By on May 21, 2013

Loans from the Department of Energy seemed to be a great idea at the time, now they are a millstone one wants to get rid of.

“Given govt loan repayment this week (prob Wed), Supercharger update will be next week. Work continuing independent of announcement,” tweeted Tesla’s CEO Elon Musk today, right after other important announcements, such as “Petting zoo left a chicken behind at the park. Now we have a pet chicken.”

The tweet is a bit cryptic, so a Tesla spokeswoman had to tell Reuters that “Musk was referring to the full repayment of the DOE loan.” Last week, Tesla said it would use $452.4 million from a bond and stock offering to repay the balance of the loan with interest.

(In the video above – from March – you learn a little bit a about gaining – or losing – money from those tweets.)

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24 Comments on “Musk Wants To Repay DOE’s Tesla Loan By Tomorrow...”


  • avatar
    wumpus

    Anyone know what the interest on the load is? I would be shocked if they managed to release bonds with lower interest (especially on the heels of Fisker imploding). Diluting stock equity isn’t all that great if you have a good chunk of stock (CEOs without much equity love it to death).

    I’m assuming its just a gimick and attempt to prove they have the capital to do it, but its pretty impressive if they have that type of money.

    • 0 avatar
      Type57SC

      It is pretty impressive that Musk is buying $100MM of the offering to maintain his ownership level. That is a nosebleed valuation to be buying in to. great to do an offering at this valuation. I just can’t get my mind around how this business is worth $10B, so if I were them, I’d be raising as much money as possible at these levels.

  • avatar
    Landcrusher

    Call me a cynic, but I think Musk wants to sell more cars less than he wants to make more money and keep his political clout/protection. The pay back will pump his stock while pleasing his political allies. Eventually, I see the whole thing could crash without continued influx of OPM.

    • 0 avatar
      CJinSD

      If Tesla has a future, it is as an exporter. European markets are perverted enough for the Model S to be a reasonable transportation solution for many people. Throw in our devalued currency, and we can send all the Teslas overseas so I don’t have to be reminded of our corrupt society by seeing them.

      • 0 avatar
        fozone

        it is a reasonable option for many in the US already (at least here on the west coast, we’re seeing them in bigger numbers. People who own them seem to love them. You plug them in at night — recharge time is meaningless the majority of the time.

        The Model X is going to be the make-or-break. But if people are buying CUV turds like the Sorento I can’t imagine what they’ll think of the X — like it fell from outer space or something…

        • 0 avatar
          GiddyHitch

          +1 on the Model X. That thing gets me excited – all the performance benefits of the Model S, styling of an SUV, and the practicality of a minivan. I don’t get all of the Tesla hate in the comments here.

      • 0 avatar
        gslippy

        @CJinSD:

        You’re ignoring the fact that the Model S has already done quite well in the US.

        I’m not sure what you mean by saying the “European markets are perverted enough for the Model S to be a reasonable transportation solution for many people”, unless you’re referring to some sort of subsidy program.

        Bear in mind that the US subsidy on this car amounts to only 10-15% of its MSRP, which is insufficient to sell people on the risks of buying an EV. I suspect Tesla sales wouldn’t be hurt if the subsidies disappeared. It’s cheaper EVs that benefit the most by subsidies.

        And since we’re discussing subsidies, I’ll avoid driving by farms so I don’t have to be reminded of our corrupt society by seeing them, since farm subsidies are about 20x auto subsidies.

  • avatar
    healthy skeptic

    Let me boil down the story:

    This is a good thing. It’s good for Tesla, and it’s good for the American taxpayers. Even if you were politically opposed to the loan, your tax money will not be lost if Tesla goes down.

    • 0 avatar
      Luke42

      +1

      If you thought the loans were a bad idea, you can breathe a sigh of relief that the madness is over, at least for one company. And you can sit back watch an American high tech business do its thing, safe.in the knowledge that you no longer have anything to do with it.

      If you thought the loans were a good idea ,you can breathe a sigh of relief that the madness is over, at least for one company. And you can sit back watch an American high tech business do its thing, safe.in the knowledge that you no longer have anything to do with it.

      Option 3: If your career is going really well, then you can contemplate buying an American made luxury car that actually is significantly better than a used Fusion with leather seats.

  • avatar
    Jean-Pierre Sarti

    My guess is that anything that has DOE attached to it right now is extremely toxic politically or otherwise as Bertel suggested so won’t mind even taking a loss on the loan. I am still not sure if he is a genius innovator or a genius huckster. My heart says the cars are actually cool and even useful especially if the recharge time can ever be conquered. But my mind says the numbers and cost don’t add up to a long term viable business.

