Tesla (NASDAQ: TSLA) Officially Repays DOE Loan

Written By Jason Stutman

Posted May 23, 2013

Tesla (NASDAQ: TSLA) CEO Elon Musk is a man of his word.

On Monday, Musk announced on his Twitter page that Tesla would be repaying its Department of Energy loan at some point this week.

On Wednesday, the funds were wired. The United States government now has an extra $451.8 million in its pocket. 

The nearly half a billion dollar loan has been payed off in full and was done nine years early to boot. This makes Tesla the only auto company in American history to repay the government in full. That is beyond impressive and definitely worth boasting about.

Elon made sure to do so:



Tesla stunned pessimists and naysayers when it announced its first quarter of profits at the start of this year – an 83% increase from the previous quarter. This growth can largely be attributed to the Model S – Motor Trend Car of the Year and recipient of a nearly perfect Consumer Report score.

In 2012, White-House-wannabes Mitt Romney and Sarah Palin referred to Tesla as a “loser” and an “atrocious waste of taxpayer money.” Talk about putting your foot in your mouth.

That’s not to say there haven’t been any losers or atrocious wastes of taxpayer money. In fact, there have been quite a few.

Solar panel production company Solyndra declared bankruptcy in 2011 after receiving over half a million in taxpayer dollars. Fisker Automotive, Tesla’s closest counterpart, didn’t have the funds to meet its first loan payment of $192 million and could be looking at a similar fate.

Tesla: the Exception

Just think about the following for a moment. The Tesla Model S can travel 300 miles on a single charge. The Nissan (OTC: NSANY) Leaf can only travel 75. Tesla’s DOE loan was $465 million, while Nissan’s DOE loan was over triple that amount at $1.4 billion.

Nissan is an established auto giant and hasn’t been able to accomplish what Tesla has with triple the amount government funding.

Still not impressed? 

Tesla’s Model S competitors – Audi A8, BMW 7 Series, and Mercedes S-Class – all sold less than their electric counterpart, whose production continues to become more efficient as Tesla climbs the ranks and digs deeper footing in the market.

In addition to the production of a now profitable line-up of electric cars, Tesla operates under a business model that is unique to the auto industry. Tesla sells directly to consumers rather than through third-party dealerships – a model which cuts out the middle-man, saving money in the process.

This model is so competitive that the North Carolina Automobile Dealers Association has recently lobbied for the ban of direct and online sale of automobiles in the state – legislation clearly targeting Tesla.

Tesla is prepping to disrupt the auto-industry, and the auto giants are scrambling in an attempt to stop it.

Of course, Elon Musk cannot be stopped. This is a man who wagered $35 million of his own fortune to keep Tesla off the ground and came out winning big – about $2.5 billion big.

Electric car sales in the U.S. have tripled since last year, and it is only a matter of time before the roads are filled with them. There is no doubt that Tesla is going to play a big role in getting them out there.

Pat on the Back

Readers of Energy and Capital are probably aware that editor Jeff Siegel has been bullish on Tesla for some time. He was advocating for the company prior to it going public and has been there since the beginning of what has so far been an amazing ride.

If you have adopted the same bullish sentiment as Jeff, you need to take a moment and pat yourself on the back – the company has seen an explosive rise of public investment this year.

Besides getting a pat on the back, you would also be swimming in gains. As I write this, Tesla has already grown 160% this year to date.

In terms of buying at this moment, I suggest holding out for now. Tesla has received a flood of positive press lately and is likely sitting on a bit of a bubble. There should be a better entry point once the hype dies down. When it does, you might just want to pounce.

Tesla is a solid long term position. People’s retirements could be driven by it. If I was already holding any stake, I would continue to do so dearly.

But for now, my excitement is not in electric cars. It’s in an even more disruptive industry. Jeff talks a little about it here.


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