Tesla Motors announced yesterday, May 22, that it has paid off the entire loan awarded to the company by the Department of Energy in 2010.
In addition to payments made in 2012 and Q1 2013, Tesla said May 22’s wire of almost half a billion dollars ($451.8M) repays the full loan facility with interest.
According to Tesla, following this payment, “Tesla will be the only American car company to have fully repaid the government.”
Tesla may have badly chosen its words as this latest statement was quickly challenged by Chrysler.
Gualberto Ranieri, Chrysler Group LLC Senior Vice President Corporate Communications, posted the following on the company’s blog:
“The information is unmistakably incorrect. It’s pretty well-known that almost exactly two years ago – May 24, 2011 – Chrysler Group LLC repaid (in full and with interest) U.S. and Canadian government loans more than six years ahead of schedule.
Question: short memory or short-circuit?”
For the first seven years since its founding in 2003, Tesla was funded entirely with private funds, led by Elon Musk.
Tesla brought its Roadster sports car to market with a 30 percent gross margin, designed electric powertrains for Daimler (Mercedes) and had done preliminary design of the Model S all before receiving a government loan.
In 2010, Tesla said it was awarded a milestone-based loan, requiring matching private capital obtained via public offering, by the DOE as part of the Advanced Technology Vehicle Manufacturing program. This program was signed into law by President Bush in 2008 and then awarded under the Obama administration in the years that followed.
Tesla said this program is often confused with the financial bailouts provided to the then bankrupt GM and Chrysler, who were ineligible for the ATVM program, because a requirement of that program was good financial health.
The loan payment was made May 22 using a portion of the approximately $1 billion in funds raised in last week’s concurrent offerings of common stock and convertible senior notes.
Elon Musk, Tesla’s Chief Executive Officer and cofounder, purchased $100 million of common equity, the least secure portion of the offering.
“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,” said Elon Musk. “I hope we did you proud.”