Print 78 comment(s) - last by fasfdhfd0000.. on Jan 29 at 4:04 PM

Tesla Model S  (Source: Tesla Motors)
Let the money flow...

The federal government seems to be quite happy with dishing out money for environmentally friendly ventures, and there are plenty of companies that are willing to take the funds and put them to good use. One such company is Tesla Motors.

Tesla Motors is probably most notable for its sexy all-electric Roadster. The $100,000+ sports car, which is based on the Lotus Elise chassis, has a driving range of 244 miles – one Tesla Roadster, however, was able to travel 313 miles on a single charge -- and can zip to 60 mph in less than four seconds. However, Tesla is looking to take its electric car-building prowess to a somewhat more mainstream audience with its four-door Model S electric sedan.

This is where the federal government steps in to work its magic. According to the Detroit News, Tesla Motors today closed on a deal to secure $465 million in low-cost loans from the Energy Department. The funds will be used to build manufacturing plants in California for the Model S and its powertrain.

The company was originally approved for the loan back in June of 2009. The $465 million will come from the Advanced Technology Vehicle Manufacturing Program which is providing a total of $25 billion to automakers that develop new fuel efficient vehicles. Other notable names to get in on the loans include Nissan ($1.6 billion) and Ford ($5.9 billion).

"This is an investment in our clean energy future that will create jobs and reduce our dependence on foreign oil," said Energy Secretary Steven Chu.

"It will help build a customer base and begin laying the foundation for American leadership in the growing electric vehicles industry. This is part of a sustained effort to develop and commercialize technologies that will be broadly deployed throughout the American auto industry."

As previously reported by DailyTech, the Model S will have a driving range of up to 300 miles and can dash to 60 mph in 5.5 seconds. The fetching sedan weighs in at a portly 4,000 pounds (1,200 pounds of which comes from its lithium-ion battery pack). If all goes according to plan, the base Model S will cost around $50,000 after a government-backed $7,500 tax credit is taken into consideration. For comparison, the Chevrolet Volt is expected to cost in the “low 30s” after the $7,500 tax credit is applied. At that price point, GM still contends that it can make a profit.

The Model S is scheduled to go into production in 2012 and yearly output is pegged at 20,000 units per year.

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

RE: Tax payers money
By Shadowself on 1/22/2010 8:58:02 PM , Rating: 2
Clearly you have no experience with these kinds of loans. I do as I'm currently working with a team to get such a loan.

1) The government assesses an up front, non refundable application fee (no matter who you are) of 0.5%. On a $1 billion loan that's $5 million dollars. This is to cover the costs of the USG processing the loan -- whether it is issued or not. Don't get the loan? Tough, you still have to pay the fee and you don't get a refund.

2) The government assesses an up front risk fee which ranges from 1% to 25% of the value of the loan -- if you get the loan. Get approved by congress and the administration (yes, both have to approve) for the loan then pay the fee BEFORE you get the money. In looking through some prior loans I've seen this fee as high as 20%. So on a $1 billion loan the up front fee is $200 million. If you're really lucky and considered by the government to be very low risk then a 1% fee on $1 billion would be $10 million. Historically this fee has been 5% to 20% depending on the risk assessed by EOB. Again, this fee is paid before you get the money from the loan. While I would not stake my life on it, I'd bet heavily that Tesla paid a higher percentage risk fee than Ford.

3) The loan outlay is done over a finite period of time, not all at once. Then the borrower has to make periodic payments after all outlays are complete. Outlays are typically over a period of 1 to 5 years and payments are typically over 1 to 15 years after that.

4) The borrower has to pay interest on the loan, typically around the "U.S. Treasury Rate". It can be less, but is usually not significantly less.

Additionally, these organizations almost always DO pay that money back -- with interest.

And just so you don't think this is a "liberals" thing -- Congress and the three prior republican administrations have issued just as many of these loans as the Congress and the current and two prior democrat administrations. The laws to do this have been in place since the 50s. It is just that the media is reporting them to the public now more than ever.

Bet you never heard of the number of loans made to several middle eastern organizations in the 70s and 80s through the auspices of HUD and DOE. (You need a government agency as a sponsor to get any of these loans no matter who you are.) Just one of the many methodologies to do this is through the Federal Financing Bank which formally came into being back in 1973. Check it out.

"If you can find a PS3 anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." -- SCEA President Jack Tretton

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki