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Tesla Repays $465-Million DoE Loan, Chrysler Bites Back At Claim

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'Revenge of the Electric Car' premiere: Elon Musk arrives in a Tesla Roadster

'Revenge of the Electric Car' premiere: Elon Musk arrives in a Tesla Roadster

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Ah, politics.

Yesterday, Tesla paid off the balance of its U.S. government loan, using proceeds from its $1 billion-plus offering of stock and warrants last week, as CEO Elon Musk had said  Monday it would in a tweet.

The amount settled yesterday was $451.8 million, following installments paid by Tesla last year and in the first quarter of this year.

Loans to Ford, Nissan, Tesla

The company had been granted $465 million in low-interest loans by the U.S. Department of Energy in June 2009, through its advanced technology vehicle manufacturing program.

Other carmakers who got loans included Fisker ($532 million, of which only $192 million was disbursed), Ford ($5.9 billion), and Nissan ($1.6 billion).

Musk thanked the DoE "and the members of Congress and their staffs that worked hard to create the ATVM program," in a release yesterday, with special appreciation to "the American taxpayer from whom these funds originate."

“I hope we did you proud," he concluded.

Out from under

So Tesla Motors [NSDQ:TSLA] is now out from under the shadow of U.S. government investment.

By paying off the loan early, Tesla also precluded the government from sharing in the current appreciation of its stock. Warrants for the DoE to acquire Tesla stock would not have kicked in until later in the loan term, as at least one critic points out.

The DoE issued a grateful press release as well, saying Tesla's repayment highlights the "strength" of its loan portfolio and noting that losses to its total $34 billion portfolio of loans across many programs represent only about 2 percent to date.

Leilani Münter and the Tesla Model S

Leilani Münter and the Tesla Model S

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Like any other carmaker selling plug-in electric cars, it continues to benefit from Federal income-tax credits of $2,500 to $7,500 offered to its buyers.

And it also earns additional money selling Zero-Emission Vehicle (ZEV) credits to other makers who buy them to comply with California state regulations requiring them to sell a certain number of vehicles that have no tailpipe emissions.

Only carmaker to repay?

But Tesla took it a step further, saying in its release, " Following this payment, Tesla will be the only American car company to have fully repaid the government."

That generated a swift response from Chrysler, which issued this statement late last night:

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?

2013 Fiat 500e electric car, Los Angeles drive event, April 2013

2013 Fiat 500e electric car, Los Angeles drive event, April 2013

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Chrysler's closing sentence contains a pun that one might expect from the Detroit maker most hostile to plug-in electric vehicles (despite the excellence of the Fiat 500e it built as a compliance car).

But is Chrysler's claim accurate?

Yes and no.

There was that bailout...

The company did pay off $7.6 billion in loans that were part of the U.S. government's overall bailout of the company, control of which was essentially passed to Italy's Fiat.

But as numerous commentators pointed out at the time, the U.S. government still lost money on the Chrysler bailout.

When Chrysler filed for bankruptcy in 2009, Obama administration forgave more than $4 billion of debt from the $13 billion it had put into the company.

So while Chrysler did technically pay off the government loans owed by the post-bankruptcy Chrysler, the U.S. government still lost billions of dollars on its investment in Chrysler.

Tesla's release includes a sentence noting that the DoE's ATVM 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."

Perhaps understandably, Chrysler chose not to mention those facts in its release.

UPDATE, May 24: Tesla CEO Musk and a Chrysler executive continued to spar over Tesla's claim throughout the day yesterday.

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Comments (19)
  1. So question to Chrysler then...Short memory, or running out of Gas?
     
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    Bad stuff?

  2. Ford never took any bail out money so that is inaccurate but the accomplishment for Tesla is still great.
     
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  3. Actually, that's not quite correct. Ford received a $5.9B loan under the same program Tesla just repaid.
     
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  4. But Peter you are correct in that Ford never received bailout money.
     
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  5. Ford did not take "bail-out money" but they did receive $5.9 billion in low-cost government loans in 2009 to overhaul its factories and bring out more fuel-efficient technology. Se yes, Ford did get a loan that it STILL has not paid back.
     
