By on February 13, 2009

It can be so hard to tell when the firm’s CEO is so notoriously at odds with reality. So let’s just say that we’re entering Elon Musk’s world, grains of salt available upon request. In fact, the news comes from a Musk email that Jason Calcanis has posted verbatim to his blog (cross posted at Tesla Motors). The main point of the email seems to be to convince the reader that Tesla isn’t about to disappear with the credit market, citing a deal with Daimler to electrify the Smart, a $40m investment round and the near sellout of all 2009 Roadsters. Even better, if you lay out $100k for a Roadster now, you might just have a new cashflow opportunity to get you through the hard times. “Due to our order backlog, it seems that owning a Roadster can be a good investment,” writes Musk. “Last September, as the financial and real estate markets began crashing, a Roadster was sold at the Sonoma Paradiso in California wine country for $160,000, well above the current list price of $109,000.” And if you buy that, I’ve got some mortgage-backed structured invesment vehicles that you might be interested in. But the big news is that Tesla may or may not get funding from the biggest sucker of them all: the US Federal Government. Or not. (Hat Tip: minion444)

“I am excited to report that the Department of Energy informed Tesla last week that they may disburse funds from our $350M Model S loan application within four to five months,” writes Musk. May? Might? Could? Sorry Elon, but I like a little more specificity out of my conjugations. “The Obama administration has thankfully made it a top priority to move quickly on the Advanced Technology Vehicles Manufacturing loan program, as this will both generate high quality jobs in the near term and lay the groundwork for a better environment in the future. ” And again, nothing specific to Tesla there. I smell some trademark “reality issues.” Especially because there isn’t a peep yet from the DOE. Which begs the question: if Musk is fudging his verbs to imply loans are forthcoming when it’s no sure thing, how on earth is anyone supposed to believe his repeated insistence that Tesla is not in financial trouble?

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14 Comments on “Tesla Confirms DOE Loan Approval. Possibly....”


  • avatar
    Conslaw

    If I were a rich man (cue music), I can imagine circumstances where I would recapitalize Tesla contingent on DOE loan approval. I would probably demand control of the company, which would probably be a deal-killer with Mr. Musk though.

  • avatar
    tesla deathwatcher

    If Tesla gets the Department of Energy loans, it will not need any recapitalization. And Tesla’s shareholders are some big Silicon Valley players. They give Elon Musk a long leash. But they would not let someone come in and take over the company in a recapitalization.

    But I do get the feeling that the government is going to give Tesla its money. That kind of stupidity seems to be the order of the day. Business sense has taken a backseat; political correctness is in the driver’s seat.

    So I am following TTAC’s lead and ending my Tesla deathwatch. Tesla Deathwatcher signing off.

  • avatar
    97escort

    Here is a Tesla piece from the San Francisco Chronicle:

    http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/02/11/financial/f122347S37.DTL

  • avatar
    97escort

    And here is Jay Leno’s test drive:

    http://www.jaylenosgarage.com/video/video_player.shtml?vid=229709

  • avatar
    gslippy

    I’d much rather give Tesla a loan than GM, F, or C.

    Tesla has the entrepreneurial spirit, sells actual cars (not vaporware like the Volt), and is unencumbered by the UAW, weighty pension funds, or the jobs bank. They stand a much, much better chance of survival than the Big 3, and the government stands a decent chance of repayment as a result.

  • avatar
    Conslaw

    I’d much rather give Tesla a loan than GM, F, or C.

    Tesla has the entrepreneurial spirit, sells actual cars (not vaporware like the Volt), and is unencumbered by the UAW, weighty pension funds, or the jobs bank. They stand a much, much better chance of survival than the Big 3, and the government stands a decent chance of repayment as a result.

    Plus, to Tesla, a billion is actually real money, not just some offset against prior actuarial watchamagigits.

  • avatar
    minion444

    We the people, aka the government should not have to give Tesla or anyone else money that has the entrepreneurial spirit. If they were true entrepreneurs they wouldn’t have to beg for money. Let them go public and raise the money.

