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Tesla's early repayment is mainly due to last week's announcement regarding its plan to issue more stock and pay off the energy loan with the proceeds

Tesla Motors announced today that it has repaid its $465 million energy loan in full nearly a decade early.  

"I would like to thank the Department of Energy and the members of Congress and their staffs that worked hard to create the [loan] program, and particularly the American taxpayer from whom these funds originate," said Elon Musk, Tesla co-founder and CEO. "I hope we did you proud."

Tesla was approved to receive a $465 million loan from the U.S. Department of Energy (DOE) in June 2009. The loan, which was part of the Advanced Technology Vehicles Manufacturing program, was to be repaid by 2022. But in March of this year, Tesla received permission to pay the loan back five years early by mid-2017. 

But now, Tesla has repaid the whole sum -- nine years earlier than expected from the original 2022 due date.

Tesla's early repayment is mainly due to last week's announcement regarding its plan to issue more stock and pay off the energy loan with the proceeds. Tesla said it wanted to sell about $830 million in shares, and use $450 million in convertible senior notes (which are due in 2018) along with sales of 2.7 million shares (valued at about $229 million at the time) to pay back its federal loan.

Tesla Model S

Also helpful to Tesla's cause is the fact that it managed to start shipping 500 Model S sedans per week starting in March of this year, exceeding the sales outlook of 4,500 posted in the February shareholder letter. In fact, Tesla managed to sell 4,900 Model S sedans in the first quarter. The automaker plans to deliver 21,000 total for the year, which slightly exceeds previous forecasts of about 20,000. 

Tesla reported its first profitable quarter in Q1 2013, where it posted a net income of $11.2 million (a huge increase from an $89.9 million loss in the year-ago quarter). Excluding certain items, Tesla's profit came in at 12 cents a share, which was a boost from a loss of 76 cents a share in Q1 2012. Analysts expected a profit of about 4 cents a share. Revenue also saw a huge year-over-year boost, totaling $562 million (up from $30.2 million in the year-ago quarter). 

Tesla is certainly looking to keep that momentum going, and is doing by extending excellent service beyond the point of sale. Last month, the automaker announced a new battery replacement program as well as new service programs, which feature valet for customers who need to send their Model S' to the shop -- and can even borrow (or later buy) a better Model S or Tesla Roadster as loaner vehicles. 

Today's early repayment is a crucial point in the history of clean energy loans issued by the Obama administration. Even though DOE said today that losses in the loan program are at 2 percent of a $34 billion portfolio and less than 10 percent of the $10 billion loss reserve, it's hard to forget some of the large loan defaults made by now-bankrupt clean energy companies. 

Tesla/SpaceX CEO Elon Musk
In September 2011, Silicon Valley-based solar panel company Solyndra filed for bankruptcy after receiving a $535 million loan from the DOE in 2009. Government officials reportedly warned the administration of the viability of Solyndra, saying the company would go bankrupt in a matter of two years. The warnings were put aside in order to meet political deadlines.

Later in November 2011, Beacon Power, a company that creates flywheels to store power and increase grid efficiency by preventing blackouts, filed for bankruptcy after receiving a $43 million loan guarantee from the Department of Energy in August 2010.

But the failed energy loans didn't end there. Battery maker EnerDel's Ener1 subsidiary filed for bankruptcy in January 2012 after winning a $118.5 million grant from the DOE in August 2009. Ener1 was supposed to develop batteries for electric vehicles.

Just last month, it was announced that California-based Fisker Automotive -- which makes plug-in hybrid electric vehicles -- was talking bankruptcy. The automaker received $529 million in DOE loans in April 2010 for the development of high-tech vehicles. However, Fisker fell a little behind on its production schedule, and in May 2011, DOE froze the loans due to "unmet milestones." Fisker had only drawn $193 million of it at that point. 
Due to these frozen loans, Fisker is having a hard time securing funds to make its second car -- the Fisker Atlantic. Fisker is now looking for investors to help out financially, but the company's investor solution has drawn a lot of criticism because two potentials have been Chinese companies -- Zhejiang Geely Holding Group and Dongfeng Motor Group Co. This is seen as an issue because Fisker received U.S. taxpayer dollars to fund its Karma plug-in. 
Things have only gotten worse, as Fisker was forced to lay off 75 percent of its staff and even missed its DOE payment in late April. 

Thankfully, Tesla has had a better time with its clean auto production. The company can now look ahead to continued Model S success and production of its Model X crossover EV (which hoped to begin production this year, but was shelved to 2014 with deliveries expected in 2015).

Source: Tesla Motors

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By flyingpants1 on 5/22/2013 10:34:52 PM , Rating: 5
Great job Tesla, you did it.

EVs will soon be cheaper to own and drive than gas cars. The $30k 200-mile EV will change the world in a few years.

RE: :)
By MechanicalTechie on 5/22/13, Rating: -1
RE: :)
By Mint on 5/23/2013 12:24:52 AM , Rating: 5
Please stop with the misinformation. It's really not hard to google 'tesla rare earth'.

