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Tesla Motors To Pay Off Government Loan 5 Years Early
fredan sends word of a post at the Tesla Motors blog detailing how the company will be paying off its $465 million government loan 5 years early. Quoting:
"This is a significant announcement both for Tesla and for the DOE. It is a marker of the successful launch of the Model S and the incredible market reaction to this award-winning car. And it is a tribute to the success of the DOE's Advanced Technology Vehicle Manufacturing Program (ATVM), a program which was chartered by Congress and signed into law by President George W. Bush, to accelerate the market for a broad range of promising automotive efficiency technologies — electric vehicles (EVs) principal among them. ... Following more than a year of thorough due diligence by commercial auditors, automotive consultants and lawyers, on January 20, 2010, Tesla became the recipient of one of three initial DOE loans announced by Secretary Chu, along with Ford and Nissan – good company for a start-up automaker. Tesla’s loan of $465 million was to be paid back over ten years following the start of production of the Model S. Months later in a separate announcement, an ATVM loan was announced for Fisker. It is worth noting that in comparison with these three other recipients, Tesla had the smallest loan. Ford’s loan was for $5.9 billion, Nissan’s was for $1.4 billion, and Fisker’s was for $529 million. ... We expect to generate sufficient cash and profitability in our business over the next five years that it gives us confidence to proceed with this early repayment of the loan. Moreover, it is also consistent with Tesla’s mantra of speed that we would, as Elon announced last week, accelerate the repayment of our loan, a full five years earlier than required under the original loan terms, making our last payment in 2017."
They're either using the Apple method of product pricing, or they got a big bribe from the NY Times and Top Gear.
It'll be interesting to see how the reflexive, knee-jerk Elon haters spin this one
Thanks Obama.
Tesla has not paid off their loan five years early. All they have done is announce that they INTEND to pay off their loan five years early, four years from now. So, before we jump up and down and talk about how this vindicates the loan program, let's wait and see if it actually happens. That does not mean that this is not good news, but only time will tell if it actually works out.
The truth is that all men having power ought to be mistrusted. James Madison
Oh wait, it *is* a press release.
we spent $500 Million A DAY in those proxy oil wars of Iraq and Afghanistan.. and we don't have a hell of a lot to show for it.
But . . . but . . . but . . . Teh Socialism!11!!111
Ford's got a piece of junk you kick regularly, Nissan hasn't said anything, and Fisker likewise.
Instead of using my money, educating my kids, they lend the money to Tesla - whom then will pay it back for my grand kids can get an education at three times the cost?
Well done Tesla....
They should make a long trip adapter like a generator that you tow behind you or strap on the roof that takes gas. I think that would really widen the cars appeal.
"A good friend will bail you out of jail. A true friend will be sitting next to you saying, 'damn....that was fun!'"
Great success! I would like to drive one! Compared to venture capital success rate of 10%, I think that the government success rate in industrial strategic investment is actually good. Anyone has numbers on this? Note that this is how many of the Canadian, Asian and European new technology ventures succeed and kill American industries. Look at the Chinese subventions to solar technology as a fresh example. As the US share of the world economy is shrinking, we do not have to be the perfect capitalist example anymore. It is time to play the game like the others and start helping strategic breakthrough enterprises.
If you spend most of your time doing short trips, and occasionally do long trips, it makes perfect sense to rent a car for the longer trips.
I lived for multiple years owning no vehicle...I could bike to work (or bus in the winter) and on weekends I could rent a small car for $15/day. Hard to beat that.
If the loan was at an expensive interest rate or included specific terms for what it could be used for, then being able to repay the loan early is good news for Tesla and anyone with an interest in their success.
However if this was a cheap loan that was not tightly restricted, its an odd choice to repay cheap finance early. Didn't Tesla have anything good to put the cash on?
The US Government has no business playing venture capitalist to Elon Musk or anyone else. The power to act give loans to business ventures is NOT in the powers enumerated in Article 1, section 8 of the Constitution. So, they went to the executive branch instead, and managed to get some money from DoE's slush fund. If they want money, they should be doing it the old-fashioned way: going to REAL venture capitalists, selling common or preferred stock, or raiding Elon's piggy bank. I'm happy that they're gonna pay back the loan 5 years early, but that doesn't change the fact that the loan should never have been made in the first place.
Karma: Chameleon - mostly influenced by bad '80s New Wave music
I am opposed to "Obamacare" but you are full of shit.
Pulling numbers out of Fox's ass/mouth again?
It is not even fully implemented yet so the impact can't be realized; even then, you have to use the system before/after to notice any change - so right there that rules out most people and makes it easy to appeal to people's ignorance and gullibility.
