Tesla Motors pays off Department of Energy advanced technology loan
Upstart electric car maker Tesla Motors on Wednesday paid off a Department Energy loan that had become a political hot potato.
Tesla owed the federal government $451.8 million on a loan that was part of a special program to develop alternative fuel vehicles and renewable energy sources.
Paying off the loan “is pragmatic as well as symbolic,” said Jeremy Anwyl, vice chairman of auto information company Edmunds.com.
“There is a nice party going on on Wall Street right now. Tesla is participating. They would be crazy not to pay off the loan,” Anwyl said.
Tesla has raised about $900 million this month in stock and debt offering deals and is expected to raise another $100 million in the coming days.
Its shares have more than double in the last year, helped by the automaker’s first-ever quarterly profit earlier this month and its success selling the Model S electric sports sedan that Tesla makes at a Fremont, Calif., factory.
The Energy Department’s loan program, which includes major automakers such as Nissan’s U.S. division, gained notoriety after the 2011 bankruptcy of Solyndra, the Fremont solar panel maker that cost taxpayers more than $400 million.
Last month, Fisker Automotive of Anaheim defaulted on a similar loan, which could cost taxpayers $171 million.
“When you’re talking about cutting-edge clean energy technologies, not every investment will succeed,” said Energy Secretary Ernest Moniz, “ but 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.”
The financial troubles at Solyndra and Fisker led Mitt Romney to also include Tesla among a list of “loser” government bets during the presidential election last year. It also made the electric car a popular target among critics of government financial support for advanced technology vehicles and alternative fuels.
“Having a Department of Energy loan after Solyndra and Fisker is kind of an embarrassment these days,” Anwyl said. “Paying off the loan gets Tesla out from under a cloud.”
“I would like to thank the Department of Energy and the members of Congress,” said Elon Musk, Tesla’s chief executive, “and particularly the American taxpayer from whom these funds originate.”
In addition to paying off the loan, Tesla will use the money to expand sales abroad, develop its Model X, a sport utility vehicle, and start work on a less expensive vehicle that would extend its customer base and manufacturing volumes, analysts said.
“What Tesla has accomplished isn’t luck, it’s real,” Adam Jonas, an analyst with Morgan Stanley Research, said in a recent report to investors.
“The Model S is a ... good car,” Jonas wrote. “Each day that goes by where Tesla delivers 60 units without images of flaming Model S’s on YouTube offers incremental validation for what it has accomplished.”
The Model S starts at about $62,000 and can top $100,000, depending on trim level and options. The car is stylish and fast, boasting a zero-to-60-mph acceleration of less than six seconds.