Tesla pays off its government loans
Davey G. Johnson
Tesla paid off the last of its $465 million government loans May 22, nine years ahead of schedule, thus outperforming most U.S. college graduates and the vast majority of American homeowners.
Tesla used funds from a stock offering to finish the loan with a whopping bank transfer of $451.8 million Wednesday, pointing out that it was “…the only American car company to have fully repaid the government.” Apparently no one at Tesla was even born when Lee Iacocca paid off Chrysler’s $1.2-billion government bailout ahead of schedule back in 1983. History is bunk.
The Tesla loan represented a fraction of the $8 billion given out under the Advanced Technology Vehicle Manufacturing program created under President George W. Bush in 2007 and implemented by president Obama in 2009. Ford still owes $5.5 billion of the $5.9 billion it borrowed under the same plan and has until 2022 to pay it off.
Tesla also used the loan repayment announcement to further distance itself from the so-called government bailout of the Big Three, saying, “This program (Advanced Technology Vehicle Manufacturing) is often confused with the financial bailouts provided to the then-bankrupt GM and Chrysler, who were ineligible for the ATVM program because a requirement of that program was good financial health.”
Tesla said its loan payment was made using a portion of the approximately $1 billion in funds raised in last week’s stock offering. Elon Musk himself purchased $100 million of common equity, what Tesla called the least secure portion of the offering.
“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,” said Musk. “I hope we did you proud.”
Newly sworn-in U.S. Energy Secretary Ernest Moniz released a statement on the repayment the same day the last of the money arrived, addressing the Energy Department’s portfolio of more than 30 loans, 98 percent of which, he pointed out, did not go under.
“…losses to date represent about 2 percent of the overall $34 billion portfolio,” Moniz said. “The other 98 percent of the portfolio includes 19 new clean energy power plants that are adding enough solar, wind and geothermal capacity to power a million homes and displace 7 million metric tons of carbon dioxide every year — roughly equal to taking a million cars off the road.
“The Department first offered loans to Tesla and other auto manufacturers in June 2009, when car companies couldn’t get other financing and many people questioned whether the industry would survive. Today, Tesla employs more than 3,000 American workers and is living proof of the power of American innovation.”
Moniz also used the event to plug EVs.
“This announcement is also good news for the future of America’s growing electric vehicle industry. While the market has taken longer than predicted to get going, sales of electric vehicles in the U.S. tripled last year and are continuing to increase rapidly in 2013. Tesla and other U.S. manufacturers are in a strong position to compete for this growing global market.”
Tesla pointed out that it has delivered more than 10,000 electric vehicles in its 10 years, in addition to establishing EV partnerships with Toyota and Mercedes. Tesla’s next vehicle, the Model X SUV, is due out in 2014, to be followed by more affordable EVs.
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