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Tesla Motors Repays $465M Government Loan 9 Years Early
Tesla Motors announced today it has completely repaid the $465 million loan from the U.S. Department of Energy the company received in 2010. The funds were generated by Tesla through a recent sale of their stock, worth close to a billion dollars. The stock price had risen sharply after the company reported its first profitable quarter (and the stock still sits roughly 50% higher than before their earnings release). Today's payment of $451.8 million finished off both the loan's principal and its interest, nine years before the final payment was due. Tesla CEO Elon Musk said, '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. I hope we did you proud.'
I think this sends an excellent message to naysayers: Not all American startups with DOE loans end up like Solyndra.
Bravo to Tesla, and let's hope the current trend continues. The US really could use some new blood in the automotive industry.
And yet the thanks they get is the state of North Carolina (and probably others too, but NC is the one I've heard about recently) shitting all over them because they want to sell their vehicles directly to people instead of having to go through "third-party dealers".
FC Closer
The Tesla S is very affordable to drive. Many cents less per mile than a gasoline car.
Your problem is purchasing, not paying for the electricity.
Except for the cars that I have stolen, I factor in purchase price with operating costs when I determine whether I can afford to drive that vehicle.
Electric cars will lead to nipples and other unamerican things.
... Like paying back your government loans instead of yelling "Too big to fail! ahahahaaha..." and running to some tropical island to take daily wealth showers and drink out of gold-lined cups. :/ They should be commended... it's a decidedly unamerican approach to business. Fiscal responsibility? It's like an F-word in Congress.
#fuckbeta #iamslashdot #dicemustdie
This is exactly what the horse and buggy industry said when the first cars came on the road. "Ha! Petrol! Where do they think they will get it, once on the road?" and "People already have horses - who's going to want to buy an automobile when the buggy is so much cheaper??"
In Australia, we call it Tall Poppy Syndrome where someone that is doing outstanding work is seen as a threat, a target and something to be cut back down to size. Though in this case, I would say that there is a hint of Schadenfreude thrown into the mix as well.
Basically, it's just sad and pathetic.
Moved to http://soylentnews.org/. You are invited to join us too!
http://money.cnn.com/2013/05/20/autos/telsa-car-dealers/index.html
I especially take offense with this argument:
"When manufacturers discontinue a brand -- such as Pontiac, Mercury, Oldsmobile or Saturn -- auto dealers still remain to help the customer,"
In reality, if Tesla were to go out of business, individual mechanics would open shop assuming there was a business demand. If there wasn't any demand, then it wouldn't matter if the sale originally involved a dealer or not. (Unless said former-dealer was unclear on the concept of business.)
You stereotypers are all the same...
Dealers are a huge lobby and major contributors in all states. This is a clear case of entrenched influence against the public interest, in opposition to individual rights.
Contribute to civilization: ari.aynrand.org/donate
I'd leave partisanship out of it--I'm pretty sure it's more about money from car dealers both via campaign contributions and taxes.
Think of it this way--that car lot takes up a lot property. Property gets taxed at a local level. There were a bunch of localities that had problems when their Pontiac and Saturn dealerships closed down. People start buying cars over the Internet and not through local dealers, there goes those dealers and their local taxes. I'm sure there are plenty of cities who'd rather not see that happen.
Your post is incorrect. Speaking as a blatant republican and businessman, I don't want the U.S. to invest in loan guarantees for fly by night operations that have absolutely no chance of success. Elon Musk, who successfully founded Paypal, knows how to run a company, had a real business plan and had a legitimate chance to make a long term profit was worthy of a federal loan guarantee. Solyndra is what we are trying to prevent.
BTW - good work rewriting history - lax lending standards / pushing acceptance of sub-prime loans that caused the housing crisis and recession were not caused by republicans. This shouldn't be a news flash...
And the fact you were voted 5 interesting for being a bigot shows how absolutly worthless /. comments are.
Now for the deregulation TRUTH how it was the DNC that refuesed to let Bush add regulations to prevent the collapse. But then again the truth doesn't ever seem to line up with DNC talking points, so keep spewing your bigioted BS lies.
but if the government is loaning out taxpayer money without adequate return on investment, the taxpayers should be pissed off as much as a bank's shareholders would be.