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  6. Congratulations to Tesla Motors you got the loan paid off yahooooo!

    To Chrysler: your loan was a bailout, you received a loan because you failed. Tesla's loan was part of a program to encourage new technologies built in the US. So Tesla's loan helped them get started, your loan was given to save you from drowning.
    To Mitt Romney, who's the loser now? Sitting at home with nothing to do Lol!
     
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  7. Worse than that, Chrysler and GM bailouts screwed senior bondholders, I don't recall Tesla's loan doing anything like that. I think Chrysler needs to shut the f--k up while successful folks is talkin'.
     
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  8. Tesla's success proves that America is ready to go electric, if you build them a great electric car.
     
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  9. Half the reason that Tesla has come off looking so good is that their competition has had their heads so far up their tail pipes.

    The irony is rich here, Obama just said, "Don't sweat that $4,000,000,000 you owe the tax payers, Chrysler". Yet they are complaining about not having been credit for paying their debts.
     
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  10. First that misguided Audi press release, now this hypocritical press release by Chrysler trying to be clever after making $4 billion of the taxpayer's money go up in exhaust smoke.

    Defensive press releases like this are a clear sign that Tesla's rise has the industry's full attention and is starting to worry the old regime. Seems like the best endorsement Tesla could get.
     
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  11. Not just in the auto industry, Tesla is now featured in the latest NASDAQ TV commercials, their name has gained enough cache and recognition that NASDAQ wants to trumpet their accomplishments. Pretty good when a "niche" company has developed such positive image in only a couple years.
     
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  12. Come on, Chrysler... While factually correct on the loan portion (not the bailout, as noted), you seem like Audi the other day. Tesla Motors has done a great job, so check your oversized egos for a little while and let Tesla enjoy its deserved praise for now.

    If Fiat/Chrysler ever join the real world and develop and sell a volume EV, then I don't see Mr. Musk taking a shot at you. How about showing the same courtesy? I'm happy that Fiat/Chrysler is/are doing relatively well but there's no need to insult Tesla here at all IMO.

    Just great work by Tesla Motors!
     
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  13. "short-circuit"?? I guess it's Chrysler with the short memory. I guess they forgot about the Dodge Circuit and all the other ENVI vehicles they promised as part of 2009 dog and pony show they did as a bid for a bailout.
    http://www.wired.com/autopia/2009/01/chrylser-unveil/
     
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  14. Chrysler is not an American company, so Tesla is still the only American one that did pay them off as stated in the press release.
     
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  15. Great point!!!
     
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  16. Fiat and Chrysler are still separate corporations, so calling Chrysler "foreign" may be stretching the point. And when it repaid the loan Fiat was not even the majority owner of Chrysler. Still, although Chrysler is an American company, the current majority shareholder is indeed foreign.
     
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  17. You are wrong Douglas.
    In 2009, the U.S. government formed Chrysler Group in a sale of old Chrysler’s “good assets” to form a new company run and owned by Italian automaker Fiat SpA, leaving behind billions in loans to old Chrysler that didn’t need to be repaid. In total, the U.S. Treasury recouped $11.2 billion, including from the sale of its interest in Chrysler Financial Inc.

    As the U.S. Treasury said in a 2011 statement, the government “is unlikely to fully recover the difference of $1.3 billion owed by Old Chrysler.”



    From The Detroit News: http://www.detroitnews.com/article/20130523/AUTO01/305230050#ixzz2UEkK8WrI
     
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  18. Tesla--please keep alert-
    Chrysler ford and gm conspired and killed tucker auto company-
    and today you have the japs and germans-also-
    they would all love to see you fail-and they obviously know how to twist Obama to their will
     
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  19. Slight difference, Tucker never actually delivered a vehicle, they only built 50 prototypes and couldn't get government funding because they couldn't meet the minimum delivery requirements. On the other hand, Telsa has delivered several thousand vehicles. I think the main reason all the other car companies are making noise now is they had expected Tesla to fail (since all other EV manufacturers never survived), they are now caught with their pants down and have years of R&D to do to come up with anything competitive. Note that all the announced "Electric Supercars" the manufacturers have announce still have lower specs than the existing model Tesla vehicles.
     
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