  • avatar
    gslippy

    We the people, aka the government should not have to give Tesla or anyone else money that has the entrepreneurial spirit. If they were true entrepreneurs they wouldn’t have to beg for money. Let them go public and raise the money.

    Point well taken. The government (us) should feel no obligation to help them. They have already raised lots of private money; one wonders why that well is dry.

    My sense is that they aren’t really “begging” like the Big 3, maybe just jumping on the bandwagon for a few bucks. I don’t hear them crying about how the world as we know it will end if they fail.

  • avatar
    rolosrevenge

    I hope that Tesla gets the money. They have proved that they could deliver their first model even though it was late. In the process they have worked out many technology issues. I like their plan of owning their dealerships as well. Plus, as has been mentioned before, they don’t have any UAW or other burdensome crap. Oh, and one more thing, people actually want to buy their cars. And the amount they are asking for is 1.4% of the entire DOE fund. If they do get it and are able to turn out 10,000 EVs in a year, that would go a long way to help ween the country from oil for not a terrible amount of money.

  • avatar

    Oh, and one more thing, people actually want to buy their cars.

    Tesla has delivered about 200 cars so far. They’re trying to ramp up from 15 cars a week to 30 cars a week by this summer. The ’09 production run of ~1100 Tesla Roadsters is sold out.

    Let’s compare that to Detroit. The best selling vehicle in North America in ’08 was the Ford F-150 with about 450,000 units sold. GM sold over 400,000 Silverado/Sierra pickups.

    Tesla’s made it past Tucker stage. They have a while to go to surpass Bricklin and Delorean. Tesla is an interesting concept for a car company and I hope they succeed, but the idea that nobody wants to buy Detroit products is just silly. GM and Ford each sell more pickups in a day than cars Tesla will sell in a year.

  • avatar
    PeteMoran

    @ 97escort

    Thanks for the Leno link. I’m wasting some time there already! Great stuff.

  • avatar
    guyincognito

    Is this new information or is this coming from the same statement that Musk had to backtrack from?

    “The newsletter contains an on-the-record statement from Elon about the expectations of the Department of Energy loans, but it’s important to note that we have NOT received final confirmation from the DOE that we will receive funds. None of the 75 applications have received final approval. However, we are in the later stages of the loan application process, where the DOE is evaluating Tesla’s financial viability and technical merits. The DOE is doing its due diligence, and we are very optimistic about a relatively expedient timeline for disbursal of funds.”

    http://gawker.com/5151769/elon-musks-electric+car-fantasy

  • avatar

    It’s not confirmed yet, but I’m going to go out on a limb and say Tesla will, in fact, get the money.

    Why?

    See the WSJ about the DOE’s stimulus problem in general:

    http://online.wsj.com/article/SB123448815417580333.html?mod=WSJ_TimesEMEA

    It seems obvious that they are desperate for good proposals at this point, and under enormous pressure to show immediate progress. Supporting Tesla is “shovel ready” – the plant’s already planned and vetting of the application is already well underway. With Tesla’s ambitious (to say the least) schedule it seems clear that the money will be spent quickly. Furthermore, Tesla has a lot of customers who really love their products.

    The Stimulus bill was a dreadful mess, and I am no defender of it. But if you want to throw money away, handing it to Tesla seems like one of the more interesting things you could do. The money will hit the economy much faster than any infrastructure proposal and being non-union it will create more jobs per dollar. Furthermore, it would go to a company that at least makes a unique, innovative product beloved by its (admittedly few) customers.

    There are a lot of things in that Stimulus, many for far more money than this support of Tesla, that are far more probematical and dangerous. I just hope Elon Musk shows himself to be a leader capable of pulling off the new factory and car design. Even with the loan, it’s still all being done on a shoestring.

    The $500-odd million is maybe $5 per taxpayer and I give my share of that ungrudgingly. It’s worth that in entertainment value alone. Will Tesla make it? Will WhiteStar be boom or bust?

    We’re about to find out, and it should be a wild ride.

    D

  • avatar
    tankd0g

    Good lord. LET BAD COMPANIES DIE. Why is this so hard for Americans to do? They are still delivering PROTOTYPES to people for christ sake. This is not how you run a car company.

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