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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."
If I win the Powerball Saturday, I may buy one. If I can afford it...
Oh wait, it *is* a press release.
Except oil.
Remember when the big banks 'paid off' TARP, but in reality were just recycling back money they got from the federal reserve/treasury?
It's kind of the same thing here; if you consider all the subsidies for electric cars, the government is still paying a LOT of money to Tesla. It will be more interesting to see the Bush lovers try to justify the fact that their president was 'distorting the market' and driving up the debt with subsidies to private industry. If there are any Bush lovers still around.
Good to see that Tesla is selling enough to make that kind of money though. Hopefully electric cars will become even more common, and cheaper, and more common, in a virtuous cycle.
"First they came for the slanderers and i said nothing."
The headline doesn't claim they did. So how is it a "lie"?
It isn't, of course. So either you're lying, or you are grossly deficient in reading comprehension. Which is it? Those are your only possible choices, and any other response (including nothing) is an irretractable confession that it's "both".
Didn't you read the summary, that it was George Bush? If there was anyone who knew how to pick winners, it was Bush.
"First they came for the slanderers and i said nothing."
Elon is suck a jerk! I hear that the batteries he uses in his cars are manufactured from ground up puppies and baby seals. This story is the last straw, and proves that he also has it in for the economy. Can you believe he's going to deny banks and the government an additional 5 years of loan interest? What a douche....
They didn't have to bribe anyone. The Model S is a highly acclaimed car from everyone else's perspective:
Not bad for a car company that didn't exist 10 years ago
What? The headline is not a lie. It says quite clearly what the future intent is: "Tesla Motors To Pay Off Government Loan 5 Years Early"
Not:
"Tesla Motors Pays Off Government Loan 5 Years Early"
or even:
"Tesla Motors Paid Off Government Loan 5 Years Early"
The headline "Tesla Motors To Pay Off Government Loan 5 Years Early" is a statement of intent, not something that already happened. How is that a lie?
Do you suppose the money just up and vanishes when the government spends it?
That money goes to individuals or companies, and if to companies then ultimately to individuals via salaries. The point of discussion should not be if government spending is good or bad since, economically, government spending is indistinguishable from any other entity spending the same amount of money on the same things... being "government" does not do anything magical to the money. Rather, the discussion should focus on if the money is spent wisely, for the maximal benefit of the country and its citizens. Obstinately the government is a product of the people collectively organizing their resources for the purpose of serving the public.
Defense spending, as an example, does not appear to have maximal benefit at the amount we are spending. Building battle tanks certainly employs many thousands of people, but we don't need or want battle tanks. Therefore building tanks the army explicitly said they do not want is the military-industrial complex equivalent of paying people to dig holes and fill them in again; money and resources are spent but nothing of real value is created.
On the other hand, spending public money on basic research has extremely high value. Just about everything we enjoy in a technological society has the fundamental principles rooted in government funded research. The DoE should get more funding, not less.
Incidentally, Sandia National Laboratories, like ALL national labs, are part of the Department of Energy. DARPA, on the other hand, is part of the Department of Defense. Just thought you might want that clarified...
So I, for one, have no problem using public money to help a new business developing a new technology with a loan. In the long run, if successful, such a business will pay massive returns in economic activity long after the loan itself is repaid. And even if the loan is never repaid, most of that money ends up right back in the economy anyway since it would have been used to buy materials and pay workers. Unless there was some kind of scam going on, even the worst case is still not that bad economically... and if someone did try to walk off with the cash in their pocket, I'd fully support stringing them up by their entrails in a public square as a cautionary example :)
=Smidge=
If I win the Powerball Saturday, I may buy one. If I can afford it...
Let's be realistic, Tesla has never released an economy car for good reasons so the same comments could be made of any higher end car. Tesla has focused on range and top end performance. They can't win this argument because if they release an economy car it will still be fairly pricey and people will complain about range and performance. It's an early adopter company and we will all benefit in the end as costs drop. They want to make money and at this point Elon Musk needs to make money because he invested most of his cash in these high end risky ventures so they would make an economy car if they could. Most of the talk I hear is it's less convenient so it should be cheaper. That's unlikely to ever happen and it ignores the other advantages. You might as well say I won't buy a gasoline car unless I can refuel it at home and gas cost less than a $1 a gallon, just to be fair. Most electric car owners love the fact they can refuel at home and electricity is cheaper not because it's a better fuel source but internal combustion engines are really inefficient when they don't run at a constant speed. It's why hybrids running an undersized gas or diesel engine to charge batteries has been my favorite. The truth is all the Tesla cars have been on par or better with the performance you'd expect for the price range. That is impressive. If you are holding out for a 15K Model S then you might as well hold out for a 15K Mercedes Sedan!
