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Tesla Repays Department of Energy Loan Nine Years Early

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61–70 of 192 posts

Re: Tesla Repays Department of Energy Loan Nine Years Early

#61

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?

It's raising money. For most car companies that is not a special achievement. For Tesla, who has not yet proven that they can make money, it's something of a milestone - at least a smallish signal of market confidence. All the chest beating is just Musk being Musk.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#62

Earlier quoted context omitted.

There's something bizarre about griping that they reached profitability from green credits. To clarify, these green credits were voluntarily paid by OTHER CAR COMPANIES like Fiat who did not innovate enough to develop their own green cars. In essence, these credits work similarly to carbon credits or sulfur credits. They are NOT paid by taxpayers or by the government in any way. It was a capitalist regulation in Cali…

they are not free, they are paid by any consumer who directly or indirectly has a relationship with someone who purchases a vehicle from one of the makers who is paying these credits. Voluntary my ass. If they don't pay what happens? Your fined. Its a tax. It is paid by consumers because they buy cars. If anything its California's way of having people in other states fund their initiatives. I guess kudos can go to Mu…

You must remember that when the government decrees that everyone must do something or else and everyone does it, it is considered voluntary.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#63

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…

Considering the terms of the government loan were very favorable (rates equal to the interest rates on Treasury notes in 2010) it doesn't make sense to me that they would want to pay it off early and get rid of all that liquidity. As a quickly growing company didn't they have something better to spend that $450 million on?

Re: Tesla Repays Department of Energy Loan Nine Years Early

#64

Earlier quoted context omitted.

There's something bizarre about griping that they reached profitability from green credits. To clarify, these green credits were voluntarily paid by OTHER CAR COMPANIES like Fiat who did not innovate enough to develop their own green cars. In essence, these credits work similarly to carbon credits or sulfur credits. They are NOT paid by taxpayers or by the government in any way. It was a capitalist regulation in Cali…

they are not free, they are paid by any consumer who directly or indirectly has a relationship with someone who purchases a vehicle from one of the makers who is paying these credits. Voluntary my ass. If they don't pay what happens? Your fined. Its a tax. It is paid by consumers because they buy cars. If anything its California's way of having people in other states fund their initiatives. I guess kudos can go to Mu…

Ummm... no. The car companies have three choices: 1) buy credits, 2) pay fines, 3) make low emission cars that earn their own credits. These kind of policies that are designed to prevent the "tragedy of the commons" happen all the time in government. You still might not agree with this type of governing, but your basic facts are wrong.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#65
post #49

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...

Who ever pays back the government for stuff? It's largely besides the point. The government didn't bail out say GM because it wanted to get a return on its investment. It did so because of the fear that letting Detroit go bankrupt would have a domino effect that would leave a gaping crater in employment. If the car companies manage to pay back the government, great. Even if they don't, that wasn't really the point.

Yet GM still went bankrupt...just a few months later. People forget that. So what was really gained?

Re: Tesla Repays Department of Energy Loan Nine Years Early

#66
post #63

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…

Considering the terms of the government loan were very favorable (rates equal to the interest rates on Treasury notes in 2010) it doesn't make sense to me that they would want to pay it off early and get rid of all that liquidity. As a quickly growing company didn't they have something better to spend that $450 million on?

Like a butt-load of positive PR? I think they calculated that the positive PR value (or maybe mitigating negative PR) was worth the incremental cost of capital from the normal markets vs. from the DOE

Re: Tesla Repays Department of Energy Loan Nine Years Early

#67
post #55

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…

"Make no mistake, this is as much a PR ploy by Tesla to pump up their offering." I don't get your negativity here. The fact that a major green tech company working with government support is able to shift financing over to the private market is, indeed, a remarkable feat and is absolutely something they have a right to crow about. The government, too — it's an example of a progressive system working as designed. As f…

"I don't get your negativity here."

I didn't get the negativity. He was just stating a reasonably deduced thought.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#68
post #34

Earlier quoted context omitted.

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…

Musk had very little to do with PayPal. He built a competing product, X.com, which was acquired by PayPal. Musk then served as CEO and if his interview in "Founders at Work" is any indication, he didn't do much besides piss off Max Levchin before stepping down after a relatively short tenure. I love what Musk has done post PayPal, but no reason to rewrite history here.

>Musk had very little to do with PayPal.

That's rather inaccurate. Musk's company was X.com and Thiel/Levchin/Noseks's was called Confinity. They had a 50/50 merger in early 2000, and at first the new company was called X.com.

Furthermore, Confinity[1] was doing Palm Pilot payments under the PayPal brand[2], while X.com was working on internet money transmission over email. Which idea was more useful in the long run? (hint: if you chose Palm Pilot's - you're wrong)

Much of the disinformation stems from a book called the "The Paypal Wars" written by a Thiel fanboy, that is embarrassingly biased. Musk writes:

"The only negativity in recent years was due to a book called The PayPal Wars, written by a sycophantic jackass called Eric Jackson. This guy was one notch above an intern at PayPal in the first few years of the company, but gives the impression he was a key player and privy to all the high level discussions. Eric couldn't find a real publisher, so Peter funded Eric to self-publish the book. Since Eric worships Peter, the outcome was obvious - Peter sounds like Mel Gibson in Braveheart and my role is somewhere between negligible and a bad seed. However, to his credit, Peter didn't realize the book would be as bad as it was and apologized to me personally at a Room 9 board meeting at David Sacks's home in LA."[3]

Post-merger it's hard to say who did what exactly, and Levchin for example was instrumental in Paypal's anti-fraud system, a key development that allowed the company to navigate around a potentially ruinous situation.

The bottom line is, 3 hyper-smart guys (Thiel, Levchin and Nosek), don't give away essentially 50% of their shares to some someone else (X.com) on a whim. This was a calculated and deliberate decision. Similarly, it's unlikely Musk would have succeeded alone either, and thus why they are all called co-founders of PayPal, Inc.

[1] http://en.wikipedia.org/wiki/Confinity

[2] http://www.halplotkin.com/cnbcs029.htm

[3] http://gawker.com/230076/an-alternate-history-according-to-e...

Re: Tesla Repays Department of Energy Loan Nine Years Early

#69
post #49

Earlier quoted context omitted.

Who ever pays back the government for stuff? It's largely besides the point. The government didn't bail out say GM because it wanted to get a return on its investment. It did so because of the fear that letting Detroit go bankrupt would have a domino effect that would leave a gaping crater in employment. If the car companies manage to pay back the government, great. Even if they don't, that wasn't really the point.

Yet GM still went bankrupt...just a few months later. People forget that. So what was really gained?

There's bankruptcy as in a controlled restructuring, and then there is bankruptcy as in a failure of the business with ripple effects throughout the economy. What GM went through was the former, and it was foreseen at the time of the government's investment.

Re: Tesla Repays Department of Energy Loan Nine Years Early

#70
post #48

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…

> selling each car at a material loss Is that true? I know the company overall would not have turned a profit without the credits but was under the impression that they currently had positive gross margins on the Model S.

Gross margin, and it's tiny without the credits. Tesla's most recent quarter resulted in an operating loss and a net loss.

Edit: my bad. Seems the net income was slightly positive last quarter (with regulatory credits included, without them it's a big old negative).

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