Lithium ion batteries generally don't use rare earth metals, and the Li(Ni-MN-Co)O2 chemistry from Panasonic that Tesla uses doesn't either. The old NiMH battery chemistry does. Tesla also uses induction motors, which don't have any permanent magnets in them.

A Model S barely uses any rare earth metals.

RE: :)
By Mint on 5/23/2013 4:34:19 PM , Rating: 2
(Correction: Tesla uses Li(Ni-Co-Al)O2 batteries. Still no rare earths, though.)

RE: :)
By Mint on 5/23/2013 12:43:59 AM , Rating: 2
It'll be more than a 'few' years for that. EVs with range extenders are the only hope for that.

But even covering the luxury sport (Model S) and luxury SUV (Model X) segments are major accomplishments. You don't exactly find the most fuel efficient vehicles among the M5's and CLS's of the world.

Let's see if TSLA shares can stay at $90. They'll have to sell about 50-100k vehicles a year with $5-10k net profit to justify that. It's already worth almost 1/4 as much as GM.

RE: :)
By flyingpants1 on 5/23/2013 5:23:41 AM , Rating: 2
Based on what? Elon says the cheaper mass market car is the first priority after S and X, scheduled for 2016/17

RE: :)
By Mint on 5/23/2013 7:04:00 AM , Rating: 2
I just don't see that future model actually being $30k, nor do I see it having 200 mile range.

Right now the 60kWh Model S barely clears 200 miles in EPA tests. That's a lot of batteries, and given how the Model S was priced before axing the 40kWh model (about $10k for every 20kWh), I don't see how the battery on a 200 mile EV would cost less than $20k in 2016. The rest of the car isn't free, and Tesla needs to make money as well.

RE: :)
By BRB29 on 5/23/2013 7:48:57 AM , Rating: 2
Because as battery storage density increases, which it is rapidly, we are going to see lighter batteries. That also mean smaller and cheaper batteries.

Less weight = less energy used = more range

With lighter and smaller batteries, they can also make a smaller car and a cheaper model.

smaller/Lighter car + lighter batteries = less costs + more range

To reduce costs more, they can use even less batteries to achieve the same 200miles range and take out some features.

You are right about 30k price, it is unlikely. I can see Tesla making a $~35k 200-250 mile range EV. I'm sure they'll market as 30k because of tax rebates.

RE: :)
By karimtemple on 5/23/2013 8:24:05 AM , Rating: 2
And I will be quite likely to buy one.

RE: :)
By Mint on 5/23/2013 4:06:49 PM , Rating: 2
If it has a 200 mile range, I'm thinking $35-40k after the tax credit.

It'll be a well equipped, decently performing car, like a BMW 328i. $35k is a reasonable price for a car like that.

RE: :)
By BaronMatrix on 5/23/13, Rating: 0
RE: :)
By flyingpants1 on 5/24/2013 12:56:42 PM , Rating: 2
Okay. Why?

RE: :)
By tayb on 5/23/2013 11:27:19 AM , Rating: 2
Battery development is beyond rapid right now. In 4-5 years I have no doubt that the cost and weight per kwH will have halved. If this holds true there will be many EV options in the $20k-$30k market with 200+ range.

RE: :)
By Mint on 5/23/2013 4:32:10 PM , Rating: 2
I guess time will tell, but I think you're overly optimistic.

Double density batteries have a much more lucrative market right now with smartphones. Apple and Samsung would easily pay $2 per Wh for such a battery (5x current prices), even if it only had half the cycle life needed for automotive applications. Yet it doesn't exist.

The startup that figures out how to increase density is certainly going to tap that market first. Only when such technologies becomes widespread knowledge will higher density have a chance at lowering costs.

Raw materials aren't really the limiting factor in battery costs anyway. With current energy densities, even a cheap $300/kWh works out to $60+/kg, which is many times more expensive than lithium, cobalt, carbon, etc.

RE: :)
By BRB29 on 5/23/2013 4:41:51 PM , Rating: 1
I don't think he's overly optimistic. The reality is money is the driving force behind this tech right now. That's a very strong incentive for most people.

RE: :)
By inperfectdarkness on 5/23/13, Rating: -1
RE: :)
By LRonaldHubbs on 5/23/2013 8:45:15 AM , Rating: 5
Since you're apparently too lazy to look this up yourself...

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 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.

Interest rates on the loans range from 0.9 percent to 3.4 percent, according to the filing. The loans must be fully repaid in 10 years, Ahuja said.

Why should the interest have been 50M? Do you have some sort of justification for this number? The rate they were given is in line with typical interest rates you would get from any other lender.

RE: :)
By inperfectdarkness on 5/23/13, Rating: 0
RE: :)
By BRB29 on 5/23/2013 3:16:32 PM , Rating: 2
They're not going to. People have confidence that Tesla will be successful. They can just issue more stocks and it will sell out on the first day.

RE: :)
By SPOOFE on 5/24/2013 5:12:01 AM , Rating: 2
Why is it Tesla's fault if some other entity is handing out loans, and why wouldn't they take advantage of such a useful option seeing as how it was freely offered to them?

"If you mod me down, I will become more insightful than you can possibly imagine." -- Slashdot

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