Tesla Motors To Pay Off Government Loan 5 Years Early 243
fredan sends word of a post at the Tesla Motors blog detailing how the company will be paying off its $465 million government loan 5 years early. Quoting:
"This is a significant announcement both for Tesla and for the DOE. It is a marker of the successful launch of the Model S and the incredible market reaction to this award-winning car. And it is a tribute to the success of the DOE's Advanced Technology Vehicle Manufacturing Program (ATVM), a program which was chartered by Congress and signed into law by President George W. Bush, to accelerate the market for a broad range of promising automotive efficiency technologies — electric vehicles (EVs) principal among them. ... Following more than a year of thorough due diligence by commercial auditors, automotive consultants and lawyers, on January 20, 2010, Tesla became the recipient of one of three initial DOE loans announced by Secretary Chu, along with Ford and Nissan – good company for a start-up automaker. Tesla’s loan of $465 million was to be paid back over ten years following the start of production of the Model S. Months later in a separate announcement, an ATVM loan was announced for Fisker. It is worth noting that in comparison with these three other recipients, Tesla had the smallest loan. Ford’s loan was for $5.9 billion, Nissan’s was for $1.4 billion, and Fisker’s was for $529 million. ... We expect to generate sufficient cash and profitability in our business over the next five years that it gives us confidence to proceed with this early repayment of the loan. Moreover, it is also consistent with Tesla’s mantra of speed that we would, as Elon announced last week, accelerate the repayment of our loan, a full five years earlier than required under the original loan terms, making our last payment in 2017."
Re:Gee, (Score:4, Interesting)
Do you suppose the money just up and vanishes when the government spends it?
That money goes to individuals or companies, and if to companies then ultimately to individuals via salaries. The point of discussion should not be if government spending is good or bad since, economically, government spending is indistinguishable from any other entity spending the same amount of money on the same things... being "government" does not do anything magical to the money. Rather, the discussion should focus on if the money is spent wisely, for the maximal benefit of the country and its citizens. Obstinately the government is a product of the people collectively organizing their resources for the purpose of serving the public.
Defense spending, as an example, does not appear to have maximal benefit at the amount we are spending. Building battle tanks certainly employs many thousands of people, but we don't need or want battle tanks. Therefore building tanks the army explicitly said they do not want is the military-industrial complex equivalent of paying people to dig holes and fill them in again; money and resources are spent but nothing of real value is created.
On the other hand, spending public money on basic research has extremely high value. Just about everything we enjoy in a technological society has the fundamental principles rooted in government funded research. The DoE should get more funding, not less.
Incidentally, Sandia National Laboratories, like ALL national labs, are part of the Department of Energy. DARPA, on the other hand, is part of the Department of Defense. Just thought you might want that clarified...
So I, for one, have no problem using public money to help a new business developing a new technology with a loan. In the long run, if successful, such a business will pay massive returns in economic activity long after the loan itself is repaid. And even if the loan is never repaid, most of that money ends up right back in the economy anyway since it would have been used to buy materials and pay workers. Unless there was some kind of scam going on, even the worst case is still not that bad economically... and if someone did try to walk off with the cash in their pocket, I'd fully support stringing them up by their entrails in a public square as a cautionary example :)
=Smidge=
Re:Jackpot? (Score:5, Interesting)
In addition to your excellent reply, it should be worth noting that the route manufacturing companies get cheap consumer prices (like Henry Ford did with the Model T) is to have massive production where you make up profits through volume sales and scales of efficiency. That is something incredibly hard for any start-up company to perform, where it costs roughly a couple billion dollars just to start a major new low-cost automobile with production runs in the hundreds of thousands of editions.
Elon Musk was incredibly intelligent to start out with the high end automobiles, especially the niche market of performance sports cars with a little bit of a twist. The Model S is really aiming more toward the luxury sedan market... again a very astute move on his part where the Model S clearly compares well with a Lexis or Mercedes Benz (or the Lincoln branded cars by General Motors). Volume of the vehicle production line doesn't have to be quite so high for these kind of vehicles and ultimately doesn't take as much cash to get them started.
The original approach that Tesla was going to take was to simply buy off the shelf components already being made by several automobile manufacturers and simply assemble a new automobile. Unfortunately because of quality control and inventory issues Tesla has been forced to increasingly build more and more components "in-house". One example was the transmission needed for the Roadster that very nearly bankrupted the company (and forced Elon Musk to double down and dump essentially all liquid assets that he had into Tesla as well as make a whole bunch of phone calls to friends with money to help out). And yes, Tesla automobiles do have a transmission... even if it is pretty simple in its design.
It is in the announced product line of development that eventually Tesla is going to be building economy automobiles, but that the original plan was to wait until they had both the manufacturing facility (that they now have with the NUMMI plant in California) and the working capital needed to get it all to happen.
The only thing that I am a bit surprised at myself is not the cheap low-end automobiles, but rather why Tesla hasn't moved into the all-electric delivery van market (aka FedEx trucks) or even the short haul semi-trailer tractor market where people routinely dump more money on vehicle purchases that would make a typical sports car enthusiast look twice at the price tag and doubt they could foot the bill. There are electric vehicles in those markets, and having corporations set up charging stations for a fleet of vehicles would be even a bonus (on site refueling without having to deal with petroleum companies). The drawback might be the existing competition as well as the fact that such companies are less likely to be hung up in the "green energy" hype.... and that Tesla can only do so many things at the same time. There are also a bunch of patent trolls hanging out in those markets with patents for electric vehicles of those types as well.... that might be causing some additional problems.
Re:Jackpot? (Score:5, Interesting)
The reason for this is because variable RPM internal combustion engine with all its peripherals is very complex structure and requires a lot of maintenance and spare parts.
This is not true for electric engine, which is a very simple in design and as a result far more reliable. This is the simple reality of engine technology, and a known limitation of internal combustion engines, which is why hybrids run a constant RPM internal combustion engine to charge the battery rather then variable RPM internal combustion engine to actually run the car. Former is simply more efficient and requires less complexity and as a result maintenance.
Re:Jackpot? (Score:5, Interesting)
The Volt is widely acknowledged to have been started explicitly because the CEO of General Motors took a bunch of marketing literature from Tesla Motors and threw it down on the desks of his engineers asking why a California start-up company could make a successful electric automobile but they couldn't. The rest, as they say, is history.
Mind you, the Volt is a pretty good automobile and deserves its own kind of kudos. The GM engineers made some compromises that I don't agree with, but I'm not exactly a professional automotive engineer nor have been put into their position to design a new automobile from scratch. Doing such things isn't as easy as it sounds.