‘Loser’ No More: Tesla Repays $465 Million U.S. Loan

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Gerry Shih / REUTERS

Elon Musk, the chief executive of Tesla Motor, speaks at the South by Southwest Interactive festival in Austin, Texas, March 9, 2013.

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.

(MORETIME Tech 40 — Elon Musk)

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.

(MORETesla Beats the Odds — And the Haters — But Now Comes the Hard Part)

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.”

36 comments
NoGood
NoGood

This is all find and dandy, but how does any of this directly affect you and me?  It doesn't because we (the average auto buyer) can't afford to pay for a Tesla vehicle. So, beyond them paying back a government loan (in essence repaying us the taxpayer) then this really is of no concern.  I don't drive a Tesla vehicle and no one in the town I live in owns one - can you really afford to continue to be ignorant of the facts, fed political lies to fuel their cause, and accept all of it as fact because you read in a magazine or heard it on TV.  Wake up America - learn the real truth!

experimentals15
experimentals15

Did everyone not realize that TESLA paying off it's car loan allowed Elon MUsk to release a huge portion of his profit.  Typical Wall Street move, the dirt is in the details. With the DOE loan Musk had to (not by choice) tie up a significant portion of his networth and couldn't get out. Now that he paid it off, he has the ability to "cash out", like he just did with the bond offering.  Another great example of an insider cashing out at the expense of momentum chasers

fitty_three
fitty_three

There seems to be a lot of this "automakers repay government loans" going around under the two Obama administrations.

GOP stand: "sour grapes"

Kinda telling, doncha think?

AlexSal
AlexSal

Ford borrowed $5.9b from the government under the same broader program that Solyndra borrowed from. That makes ford...Federal Motor Company.

JackB125
JackB125

Now if we can just get Congress to overturn the crazy state automobile franchise laws so Tesla can directly sell the cars they design and manufacture.

Onepatriot
Onepatriot

So disappointed in not finding a store here in Missouri.  Not surprising. This state is so far behind on environmental issues, it's pathetic.  They seem to have the mentality that they can hold back climate change by retreating into a cave and declaring science is wrong.  We should be doing everything we can to make these vehicles available to the public.   

I'd like to have one, but not if I can't have a dealer near me.  Have to get a Chevy Volt I guess.

mten24
mten24

Elon Musk Paid off the doe loan in order to shut up the uneducated skeptical critics of tesla motors. Elon Musk is better then you. Elon musk is better then me. He is smarter. He is richer. He is more accomplished. More educated. He is a genius of both the sciences and business. Thats not just my opinion. Thats also the opinion of nasa. That is also the opinion of mr. toyoda himself, who said 'I love this guy' and then gave him the 1 billion dollar numi factory for FREE in exchange for a licensing agreement.  The business model of tesla motors is not to build cars for the 1%. The goal has always been the same. Create a new type of vehicle to replace mainstream vehicles that are powered by a finite source.  In order to do so there needs to first  be cars like the tesla roadster and model s. These vehicles may be expensive but computers were also very expensive 20 years ago. Today computers are wide spread because early adopters bought in to them. Elon musk plans to use the success and technology from the model s and tesla roadster in order to eventually build a line of mass produced emmision free vehicles that everyone will be able to own.  How hard is that to understand????? Elon could have taken his quarter billion dollars earned from the sale of his company called paypal and retired on an island.  Instead he put it all on the line to help better mankind. 

BrianChambers
BrianChambers

One Model of car built soley to cater to the very rich, F&^# Tesla

HudsonValleyTim
HudsonValleyTim

What's the "Over/Under" on how-long it takes some idiot in Congress to find something to fault with the early repayment (and demand hearings)?

HudsonValleyTim
HudsonValleyTim

Tesla, which was branded as a “loser” company by Mitt Romney...

50 Bonus points to whomever can come-up with a new translation of the "GOP' acronym that can adequately convey the irony here.

tacedaniels
tacedaniels

The real story is that this program fortunately started before the Obama Presidency which means that Republicans were not able to stop it because they feared it would be a success..

Romney's comments that this was a failed project was just repeating the Fox News mantra.

Just think how much further ahead the United States could be without Republicans hell bent on trying to destroy President Obama.

Education, job training and rebuilding the infrastructure are all needed for the future success of our country.

The United States continues to be a great economic power even with Republicans working full time to destroy it.

EnergyFactCheck
EnergyFactCheck

"Loser no more!?" Implying that, at some point, Tesla was a loser? Entirely false. Tesla has been a clean energy success story from day 1. Paying off their loan 9 years early is a clear win, this headline notwithstanding. 

The interest that Tesla on this loan payed the U.S. taxpayer over $20 million. Not bad. 

