Autos

Tesla Pays Off Its $465 Million 'Loser' Loan


Tesla Motor associates work on the Model S electric car at the company's factory in Fremont, Calif.

Photograph by David Paul Morris/Bloomberg

Tesla Motor associates work on the Model S electric car at the company's factory in Fremont, Calif.

Elon Musk’s “Summer of Revenge Tour” continues. His electric-car company, Tesla Motors, just cut the government a $451.8 million check, which means that Tesla has paid off its entire Department of Energy loan plus interest. “Following this payment, Tesla (TSLA) will be the only American car company to have fully repaid the government,” the company boasted (emphasis Tesla’s).

Of all his recent moves, this one must be especially sweet for Musk. Critics have long taken swipes at Tesla and its all-electric hippieness for relying on a federal handout. The most public of such barbs arrived from Mitt Romney during the presidential debates, when he described Tesla as a “loser” alongside Solyndra and Fisker Automotive. Even back then, it seemed a bit silly to lump Tesla—a company employing thousands of people at an American car factory—in with that group of green lollygaggers. And now that Tesla has paid its way off the government dole, Romney may have sealed his fate as that rare capitalist-cum-politician rooting against a successful American car company. (Although Sarah Palin has recently threatened to keep him company.)

The loan repayment follows a number of recent announcements from Musk, including Tesla’s first-ever profit, a higher-than-expected sales forecast, a $1 billion fund raising round, and its Model S sedan earning the highest auto test ratings ever from Consumer Reports. The company’s share price has soared over the past year, from $25.52 to an $87.24 close on Wednesday. The massive runup in Tesla’s shares is partly explained by an epic short squeeze, which is the other part of Musk’s Summer of Revenge.

Tesla got a $465 million loan from the DOE in 2010 as part of an Advanced Technology Vehicle Manufacturing program. The company, which has made some previous payments, had nine more years to pay off the loan. Tesla’s rival Fisker, also a recipient of a DOE loan, recently hired advisers to help it weigh bankruptcy and restructuring options after laying off much of its staff.

“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,” Musk said in a statement. “I hope we did you proud.”

Vance_190
Vance is a technology writer for Bloomberg Businessweek in Palo Alto, Calif. He is the author of Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future (HarperCollins, May 2015). Follow him on Twitter @valleyhack.

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