The government is not a company. It does not need to make a direct return to do a good thing. Consider the government spending $100 million for a bridge. Say the bridge creates $200 million in economic activity by joining communities. If the government taxes at 40% they will only get $80 million back. Does that mean it was a bad investment? That doesn't mean the government spends money on anything. How is anyone really anti-government. I know of no alternative system. I propose a real discussion about what government should be used for instead of making the ridiculous assertion that the government needs to somehow make a profit.
Even without a penalty the US Treasury will make money. They get the principal back – just less interest.
Most corp bonds issued that have a call feature in them (i.e. a early repay feature) has a penalty. Normally 1 to 2 percent in the early life of the loan, but steadily decreasing.
Here is an example. A company issues a 10 year bond at 10%. 3 years latter the interest rate is 5%. They call back the high interest rate bonds and issue new ones at 5%. This is bad for the bond holder because instead of having a 10% bond they now have cash. If they went ahead and replaced it they would only get 5%. In order to stop that, the company usually has to call the bond at 102. - that is for every $100 they need to pay $102.
I doubt the US Treasury would have put a penalty for an early call – but I am just guessing.
Early repayment penalties are illegal in most of the US.
The benefit of this kind of loan program is not in the interest earned, but in the fact that you get a successful company that creates jobs and pays taxes, which used to be considered a good thing. Having an additional player in a heavy industry also creates competition in a fairly consolidated sector, which also used to be considered a good thing.
These kind of government loans to business in the US go back to the 18th century, and were considered a very good idea until recently, when one of the two political parties lost its mind.
You are welcome on my lawn.
Speaking as a blatant democrat and businessman, I agree with your first paragraph. Tesla had a good chance. I cheered the decision to extend the government backed loan. They'd already produced the most successful electric car in my lifetime, losing not too much money in the process, while developing core competencies - the drive train and battery packs. The basic principle that government should invest where there is a track record of success falls on deaf ears in Washington. Companies like Fisker did not meet this threshold, and Solyndra was essentially an idea on paper, worth more research, but not a half billion dollars. I think a 1 in 3 success rate is about the best we could expect from government investments, regardless of the party in charge. No VCs I know of have a 1 in 3 success rate. Still... Fisker was a doomed investment. I was pissed when I heard of it. I'm just glad we never gave them the second half of the money.
As for the second part, yes democrats pushed for bad loans, but unregulated banks got unregulated insurance on unregulated derivatives, while everyone knew that they were all too big to fail. That lack of regulation on businesses that the government will give a trillion dollars to before allowing to fail is the GOP's fault. There's blame to go around, and that's not rewriting history. Still, good post overall.
Celebrate failure, and then learn from it - Nolan Bushnell
If local bookstores and video stores had the same amount of political clout as auto dealers then Amazon and NetFlix wouldn't be able to sell in those states either.
Well you're forgetting the revenue side of things from dealers. Not that Tesla couldn't do the same thing up to a point.
Car Sales generate very lucrative sales taxes as well as vehicle registration fees etc. Dealerships must have licenses and in some states, state approval to operate (read: $$$ in the state coffers)
Dealers make heavy investments in their franchise, meaning that they'll employ workers and have a presence that also generates lots of sales tax revenue from parts/maintenance and resale.
Most states also want a local "neck to wring" when it comes to things like lemon laws. If they're dealing with an out of state provider, it complicates their remediation process. Not that it's not impossible to enforce their laws on somebody selling something in state (uh, Internet Sales Taxes anyone?)
But the cronyism that exists and has existed because car dealers contribute to political campaigns and get nice laws passed to prohibit competition.
It's all about money and influence and like the Taxi Apps for example fighing DC and NYC to allow folks to order a cab their way or AirBnb for example running afoul with NYC, it goes to show how much red tape and regulation there is in our world.
So, yes Car Dealerships are a huge
Harrison's Postulate - "For every action there is an equal and opposite criticism"
If electric cars take over the market, the demand for car maintenance will collapse. Thats a big chunk of the job market in some areas and there will have to be some adjustment.
We should all have such problems. Also if they find the cure for cancer, a lot of oncologists will be out of a job. It's still a big net win for society in either case.
I don't care if it's 90,000 hectares. That lake was not my doing.