Tesla Could Start Repaying Federal Loans Early


The government’s role in developing new technologies has come under fire from the Republican Party in recent months, in particular low-interest Federal loans given to electric car companies like Think Global Fisker and Tesla. And while Think is facing bankruptcy for the umptenth time, Tesla Motors may start paying back its Federal loans early…despite another quarter of multi-million dollar losses.

Mounting Losses No Problem

Tesla reported a 2nd-quarter loss of more than $105 million, worse than analysts expectations. Revenue was also down 54% from the same time last year, which would seem to indicate trouble at the electric car maker. But head-honcho Elon Musk doesn’t seem too concerned. In fact, Musk seems to think that Tesla can start paying back its $465 million Federal loan as soon as December.

That is ahead of schedule, and is perhaps a good-faith attempt by Musk to defuse questions of Tesla’s long-term viability. Right now Tesla is in a bit of an odd spot; their first popular model, the Roadster, is no longer being built as Tesla ramps up production of the Model S Sedan, which started rolling off of assembly lines last month.

Optimistic Outlook, But Wheres The Profit?

According to Musk, there is a 10-11 month waiting period for the Model S sedan, and it would require very little capital for Tesla to amp up production. You’d think they’d do that already, what with its current and future models apparently in such high demand. But what do I know?

In my opinion, Tesla Motors can still go either way. It’s biggest advantage is Musk himself, who seems dedicated to making his electric car company work. But is sheer will alone enough to wipe out a decade of losses? Is Tesla a long-term company, or a flash in the pan?

Source: Reuters

About the Author

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or else, he’s running, because he’s one of those crazy people who gets enjoyment from running insane distances.

  • ASG

    Chris, I recommend reading the Q2 earnings call transcript. Musk discusses why he’s ‘slowly’ ramping production….

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  • B. Prebo

    THINK was never awarded a government loan. Maybe you’re thinking of Fisker?

  • Herman Jackson

    Your article has one significant factual flaw, related to this statement, and the article’s title:
    ” Musk seems to think that Tesla can start paying back its $465 million Federal loan as soon as December.”

    December is NOT early. The terms of the loan require them to make their first payment in December (by the 14th, I think). I know you are not a Tesla fanboy, but somehow the notion is going around on the enthusiast boards that simply not defaulting on your first required payment equals being early. It isn’t.

    As for whether or not Tesla has the money, they were required under terms of the first Loan term amendments to maintain a reserve for at least the first three payments; they have done that. Paying on time in December makes no difference to available cash on hand.

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  • Paul Rodrigi

    I “plan” to date model Kate Upon… which pretty
    much means it is not going to happen. This is ultimate spin from Tesla because
    they screwed the pooch and nobody wants a Tesla, nobody wants Solar City panels
    and Space X rockets keep failing so Musk is freaking out and traded some BS
    warrants with DOE to make this cover-up announcement which means totally nothing.
    Nobody wants to be seen driving a Tesla, it is the most tainted car on earth
    and the poster car of corruption. What means something is that any real car
    company sells 100,000 cars of each model and usually 400,000, or more cars.
    Tesla has only sold a few hundred to its investors after a decade of trying and
    nearly a billion dollars of free tax money… FAIL! FAIL! FAIL!