There are not a lot of parts to sell on the Tesla. Unlike a traditional car there is also a lot less maintenance. I for one can't wait until I own a car like that. Oil changes suck, parts suck, lead acid batteries suck.
Oil companies aren't getting loans--they're getting huge piles of cash for free. If those who believe that Government has no right to pick a company to loan money to, they should start with the loans that don't get paid back.
"Tesla Motors *Intends* To Pay Off Government Loan 5 Years Early" is a statement of intent. The headline makes it sound as though they're just about to sign the check.
I'm sorry, AC, what fuzzy logic world are you living in? It is done already. The cars are being produced, sold and used...they are making money and will continue to do so. It's done.
It isn't actually that expensive. Fairly comparable to a similarly equipped BMW or Lexus. Thing is you save money on fuel and even get it for free some times, so over the car's lifetime it is cheaper.
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SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
From my understanding, this was the business plan all along. Let's build really expensive bad ass sports cars that are all electric. Once they made enough money on those, they could start adapting the technology to be cheaper and cheaper. All the while still selling an expensive bad ass sports car for the same price.
Its seems the Model S is part two of this plan.
Seemed genius to me.
21st Century Renaissance Man
In addition to your excellent reply, it should be worth noting that the route manufacturing companies get cheap consumer prices (like Henry Ford did with the Model T) is to have massive production where you make up profits through volume sales and scales of efficiency. That is something incredibly hard for any start-up company to perform, where it costs roughly a couple billion dollars just to start a major new low-cost automobile with production runs in the hundreds of thousands of editions.
Elon Musk was incredibly intelligent to start out with the high end automobiles, especially the niche market of performance sports cars with a little bit of a twist. The Model S is really aiming more toward the luxury sedan market... again a very astute move on his part where the Model S clearly compares well with a Lexis or Mercedes Benz (or the Lincoln branded cars by General Motors). Volume of the vehicle production line doesn't have to be quite so high for these kind of vehicles and ultimately doesn't take as much cash to get them started.
The original approach that Tesla was going to take was to simply buy off the shelf components already being made by several automobile manufacturers and simply assemble a new automobile. Unfortunately because of quality control and inventory issues Tesla has been forced to increasingly build more and more components "in-house". One example was the transmission needed for the Roadster that very nearly bankrupted the company (and forced Elon Musk to double down and dump essentially all liquid assets that he had into Tesla as well as make a whole bunch of phone calls to friends with money to help out). And yes, Tesla automobiles do have a transmission... even if it is pretty simple in its design.
It is in the announced product line of development that eventually Tesla is going to be building economy automobiles, but that the original plan was to wait until they had both the manufacturing facility (that they now have with the NUMMI plant in California) and the working capital needed to get it all to happen.
The only thing that I am a bit surprised at myself is not the cheap low-end automobiles, but rather why Tesla hasn't moved into the all-electric delivery van market (aka FedEx trucks) or even the short haul semi-trailer tractor market where people routinely dump more money on vehicle purchases that would make a typical sports car enthusiast look twice at the price tag and doubt they could foot the bill. There are electric vehicles in those markets, and having corporations set up charging stations for a fleet of vehicles would be even a bonus (on site refueling without having to deal with petroleum companies). The drawback might be the existing competition as well as the fact that such companies are less likely to be hung up in the "green energy" hype.... and that Tesla can only do so many things at the same time. There are also a bunch of patent trolls hanging out in those markets with patents for electric vehicles of those types as well.... that might be causing some additional problems.
The reason for this is because variable RPM internal combustion engine with all its peripherals is very complex structure and requires a lot of maintenance and spare parts.
This is not true for electric engine, which is a very simple in design and as a result far more reliable. This is the simple reality of engine technology, and a known limitation of internal combustion engines, which is why hybrids run a constant RPM internal combustion engine to charge the battery rather then variable RPM internal combustion engine to actually run the car. Former is simply more efficient and requires less complexity and as a result maintenance.
The Volt is widely acknowledged to have been started explicitly because the CEO of General Motors took a bunch of marketing literature from Tesla Motors and threw it down on the desks of his engineers asking why a California start-up company could make a successful electric automobile but they couldn't. The rest, as they say, is history.
Mind you, the Volt is a pretty good automobile and deserves its own kind of kudos. The GM engineers made some compromises that I don't agree with, but I'm not exactly a professional automotive engineer nor have been put into their position to design a new automobile from scratch. Doing such things isn't as easy as it sounds.
As much as I like bashing the gov't, at 36-40% marginal income tax bracket is a long, long, LONG way from "take all my money".
Get a grip.
Learning HOW to think is more important than learning WHAT to think.