Obamacare doesn't solve the drug cost problem, it doesn't solve the 30% of all costs being wasted by the insurance "industry" but it doesn't make those problems worse either. That is why it was able to pass at all. It can't be blamed for rising costs - it never was allowed touch the real problem (like every other problem of today.)
The wars kill people and screw up many more people with unpredictable blow back, not to mention how many Americans it negatively impacts. When more of the military dies at their own hands than by the enemy; you have to ask yourself, who is the real enemy?
Democracy Now! - uncensored, anti-establishment news
That it actually made the news. Obviously, this is the exception not the standard.
Hubris, marketing, bullshit.
When Tesla pays off the debt, then I'll be impressed, otherwise it's merely marketing B.S..
I thought ATVM stood for something completely different.
As usual, the truth is buried deep in the summary, and even deeper in the article.
Tesla is not paying off the loan early - they're *intending* to pay off the loan early because they *expect* to generate "sufficient cash and profits" to do so.
So far they've (with great effort) managed to get one model into production - but it's selling at a price such that their planned delivery rate cannot possibly generate enough cash. They've got some sidelines, but as above, the production rate is almost certainly insufficient to generate enough cash. Even taken together, the two aren't likely enough.
Let's wait for the chickens to hatch shall we?
http://money.cnn.com/2012/11/14/pf/health-insurance-premiums/index.html
Nice troll, there AC.
Is it just my observation, or are there way too many stupid people in the world?
If the government is going to spend money on innovation I think they should use it for scientific grants and make the discoveries public domain. That way it is not single companies that benefit from proprietary knowledge paid for with government loans, but rather humanity benefiting from royalty free technology. You also wouldn't need to worry about loans being repaid.
For technologies where the government has no idea the direction research needs to go, this may not work. But for electric cars? It's obvious we just need better batteries. The government should just be finding research into better batteries and allow everyone access to the research. Tesla didn't even make any new battery technology. They just used existing lithium battery technology which is the primary weakness of the model S.
Each Tesla sold in the US puts $7,500 in tax dollars in Tesla's pockets. Estimate 10,000 sales (in the US alone), and we have $75,000,000 per year in subsidies.
I could pay off my house in LESS than a quarter of the mortage term if the bank subsidized 75% of each payment.
Hell to the yeah!
As a new Tesla owner I am happy to hear this. A couple weeks ago I got to see first hand how that money was spent when I toured the factory. See http://www.youtube.com/watch?v=VUgDcA1pZAM for a National Geographic program on the Tesla factory. The factory is highly automated and has one of the largest stamping machines in North America.
Tesla has the equivalent of a multi-billion dollar factory that they bought and built out for pennies on the dollar. They bought a lot of state-of-the-art equipment from other car manufacturers who were shuttering factories and bought the Fremont NUMI plant for a song from Toyota. While touring the factory they pointed out a large crane mounted to the ceiling of the factory. They said they normally sell for $100K each and they got ten of them for $67K. The one I saw was moving massive stamping templates around.
The loan money was well spent and they have executed their plan quite well. They are on track to deliver 20,000 cars this year, even if they do not get a single new order, and that's without any serious marketing campaign other than their show rooms. They have plenty of demand and seem to have worked out most of their manufacturing issues, many of which were supply chain related. Many of their suppliers did not believe the quantities Tesla had requested and were unable to meet the demand once manufacturing began in earnest. We finally have an innovative car company in the US who chooses to lead rather than follow the Japanese car manufacturers and can compete with the likes of BMW, Audi and Mercedes. They are also working towards building lower cost vehicles as battery prices continue to drop.
They are the polar opposite of Solyndra which was just down the road from them. Solyndra made sense when the cost of silicon was quite high but all the competition from China drove the cost of solar through the floor where there was no way they could compete. They spent a fortune building their factory in Fremont. I watched them build it day and night. There was even construction going on after midnight! (The Seagate sign just went on the former Solyndra buildings).
The cars move around the factory on autonomous robotic devices that follow magnetic lines in the floor so they can quickly reconfigure the factory or move things around. People move around the factory on bicycles, though I saw some electric and non-electric scooters as well.
Many things in the Tesla model S are revolutionary. The drive train and battery technology are quite different than what everyone else is doing. Most manufacturers are using synchronous motors and automotive grade batteries. The automotive grade batteries are very robust but much lower energy density. Tesla has managed to get the reliability using batteries that are much closer to laptop batteries. They can also replace the battery pack in under 10 minutes.
Tesla showed what can really be done by designing an electric car from the ground up. The battery is located entirely underneath the floor of the car and the drive train is quite small. The 416HP electric motor in my car is the size of a watermelon located underneath the large trunk. The inverter is also located there. The chargers are under the rear seats. There's also a sizable trunk in front of the car.
