US based electric automobile manufacturer Tesla today announced that it had paid back all of its debt to the federal government. The move comes one week after a surprise announcement by the company that it would issue stock to make the repayment possible. What makes this move so completely newsworthy is that Tesla did not have to pay off the loan now. It is paying it off 9 years early.
Last week’s stock offering brought in more than enough to pay off the approximately half billion still owed to the US government. The loan was part of a package it received as part of the Advanced Technology Vehicle Manufacturing program (ATVM). The program, started during the administration of President Bush, and continued by President Obama’s administration, required that automaker also obtain matching funds from private investors. Much of that money came from company founder and CEO, Elon Musk. Mr. Musk also bought $ 100 million more of his company last week following the IPO which in total is reported by Tesla to equal approximately $ 1 billion.
Tesla benefitted from the loan in many ways, but also was frequently linked to other loans to US automakers which had completely different circumstances. This may have hurt the automaker in ways immeasurable, but if so, the incredible early repayment should more than make up for that in the eyes of detractors. The loans provided to Tesla were not part of the auto bailout that General Motors and Chrysler benefited from (and continue to benefit from). This is also not the first time Tesla has paid part of the loan early. Pretty much from the outset its payments were sent early and in full as Torque News has previously reported.
Tesla has only one car, called the Model S, in production. Ranging in price from about $69,000 to about $120,000, the car is a runaway success. Although it had a slower than predicted start, and although Tesla was not able to meet some of the production targets it had set for itself by the end of the last year, it has since rebounded. Tesla does not report its sales in the same fashion that other automakers do, but all reports seem to indicate that Tesla is on target, or ahead of target to meet its 2013 production and sales goals. In a move that some say signals the strength of its products, in late March the company dropped the introductory level of the Model S to focus production capability on higher content models. Even that move spurred some controversy.
Mr. Musk, who does not shun the spotlight, today thanked the Department of Energy, and the US taxpayers for the loan, saying “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.”