Tesla to pay off DOE loan faster than anticipated

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Elon Musk

Tesla CEO Elon Musk. Image: Onninovation/Flickr/CC BY-ND

In last week’s presidential debate, Republican contender Mitt Romney called Tesla Motors a “loser,” along with Fisker and Solyndra. Friday, the company’s CEO, Elon Musk, blogged that it is neither behind in production nor short on cash. In fact, it is paying off its Department of Energy loan early.

Tesla making early payments

Tesla was loaned $465 million from the taxpayers in 2009. The company has already drawn all of that loan. Musk says Tesla will pay $14.5 million down on its payment by the end of the month, though it is not due until March 15.

The DOE requested that the automaker repay its loan ahead of schedule if able to do so.

Musk wrote:

“The DOE is highly bullish about our future and doesn’t want us to delay early repayment of the loan if we have the cash on hand to do so.”

The company has already paid the $15 million it owed by Dec. 15. According to Musk, it has never missed a payment.

Musk wrote:

“We will be initiating an advance payment today to pre-fund the principal payment that is due in March 2013. We have a duty at Tesla, having accepted this loan as a portion of our capital, to repay it at the earliest opportunity. We will do exactly that.”

‘Pessimistic scenario’

According to Musk, the company will be in profits by the end of November. But he also said Tesla takes some of the blame for people thinking it is worse off than it truly is. He said it may have painted too dire a picture at its last corporate filing. Musk, at the time, wrote that more capital may be needed to keep the company healthy.

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Musk said last week:

“We described a relatively pessimistic scenario for Tesla, which was incorrectly interpreted by some to be what we thought was the most likely scenario.”

Lagging, a bit

Musk admitted to being behind in production, but minimized the problem:

“While we are indeed a few weeks later than we would like, this is perhaps not a terrible outcome for a product as
advanced and complex as the Model S, particularly given that Tesla is doing manufacturing of full vehicles for the first
time with a new team and new suppliers.”

Production line

The Tesla Model S is a luxury all-electric car with a range of 265 miles. It is not cheap, however, requiring buyers to get a car loan of $57,000.

Tesla Motors turned out 359 cars in the third quarter of the year. It said recently that it intends to produce 3,225 cars in 2012.

Sources

Torque News
USA Today
Reuters

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