The interior is very roomy, able to easily seat 5 people. They don't need to make allowances for things like exhaust, a gas tank, a transmission and all the other things involved in a traditional car. The interface was also well thought out with the 17" touch screen (which runs Linux and I believe it is using the QT toolkit). The touch screen is simple with large buttons and is quite intuitive.
Just about everything is controlled by software. So far the software has worked very well though I have hit a few minor bugs. Since the car is 3G enabled Tesla can push out software updates any time without requiring a trip to the dealer (and you choose if and when to install them). They have been adding more
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and is experiencing accelerating operating losses each quarter, I'm glad they're paying the money back sooner because I don't see how they're going to survive long term.
A corporation would reinvest this low interest loan at higher rates and pay it off only when finally forced. Private companies have the luxury of being ethical like this. I hope it works out for them.
What were the interests for the loan? Today's rates are historically low, perhaps they just borrowed to someone else at lower rate to reimburse government loan with higher interest rates?
Oil companies aren't subsidized
By BERNARD L. WEINSTEIN
The next time you hear President Obama beating up on oil companies and crusading to wipe out what he calls the industry’s “tax breaks,” don’t be fooled: He’s telling a lie.
Recently at the White House, Obama unleashed some of his most aggressive rhetoric yet on the subject, telling Congress that it can “stand with big oil companies or . . . the American people.”
“I think it’s time [oil companies] got by without more help from taxpayers,” the president added.
Only days before that, Senate Democrats had introduced a measure to raise the tax burden on oil companies dramatically, while creating credits for so-called renewables. The legislation narrowly missed the 60 votes needed to advance. But it’s crystal clear that the Democratic Party, from the top down, is committed to turning anti-oil rhetoric into policy.
But again, the sales pitch is based on a giant distortion — a lie. Obama and the Democrats talk about huge “subsidies” — as if taxpayers are signing billion-dollar checks to oil and gas companies. But oil companies don’t get subsidies. Rather, like every other business, they’re allowed to take tax deductions for the expenses they incur.
A tax deduction and a government subsidy aren’t the same. When politicians use the terms interchangeably, it misleads many Americans.
Oil-company tax deductions aren’t special favors. They are the standard relief afforded manufacturers, mining companies and other businesses to help recognize the costs of operations. Oil companies can deduct their expenses for things like equipment purchases and rig-technicians’ salaries. The point of these deductions — as for any other industry or individual — is to ensure taxes are only levied on income after expenses.
Oil companies can also deduct expenses related to exploration or development. The idea there is to provide an incentive to take on the often substantial risk of seeking new energy sources. When these efforts succeed, the energy market expands, prices drop and America moves that much closer to energy independence.
But even these deductions aren’t unique to energy companies. Many provisions in the tax code seek to encourage certain kinds of behavior. Mortgage deductions reward home ownership. Special tax benefits promote savings in individual retirement accounts or 401(k)s.
Overall, the oil and natural-gas industries claim about $2.8 billion a year in tax deductions. Yet that’s a tiny price to pay for the huge benefits the sector generates for the economy.
Over the last five years, through the thick of the recession, the oil and natural-gas industries have added 160,000 jobs. These firms now employ more than 9 million people. And 2011 saw higher domestic oil production for the third year in a row.
Now, some energy-sector players do get federal subsidies, and they’re massive. They’re the “alternative-energy” companies the White House is so fond of. The wind and solar sectors alone take in $12.5 billion annually in direct subsidies.
Initially, this vast government support was justified on the grounds that “clean tech” was an infant industry that needed help to start competing with traditional energy sources. But we’re now years into shelling out tens of billions in taxpayer dollars — in return for little in innovation or self-sustaining jobs.
Today, each solar-energy megawatt is produced with a stunning $776 in investment- and production-tax credits. For wind power, it’s $56 a megawatt. That’s a huge public expenditure for not much energy production. The tax incentives for fossil fuels amount to a mere 64 cents per megawatt.
Worse, despite the public largess, some clean-tech companies have such flawed business models that they’ve already gone under. Solyndra, the solar-p
That that is is that that that that is not is not.
Bull fucking shit. Still want to believe this liar? Do your own research. Google "intangible drilling costs" and "oil depletion allowance" (and there are more, if you care to dig deeper). These are *NOT* "afforded to all kinds of industries." Any attempt to claim otherwise is a BIG FAT LIE.
"A tax deduction and a government subsidy arenâ(TM)t the same." No, they are exactly the same.
Isn't Fisker swirling the drain?
Fisker's always struck me as "all sizzle, no steak".