Telsa Gets $465 Million from Government Program

In an announcement Tuesday at Ford’s research center in Dearborn, Michigan, the U.S. Secretary of Energy will be giving details about the first loans to come out of the government’s $25 billion program to help auto manufacturers. Ford got a $5.9 billion loan, but Tesla Motors, Silicon Valley’s electric car manufacturer, is receiving $465 million from the program. The money will go towards completing the development of its Modern S sedan and its electric power trains, which are being licensed by other car makers such as Mercedes. Last month, Mercedes’ parent company Daimler also invested $50 million for a 10 percent stake in Tesla. That brought the total debt and equity invested in the company to more than $200 million. Now, with the government loan, that brings the total capital raised to $700 million.

If the government is going to be giving out loans to help car makers produce more fuel-efficient vehicles, it is good to see some of that money trickle down to helping electric cars get off the drawing table and into driveways. Tesla plans to use $365 million of the loan to accelerate the production of its Model S sedan, and the remaining $100 million for its electric power train manufacturing plant in California, for which its is in the final stages of negotiating a lease.

At the tail-end of a long blog post Monday responding to allegations in a lawsuit by Tesla co-founder Martin Eberhard, Tesla CEO Elon Musk reveals that the company is on track to hit profitability next month as it ramps up production of its all-electric Roadster sports car. He also writes that the company has received more than 1,000 pre-orders for the Model S sedan, up from 500 in the first week. At about $50,000 after a tax credit, the Model S will be about half the price of the Roadster. In the post, he explains how the Roadster made possible the sedan:

Tesla is sometimes criticized for the fact that our first car is relatively expensive, implying we thought there was a shortage of sports cars for rich people! Obviously, the transition to electric cars can only occur if they are affordable. However, a low volume and fairly costly product like the Roadster is the only realistic initial option for a small startup trying to create breakthrough technology. New technology in any field takes a few versions to optimize before reaching the mass market and in this case it is competing with 150 years and trillions of dollars spent on gasoline cars.

I want to be clear, though, that we are trying to get there as soon as possible. My main reason for putting so much time and money into helping create Tesla is to speed up the transition to electric cars. This was not a case of rank ordering likely return on investment and concluding that the auto industry was the easiest way to make money! While I’m confident that Tesla will turn out to have a good return for investors, building a car company has to be one of the hardest ways to make a buck.

That $465 million loan should help.

Original post

Comments

[Zenfar:]

Throw Quantum a bone...

Long QTWW

Jun 23 01:13 PM

[KRS1115:]

Please spell the name correctly in the headline it should read TESLA and not Telsa.

Jun 24 08:43 AM

[ECONOMICS 101:]

Gerald Chipeur says thanks to KRS1115.

Gerry says helping TESLA is great but stop the 'Buy American" campaign Mr President Obama.

Joe Mancinelli also agrees to keep helping the employers any way you can Mr Government as long as it keeps people employed receiving good pay.

By Gerry Chipeur
gerrychipeur.com

Jun 24 08:49 AM

[a. palmer jr.:]

Why couldn't our government have given the money to a company that will sell the cars that the public can afford. I understand the Tesla is a very expensive car. I know it's a sports car but I'll bet the sedan is going to be very pricey also.

Jun 24 08:49 PM

[jmmx:]

@ a palmer jr
Re: "... Can afford..."
1-
The govt DID give money to such companies. Tesla is getting only $465 M out of $25 B.
2- Tesla appears to be moving in the direction of affordability. The S is less than half the cost of the roadster. One has to build a little at a time.

Let's hope it all plays out in the end!


On Jun 24 08:49 PM a. palmer jr. wrote:

> Why couldn't our government have given the money to a company that
> will sell the cars that the public can afford. I understand the
> Tesla is a very expensive car. I know it's a sports car but I'll
> bet the sedan is going to be very pricey also.

Jun 25 12:49 PM

[philip1111:]

yeah you are right!!
--------------
philip
forclosed homes

Jul 08 02:56 AM