. So far this year, Tesla’s stock price has soared by 171%, which helped drive the company’s recent billion dollar stock and debt offering. The company is working to bring its next car, a sport utility vehicle called the Model X, to market in the next few years.
“My hat’s off to them,” Ford Motor executive chairman Bill Ford said at his company’s annual meeting recently. “It’s really hard to start a company, particularly in the auto business, and be successful.”
Tesla’s loan repayment is a big boost for the still-nascent U.S. electric car industry. “While the market has taken longer than predicted to get going, sales of electric vehicles in the U.S. tripled last year and are continuing to increase rapidly in 2013,” said Moniz, the U.S. Energy Secretary. “Tesla and other U.S. manufacturers are in a strong position to compete for this growing global market.”