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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.
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
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!
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.
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.