Electric car maker Tesla Motors Inc. (TSLA) said Wednesday that it has paid off the entire $465 million loan awarded to the company by the Department of Energy in 2010. The company noted that in addition to payments made in 2012 and the first quarter of 2013, today's payment of $451.8 million repays the full loan facility with interest.
Palo Alto, California-based Tesla made the loan payment using a portion of the about $1 billion in funds raised by the company in last week's concurrent offerings of common stock and convertible senior notes. Tesla's CEO and Co-Founder Elon Musk purchased $100 million of common equity, the least secure portion of the offering.
In a separate statement, the Department of Energy said that Tesla repaid the entire remaining balance on a $465 million loan from the Department, nine years earlier than originally required.
U.S. Energy Secretary Ernest Moniz said, "When you're talking about cutting-edge clean energy technologies, not every investment will succeed - but today's repayment is the latest indication that the Energy Department's portfolio of more than 30 loans is delivering big results for the American economy while costing far less than anticipated."
The Department of Energy or DOE noted that losses to date in its loan programs represent about 2 percent of the $34 billion portfolio and less than 10 percent of the $10 billion loan loss reserve that Congress set aside to cover expected losses in the programs.
For the first seven years since its founding in 2003, Tesla was funded entirely with private funds, led by Elon Musk. However, in 2010, Tesla was awarded a milestone-based loan, requiring matching private capital obtained via public offering, by the DOE as part of the Advanced Technology Vehicle Manufacturing or ATVM program.
This program was signed into law by President Bush in 2008 and then awarded under the Obama administration in the years that followed. However, the program is different from the financial bailouts provided to the then bankrupt automakers General Motors (GM) and Chrysler, who were ineligible for the ATVM program as a requirement of that program was good financial health.
Elon Musk said, "I would like to thank the Department of Energy and the members of Congress and their staffs that worked hard to create the ATVM program, and particularly the American taxpayer from whom these funds originate. I hope we did you proud."
Tesla, in early May, reported a profit for the first quarter, its first-ever quarterly profit in ten years. The results were driven mainly by strong sales of its Model S electric luxury sedan.
In April, Tesla had launched a finance option for prospective buyers of its fast selling Model S car in partnership with Wells Fargo & Co. (WFC) and US Bancorp (USB). The financing option includes a guaranteed buyback after three years.
TSLA closed Wednesday's trading at $87.24, down $0.35 or 0.40 percent on a volume of 8.57 million shares.
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