    He certainly is riding an incredible streak right now and in many ways I hope it turns out right.

    • 0 avatar

      “But my mind says the numbers and cost don’t add up to a long term viable business.”

      You are correct. The number of people who can afford a $60,000 car is too small. The number of people within this group who want to buy an EV is even smaller. The Volt must be taking some of these sales since the average yearly income of a volt buyer is 175,000. Tesla will soon be facing fierce competition from the ELR. No automaker makes any profit on EV’s just yet. GM would be able to eat the losses by selling profitable trucks and SUV’s. No such luxury for Tesla. Tesla made a small profit in 1Q thanks to Zero Emission Credits. If not for these credits, they would have lost money in what probably is their best selling quarter. Exports can’t save Tesla. EV’s are not popular in Europe or China. I do not see how Tesla can survive beyond a couple of years on its own.

      • 0 avatar
        Luke42

        Elon Musk seems to have a negative personal IRR.

        He seems to love risky ventures that might change the word. My guess is that he’s trying to make his money last until he dies, but do as much cool geek stuff as possible along the way.

        Flying in to space in my own rocket, and driving my own EV are pretty high on my geek bucket list…!

      • 0 avatar
        fozone

        One thing in Tesla’s favor (and it is a big one) is that they seem to understand product design very much like Apple does, and the way most auto manufacturers don’t.

        Sit in a model S to see what I mean. Everything you see and touch feels special, like they sweated the details and didn’t just raid a parts bin. The UI of the controls actually doesn’t suck (a rarity for car makers, and probably due to where tesla is HQ’d.)

        Always worth remembering that the iPod was just an MP3 player, after all….

        • 0 avatar
          redav

          I think you have a good point, but I disagree about the touch screen interface. It clearly is done by a company that understands tech (as opposed to other touch screen set ups), but I still think it is a poor fit/choice for a car.

      • 0 avatar
        mcs

        “Tesla will soon be facing fierce competition from the ELR.”

        What?? the ELR is a 2 door 4 passenger coupe and the Tesla is a much faster 7 passenger sedan. Range Extender – yes Tesla does have a range extender. It’s called NetJets, or if your not as well off, commercial airlines.

        BTW – Tesla is going to go the quick swap replaceable battery route to solve the charge time issue.

      • 0 avatar
        mkirk

        Can he bring any of the cash over from selling profitable spacecraft to the Government? There has got to be some markup in that business. Certainly some ad cachet…”Range Anxiety? – cuts to spacecraft docking at the ISS – How’s this for range?

        Wouldn’t the tie in that he can get a spaceraft up and back successfully help put some at ease about the technology in Tesla Cars? Worked for Saab…wait, umm, never mind

  • avatar
    7402

    I see several Model S Teslas in daily use. I still see a couple of the Tesla roadsters on the road now and then. They are all good looking, powerful, well-made cars. Most of the early adopters (willing victims) love them.

    It’s way too early to give up on Tesla.

  • avatar
    wumpus

    So does the best and brightest actually think Musk intends to do this? Government loans may be toxic, but there is a huge overlap between those who hate government loans and those who hate anything as “green” as electric cars. I still maintain it’s a gimick that will include conditions to guarantee he will “only” have to pay twice as fast as the contract.

    I remain impressed if Tessla has that type of capital anyway.

    • 0 avatar
      gslippy

      I’m not sure Tesla has the capital, but Musk probably still does.

      Remember, he’s going to take his dealer network fight national, so it may help his case to show he’s no longer tied to any government money.

  • avatar
    redseca2

    All I know is:
    1. In San Francisco I see them everyday. More common than that other american luxury car, Cadillac.
    2. My Tesla stock has tripled.

    • 0 avatar
      mkirk

      I hope you are right about Tesla. It is a good story and I am glad when American companies are successful, especially when they build here in the US. With regard to your Tesla stock though, good for you but somewhere, someone once uttered those same words in regard to their ENRON stock.

      • 0 avatar
        redav

        Re stock price: One can always sell a portion of their holdings to cover their initial investment so that they don’t ‘lose their shirt,’ even if it subsequently crashes. E.g., if a stock triples, sell 1/3 of your stock. Then you have all your capital investment returned as cash, and everything else the stock does is profit, even if it crashes to half your initial purchase price.

  • avatar
    gslippy

    Indeed, Tesla paid their loan back in full today – 9 years early.

    BTW, I saw my first Model S in the Pittsburgh area today, which brings to exactly 3 the number of EVs I’ve seen around here. The count includes an i-MiEV and the Leaf I drive. Still lonely.


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