- Of the five car companies that received loans from the program, including Ford Motor Co. and Nissan North America, Tesla Motors became the first to have fully repaid the federal government under the Department of Energy‘s Advanced Technology Vehicle Manufacturing program. (Source: San Francisco Chronicle, http://bit.ly/10MPJnS)  

Paying off the DOE Loan earned American taxpayers between $15 million and $20 million, according to Tesla CEO Elon Musk. The Energy Department puts the profit at closer to $26 million. (Source: Bloomberg Businessweek, http://buswk.co/12YDfwg)

- The Department of Energy Loan Guarantee Program has an approximately 97% success rate. As of late July, 2012, Solyndra, Abound Solar and the handful of other DOE-backed renewable energy companies that went bankrupt represented total investments of less than 3% of the entire DOE portfolio.  (Source: U.S. Department of Energy, April 2013, http://1.usa.gov/Nv1OeU)

Check out EnergyFactCheck.org’s Fact Check on the DOE Loan Guarantee Program: http://bit.ly/182rztP and follow on Twitter at @EnergyFactCheck 

Great story, but incredibly misleading headline... Hopefully TIME or @SamGustin will fix.



cenergy2013
cenergy2013

Misleading to say the least. Tesla "borrowed" more money to pay a loan. What is their revenue and profit margin? 

No one talks about actual revenues and profits, they borrowed more money to pay back previously borrowed money. Debt and more debt.

tboneivd
tboneivd

The starting price for a Tesla Model S is $62k. If they are successful, then they will no doubt make both lower and higher priced car models. They have provided jobs and repaid their government loan. Average consumers have many different options, that's not why the money was lent. Car technology advancement ALWAYS starts on high end models. It was a decade before anti-lock brakes and other advancements migrated down to affordable models. 

For once, things have worked out thus far. No need to try and make this a downer story too.

MNguyen88
MNguyen88

Hmm the Lowest starting price for a Tesla is about 80k. Yea thanks for giving them money to make cars that the average consumer can't even afford.

lunarnsx
lunarnsx

@BrianChambers You don't have any idea what you are talking about. Tesla will sell a $30,000, 200+ mile EV in a couple of years. Most cool new tech starts out expensive and is early adopted by the wealthy. Then the prices come way down. If you do not believe in this system then I insist you send me your Flat Screen TV and cell phone immediately.

mten24
mten24

go hit the books.  hard

Paul,nnto
Paul,nnto

"They cheated us out of interest!"

grendal0072
grendal0072

@tacedaniels   The GOP could have taken credit for Tesla's success since the ATVM program that gave Tesla their money was a G. W. Bush administration program but instead decided to use Tesla to attack Obama.  Now they have to live with the bed they made and have egg on their faces.  The sad thing is that Tesla represents a lot of the policies that the GOP say they support such as American industry and getting off foreign oil.  Instead they are shown to be hypocrites

vstillwell
vstillwell

@cenergy2013 I would also like to add that if you wanted to know what Tesla's NI was for the last fiscal quarter, you could have just googled it. 

vstillwell
vstillwell

@cenergy2013 Well, you're wrong to a degree. When a company sells stock shares, it's selling ownership in the company. The debt offerings were probably bond offerings in the private markets. That's how all companies raise cash by the way. By going through the bond markets, Tesla got more favorable terms than by just borrowing money from a bank. 

lunarnsx
lunarnsx

@MNguyen88You don't have any idea what you are talking about. Tesla will sell a $30,000, 200+ mile EV in a couple of years. Most cool new tech starts out expensive and is early adopted by the wealthy. Then the prices come way down. If you do not believe in this system then I insist you send me your Flat Screen TV and cell phone immediately.

stephen.pace
stephen.pace

@MNguyen88 The base price was initially $50k.  Only 4% ordered the smallest battery (so it was eliminated) and high demand for the car led Tesla to increase the price $2k which makes the new base price $62.  Not $80k.  Further, the goal of the DOE loan program is to stimulate new technology--and they did that in spades with this program.  Tesla was able to accelerate the development of the car and get it in the hands of consumers sooner.  And the sooner the Model S hit the street, the greater chance Tesla would survive until the base $30k Gen III car (bringing sustainable transport even closer to the mass market).  The government doesn't always make the choices I want with my money, but I completely agree with this one.  But you have to admit that government programs like the Hoover Dam, the Internet, the Interstate Highway System, and the Space Program have made an extremely positive impact on society--Tesla may make a similar impact on sustainable transportation and for a much cheaper price.

gysgt213
gysgt213

@MNguyen88 I got news for you.  Not many Americans these days can afford any brand of a new car because the prices are rising and the buyers pay is not.  Car dealers understand this and that's why a lot of them are pouring massive attention into their certified pre-owned vehicles. 

HudsonValleyTim
HudsonValleyTim

Gotta have a little foresight here.  How many of the things that we take for granted start-out as luxury items?  Let's see, cars, computers, cell phones, microwave ovens, etc. etc. etc.  Now that the cars are "here", mass production of components can become the norm, and prices will drop, and so forth. 

Patience!

MNguyen88
MNguyen88

@AlexSal  im sorry has 65k somehow become more affordable? and its only 65k for the basic basic model and that doesn't even include your taxes and thats after you get $7500 tax credit how long will that last. 

MNguyen88
MNguyen88

@lunarnsx when that day happens ill be glad to say i would be wrong but there will never be a 30k tesla with 200+mile car.

HudsonValleyTim
HudsonValleyTim

Oh...and mass production of components fattens the supply chain and provides bunches of new jobs.