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Tesla CEO sets affordability as his electric-car goal | The Detroit News |

With the early repayment last week of Tesla Motors Inc.’s loan from the U.S. Energy Department, Chief Executive Officer Elon Musk is free to run the electric-car maker for the benefit of himself and other shareholders.

As a co-founder of PayPal, CEO of rocket maker Space Exploration Technologies Corp. and chairman of solar power company SolarCity Corp., Musk has proven he’s a free thinker who can turn those ideas into billions. What happens with Tesla now that he can do anything he wants? The possibilities are broad.

“I do feel as if it’s a weight off our chest,” Musk said in his first interview after the repayment was announced Thursday. “We did get criticized quite a lot for taking government funding, even though during the first several years Tesla was privately funded — mostly from me. I put my last money into Tesla in late 2008 just to keep the company alive.”

Tesla paid the Energy Department $451.8 million remaining on the Advanced Technology Vehicles Manufacturing loan Tesla was awarded in 2009. Settling the debt earned taxpayers about $26 million, the Energy Department said.

Conditions of the loan issued through a green-cars program created under President George W. Bush and implemented by President Barack Obama included keeping officials apprised of business plans. Musk, Tesla’s top shareholder, couldn’t sell more than 65 percent of his stake as of Tesla’s 2010 initial public offering, nor could he merge it with another company.

Repayment gives Tesla more flexibility and “removes some operational covenants that are in place,” said Elaine Kwei, an equity analyst for Jefferies Equity Research in New York, who rates Tesla a buy. “Not to mention it’s also great for P.R.”

Some investor interest in Tesla, which counts Daimler AG and Toyota Motor Corp. as shareholders and customers, is that the carmaker will win more tie-ups, said analyst Ben Kallo of Robert W. Baird & Co., who rates Tesla outperform.

“Expanding relationships they have with Toyota and Daimler and possibly even adding new relationships is always at the forefront of investors’ minds,” he said. “More so now than ever after they get this loan behind them.”

Daimler has 4.87 million Tesla shares valued at $425 million, while Toyota has 2.94 million shares valued at $257 million, according to data compiled by Bloomberg.

Musk, 41, said earlier this month that he wouldn’t anticipate stepping away from Tesla for “several years” and that an acquisition by another carmaker isn’t likely.

To a large, established automaker, “Tesla just seems very expensive,” Musk said on May 2, when the company was valued at $6.24 billion. “How many cars do we make? What’s our market cap? It seems nutty to them.”

After selling 4,900 Model S sedans in the first quarter and reporting its first three-month profit this month, Tesla’s market valuation soared above $10 billion, bigger than that of Fiat SpA, which sells 1 million vehicles a quarter, including those of Chrysler Group LLC, which it controls.

Still, an acquisition is “one of the possible outcomes, I suppose,” he said. Rather than an auto company, “I’d guess it would come from outside the auto industry. It would be a buyer with a very large cash position,” he said.

While he declined to speculate on possible buyers, he did acknowledge that Apple Inc. qualifies as a company with a lot of cash.

Steve Dowling, a spokesman for Apple, declined to comment.

Musk said he hasn’t had any discussions with Apple beyond iPhone integration, and isn’t looking to be acquired by anyone until he can produce “a compelling, affordable car” that is less expensive than the Model S and nicer than Nissan Motor Co.’s electric-powered Leaf.

“With the Model S, you have a compelling car that’s too expensive for most people,” he said. “And you have the Leaf, which is cheap, but it’s not great. What the world really needs is a great, affordable electric car. I’m not going to let anything go, no matter what people offer, until I complete that mission.”



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