Tesla Repays Department of Energy Loan Nine Years Early • Hacker News Board

Re: Tesla Repays Department of Energy Loan Nine Years Early

#31

Post by Uhhrrr » Wed, May 22, 2013, 9:30 PM UTC

3am wrote: post #11

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...

Why be mad at anything? At most be mad at car makers for running so leveraged that they had liquidity problems at the same time that all the major lenders in the financial system ran into solvency problems (and feel free to be mad at the financial sector) But given that, it was _excellent_ government policy to guarantee loans to the automakers, just from a cost/benefit perspective. And there's no shame in not going a…

GM was in trouble long before the 2008 crash: http://www.thetruthaboutcars.com/2008/06/general-motors-deat... (in June 2008, they were already up to part 181 in their series)

Also, guaranteed loans for automakers might be excellent compared to other government policy, but given that Ford didn't take a loan, and there are many foreign companies which didn't need loans, the existence of any benefit from subsidizing more poorly-run automakers is questionable.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#32

Post by davidrudder » Wed, May 22, 2013, 9:32 PM UTC

testing12341234 wrote: post #10

davidrudder wrote: post #8

Earlier quoted context omitted.

I'm not an economist, but this is how I understand it. GM paid back it's debt in full, but it paid most of it back in stock. The US government has sold some of it, so it's gotten about half of it's bailout back in cash. But, it still has a ton of GM stock. It's selling the stock slowly to avoid disrupting the market. That being said, the government needs to sell at something like $75/share to make their money back, b…

This announcement doesn't really have anything to do with GM (or even apply to them) in anything but the "we gave them a loan" sense. From the linked article: "This 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."

Yeah, I thought that was confusing. "We're the only", "but in some circumstances we're not really talking about everyone". I thought it was worth answering the question "did GM pay back it's loan" because GM is the largest and most notorious recipient of US loan money.

Maybe Tesla really did mean "We're the only American company who received an ATVM loan to pay it back." But, if so, they're being intentionally misleading.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#33

Post by andrewtbham » Wed, May 22, 2013, 9:32 PM UTC

noname123 wrote: post #23

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…

Where do you get 40M for the float? Yahoo indicates 73M. Plus doesn't dilution go against all outstanding shares (115M)?

http://finance.yahoo.com/q/ks?s=TSLA+Key+Statistics

Re: Tesla Repays Department of Energy Loan Nine Years Early

#34

Post by Nrsolis » Wed, May 22, 2013, 9:33 PM UTC

noname123 wrote: post #23

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…

If I take a step back from this, I'd say it's bad strategy to bet against Elon Musk. IMHO, part of what makes his companies appealing is that he has a remarkable track record of keeping his head down and just getting sh!* done. I'm very impressed with his work ethic and vision and I think Tesla is going to go far.

Secondly, if he is successful and manages to bootstrap and entire electric car industry from the ground up, what kind of effect do you think this innovation is going to have on the world? Think of the massive investment in geopolitical resource availability that will be mitigated by the diversification of fuel options for auto transport.

He already hit one home run with PayPal, hit a triple with SpaceX, and might steal home with Tesla. He's a star player in a very sparse field of real innovators right now.

Disclosure: I also trade TSLA options, but I'm quite bullish on the company.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#35

Post by andrewtbham » Wed, May 22, 2013, 9:39 PM UTC

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.

I agree, the dealership issue is not a red/blue state issue. It's one less criticism that can be used against Tesla... one that would likely be more effective in red states.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#36

Post by revelation » Wed, May 22, 2013, 9:39 PM UTC

noname123 wrote: post #23

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…

They already raised all the money prior to this announcement. They raised debt precisely because they didn't want to dilute shareholders (too much) and give existing short positions an easy out. You certainly realize they could have easily funded $1B through shares only at their then stock price level.

Elon predicted $200M capex in the next quarter, mainly to complete tooling and optimize factory processes. He clarified that they are not looking to scale the manufacturing process any further than its current level (400-500 cars/wk).

Stock price is up because Tesla only had $200M in cash equivalents available, which is a pretty small number for a car manufacturer, especially one looking to develop a new model (Model X) for a 2014 release and expanding charging/sales/service infrastructure.

Disclosure: I think technical trading is bullshit.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#37

Post by dragonwriter » Wed, May 22, 2013, 9:40 PM UTC

Uhhrrr wrote: post #31

3am wrote: post #11

Earlier quoted context omitted.

Why be mad at anything? At most be mad at car makers for running so leveraged that they had liquidity problems at the same time that all the major lenders in the financial system ran into solvency problems (and feel free to be mad at the financial sector) But given that, it was _excellent_ government policy to guarantee loans to the automakers, just from a cost/benefit perspective. And there's no shame in not going a…

GM was in trouble long before the 2008 crash: http://www.thetruthaboutcars.com/2008/06/general-motors-deat... (in June 2008, they were already up to part 181 in their series) Also, guaranteed loans for automakers might be excellent compared to other government policy, but given that Ford didn't take a loan, and there are many foreign companies which didn't need loans, the existence of any benefit from subsidizing mor…

> Also, guaranteed loans for automakers might be excellent compared to other government policy, but given that Ford didn't take a loan, and there are many foreign companies which didn't need loans, the existence of any benefit from subsidizing more poorly-run automakers is questionable.

FWIW, Ford's CEO disagreed, which is both why he went to Congress in 2008 to argue for the bailout, and defended the bailout in 2012 as having been good for the country, the industry, and Ford even though Ford wasn't a direct beneficiary [1].

[1] http://articles.latimes.com/2012/apr/19/news/la-ol-ford-ceo-...

Re: Tesla Repays Department of Energy Loan Nine Years Early

#38

Post by Nrsolis » Wed, May 22, 2013, 9:43 PM UTC

revelation wrote: post #36

noname123 wrote: post #23

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…

They already raised all the money prior to this announcement. They raised debt precisely because they didn't want to dilute shareholders (too much) and give existing short positions an easy out. You certainly realize they could have easily funded $1B through shares only at their then stock price level. Elon predicted $200M capex in the next quarter, mainly to complete tooling and optimize factory processes. He clarif…

Heh. It's all about the Alpha.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#39

Post by roin » Wed, May 22, 2013, 9:45 PM UTC

dcosson wrote: post #22

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 h…

As you noted, the problem is that the government bought debt, not equity, so they don't share in the upside that would make this a financial home run that makes up for other failures. That being said, the government isn't in this to make money, they're in it for the broader benefits that will spillover outside of the individual company receiving financing. In that sense the VC analogy could work, because a major successful electric car company in the US probably would be a "home run" for the country (and the world) on several dimensions, more than making up for losses on the way.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#40

Post by dba7dba » Wed, May 22, 2013, 9:46 PM UTC

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.

If you think about it, Tesla is a lot like Apple. One similarity is having their own sales channel and not reply on a middleman. Main channel of apple products is their website and the stores. And I for one would like a choice in buying cars, directly from maker and also dealers.