Not big at all, because GM is still around and ostensibly still paying taxes, and employing people who in turn pay their taxes, and they are purchasing goods and services from companies that employ people that are also paying taxes, etc. Consider the opposite if GM went out of business it would in the process bankrupt most of their employees, suppliers, and whole swaths of service and goods industries that rely on their employees' patronage, as well as the many local governments where GM manufactures their cars. It's easy to see that propping up an industry temporarily even at great cost can return value to the government many times the cost of the bail-out program itself.
Investments often have paybacks in the wide economy that far outstrip the initial investment. The government is in the unique position to profit off all of it through taxation.
cat sig >
Not all hybrids operate like that, in fact, most don't. What you're talking about is a series hybrid. In a series hybrid (ex: Chevy Volt), only the electric motor is connected to the wheels. The purpose of the gasoline engine is only to turn a generator and produce power for the motor and to charge the batteries. In a parallel hybrid (Ex: Toyota Prius), both the electric motor and the engine are connected to the wheels. As such, the engine must run at variable speeds depending on vehicle speed/gear. The vast majority of available hybrid vehicles are parallel hybrids.
Your car knowledge pains me. Lexus, not Lexis. And Ford owns Lincoln. GM owns Cadillac.
Those errors aside, I agree with you.
Oh please spare us the tears. The government has around 2,110,221 Civil Servants. They earn an average salary of $76,358. That comes out to $161,132,255,118 a year. That is only 4.55% of the Federal budget. WOW, those government employees sure are hogging the spending all right. I'm pretty sure that excedes the efficiencies achieved in most private companies. Is there room for improvement, always, just like everyewhere else.
I won't even touch the complaints about the horrible injustice of venture capitalists having to pay taxes, or government helping to prop up the free market with subsidies.
That is, frankly, sheer stupidity.
The Constitution gives Congress the right to pass laws reguarding the disposition of Federal funds, and nothing in there says they can't use those funds to loan (or heck, even give) money to individuals or businesses. Both are done all the time, and in fact have been since the days of the very first Congress. Not only have both parties done this, but every party in US history that had a majority in Congress has done it, going right back to the Federalists.
From a finiancial standpoint, complaining about this is even dumber. The US Government made money on this deal. Even if you take the entire program together, including some prominent defaults, the US Government has made a higher return on this loan program than the T-Bill rate. In other words, spending money on these loans was a better deal for the taxpayer than paying down the debt by that amount would have been. If anything, our finances would be better off if the program were expanded.
Actually, the smart move would be for them to cut deals with all of the electric companies here in America. Basically, develop delivery trucks that do anywhere from 40 MPC to 120 MPC and then sell them CHEAP to the electric companies. At that point, the electric companies approach ALL of the delivery companies and offers the vehicles for free while selling them electricity at regular prices, but requiring night time charging. With that approach, the electric company can simply pay for the electric vehicle with the difference.
Tesla would gain by being able to produce multiple frames, but also to increase the battery production. And if you notice, the tesla is made like a truck, not a unibody. It is ideal for adding a cheap body with a roll bar over the passenger compartment.
I prefer the "u" in honour as it seems to be missing these days.
The electric motor has far more torque far more reliability against variable effort, more stability and acceleration times competitive with the best Sedans. Sure the Mercedes-Benz C63 AM has a 4.2 s acceleration time, but even the most expensive cars from Mercedez do not go bellow 3.5, and many models more expensive than the Model S have acceleration times in the 5 to 6 s area. It is a performance car, despite your unwillingness to admit it.
You may be interested in reading this little gem concerning the Volt: http://www.autoguide.com/auto-news/2010/10/gm-admits-chevy-volts-gasoline-engine-can-power-the-wheels-so-is-it-still-special.html
I Learned two things about you from reading this post.
1) You have no idea how the tiered tax rate structure in the US works.
2) You are a shortsighted idiot.
The evidence of (1) is that you appear to believe that if you are making, say, $32K/yr (15% marginal income tax rate), that working a bit harder and getting that raise to $33K/yr (25% marginal tax rate) would mean your tax bill would go from $4,800/yr to $8250/yr. This is nonsense since you still pay 15% on the first $32K and the 25% rate only applies to anything in excess of that, i.e. $1K. So you get $1000/yr increase in salary and pay an extra $250/yr in taxes for a net increase in-your-pocket of $750/yr.
(2) Is evidenced by the notion that, despite the amount of money you put in your pocket ALWAYS increasing with increasing salary, you honestly think it's not worth the extra effort. Of course, your whole argument seems to be predicated on the notion that someone making $300M/yr is working ten thousand times harder than someone making $30K/yr, and that's clearly bullshit.
=Smidge=