Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Tesla Repays Department of Energy Loan Nine Years Early

teslamotors.com

Post reply on HN
Print view View original

21–30 of 192 posts

Re: Tesla Repays Department of Energy Loan Nine Years Early

#21

Post by mrkmcknz »

meterplech wrote: post #17
mrkmcknz wrote: post #12

Didn't Tesla repay this loan back with another loan: http://www.reuters.com/article/2013/05/15/us-tesla-stock-idU... I'm not a market economics kind of guy but I don't see how this is any kind of special achievement. Surely any other car manufacturer could have done precisely this?

The story is that they paid it back via the private market, meaning that the financial community believes in the company enough that they no longer need public support. Incidentally, they did issue corporate debt (a form of a loan, sure), but also issued more equity as well.

I guess it probably made sense financially in that the private market believed in Tesla enough to provide a better rate than the original loan.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#22

Post by dcosson »

snprbob86 wrote: post #4

The subtitle says: "ONLY AMERICAN CAR COMPANY TO HAVE PAID BACK GOVERNMENT" Assuming that's true, I'm not sure whether I should be proud of Tesla, ashamed of our Government, or angered at other car companies. Probably all three...

I'm sure there was some money wasted along the way, but this makes me think of the often-quoted (around here at least) anecdote that VCs succeed not by getting decent returns across the board but by having one or two "home runs".

If Tesla is the home run that this ATVM program made possible, maybe it doesn't matter if all the rest end up defaulting on the loans (which this article doesn't even imply, Tesla seems to have just paid back the loan early). Obviously the economics of government loans aren't exactly the same as those of VC investments, but making the large-scale production of electric cars economically feasible is a huge accomplishment that seems like it'd be worth the cost of this whole program.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#23

Post by noname123 »

The reason why Tesla is able to pay the Dept of Energy loan early is because of a secondary stock and bonds offering worth about >850+ million. In another words, Tesla is raising funds by generating more debt (from bondholders) and diluting share value (from shareholders), roughly about 3.5 mil out of 40 mil float, and using that money to pay the US govt.

TSLA rose on the news despite diluting shareholders is because coupled with the announcement, Elon Musk mentions that he will personally put an additional 100mil into the secondary offer; and general exuberance that TSLA will use the cash for more infrastructure build-out, a la Google, Yahoo during their heyday's. Make no mistake, this is as much a PR ploy by Tesla to pump up their offering.

It's incredibly smart for Musk and company to raise money in a very favorable environment as TSLA climbed from 45 to 90 after earnings. However, it remains to be seen if they can be still profitable. Note that they are still selling each car at a material loss; and only managed to show a profitable quarter by trading green credits they gained from their manufacturing. To truly scale, they need to either drive down the production cost of their cars down and broaden their market as there are only so much supply of carbon-emission credits on the market.

Disclosure: I trade TSLA options on volatility, without any directional bias.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#24

Post by veritas20 »

andrewtbham wrote: post #9

I own Tesla stock and I'm glad to see this. Tesla has been a highly politicized stock... largely because Mitt Romney and Sarah Palin called it a "loser." My hope is that this will help get rid of that stigma and help them with their image and political battle with dealerships in red states, like North Carolina and Texas. This also removes some strings attached to the DOE loan. For instance, Tesla could be acquired (a…

It's crazy to see that a "red" state, you know the champions of free-market and capitalism, would support such laws that restrict any manufacturer from selling directly to consumers. The obstacles being thrown in Tesla's path from the dealership associations fly in the face of capitalism and free enterprise. Before Tesla, I wasn't aware that these types of laws existed.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#25

Post by NatW »

andrewtbham wrote: post #9

I own Tesla stock and I'm glad to see this. Tesla has been a highly politicized stock... largely because Mitt Romney and Sarah Palin called it a "loser." My hope is that this will help get rid of that stigma and help them with their image and political battle with dealerships in red states, like North Carolina and Texas. This also removes some strings attached to the DOE loan. For instance, Tesla could be acquired (a…

Clips from Fox on Tesla http://www.youtube.com/watch?v=WcHkIWkecY8

Re: Tesla Repays Department of Energy Loan Nine Years Early

#26

Post by veritas20 »

twistedpair wrote: post #20
andrewtbham wrote: post #9

I own Tesla stock and I'm glad to see this. Tesla has been a highly politicized stock... largely because Mitt Romney and Sarah Palin called it a "loser." My hope is that this will help get rid of that stigma and help them with their image and political battle with dealerships in red states, like North Carolina and Texas. This also removes some strings attached to the DOE loan. For instance, Tesla could be acquired (a…

Don't forget, we tried to make Tesla dealerships illegal first here in Mass. NC was late on that one, so let's not make it a "Red State" matter.

It's a preservation of money and industry matter.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#28

Post by deelowe »

veritas20 wrote: post #24
andrewtbham wrote: post #9

I own Tesla stock and I'm glad to see this. Tesla has been a highly politicized stock... largely because Mitt Romney and Sarah Palin called it a "loser." My hope is that this will help get rid of that stigma and help them with their image and political battle with dealerships in red states, like North Carolina and Texas. This also removes some strings attached to the DOE loan. For instance, Tesla could be acquired (a…

It's crazy to see that a "red" state, you know the champions of free-market and capitalism, would support such laws that restrict any manufacturer from selling directly to consumers. The obstacles being thrown in Tesla's path from the dealership associations fly in the face of capitalism and free enterprise. Before Tesla, I wasn't aware that these types of laws existed.

Who said republicans support a truly free-market?

Re: Tesla Repays Department of Energy Loan Nine Years Early

#29

Post by ChuckMcM »

mrkmcknz wrote: post #12

Didn't Tesla repay this loan back with another loan: http://www.reuters.com/article/2013/05/15/us-tesla-stock-idU... I'm not a market economics kind of guy but I don't see how this is any kind of special achievement. Surely any other car manufacturer could have done precisely this?

No, they paid back the government loan with stock.

The difference between a 'convertible note' and a 'loan' is that in a convertible note turns into its conversion when 'due.' Basically it turns into stock at the value of the amount borrowed plus interest.

There is a fascinating Convertible Note generator that you can run on the Wilson Sonsini web site [1] which I recommend doing if you are at all interested and read all the text about why or why not you might want choose one set of terms over the other.

[1] http://www.wsgr.com/WSGR/Display.aspx?SectionName=practice/t...

Re: Tesla Repays Department of Energy Loan Nine Years Early

#30

Post by matt_brushlabs »

preinheimer wrote: post #18
matt_brushlabs wrote: post #14

I don't know if Elon should be so quick to thumb his nose at the other auto manufacturers. For one, he's facing a pretty substantial uphill climb WRT dealership laws in a lot of states, and rattling the snake cage won't win any friends. On the other hand, when brand value (save Ford) for the domestics is strikingly low, maybe he's throwing punches exactly when he needs to.

He's not fighting car makers, he's fighting the (generally very independent) dealers in those states. Playing nice isn't going to have them withdrawing their complaints. At this point better PR, and a mention on the six o'clock news seems worth it.

I'd agree with you, on the most part -- but I've worked with folks at the Big Three on their dealership strategies, and trust me: they're strange bedfellows.

Look no further than how TrueCar had to pivot their business model in a short period of time in order to comply with the cold backhand of dealers. It's a juggernaut, sadly.

I'm rooting for Elon to turn it on edge.

Post reply on HN