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Tesla Motors Is the First Automaker to Repay All of Its Government Loans

Just a month ago, Tesla Motors posted its first profitable quarter ever, which was a huge step towards proving the viability of electric cars. But now the young automaker has taken an even larger stride forward: yesterday, Tesla wired $451.8 million to the federal government to fully pay off Department of Energy loans aimed at spurring the electric car industry.

It would have seemed unfathomable just a few years ago, but an EV-only manufacturer has now become the only automaker to repay all of its federal loans awarded from the bailout onward. Using part of the nearly $1 billion it raised through a recent stock and note sale, Tesla has paid off every cent it received from the Department of Energy, simultaneously proving that electric vehicles and alternative energy loan programs can be a success.

Two major loan packages were given to automakers in the last five years: the automaker bailout package detailed in the Troubled Assets Relief Program (TARP) signed into law by President Bush, and the 2010 Advanced Technology Vehicle Manufacturing Program (ATVMP), which Congress approved to help boost alternative fuel auto manufacturing in the US.

TARP was the larger of the two, with GM and Chrysler receiving about $50.9 billion and $11 billion in taxpayer-guaranteed loans. Chrysler has since fulfilled its debt obligations, and it doing pretty well under new owner Fiat, an Italian conglomerate. That led the company to fire back at Tesla’s claims that Tesla is the only company to have paid back its government loans. But fulfilling its obligations doesn’t mean it’s repaid the debt in full, as a number of terms were waived; all told, taxpayers lost billions on the deal.

The government, meanwhile, is still about $20 billion short on GM’s deal. The US Treasury still owns about 32 percent of GM’s stock, which it will sell off over time to recoup loan costs. But for the deal to break even, Treasury needs to sell its 500 million shares for close to $53 each. GM’s stock is currently sitting at below $33. Unless the stock climbs appreciably before Treasury dumps it, the GM deal will wind up in a substantial loss for taxpayers.

Read more: http://motherboard.vice.com/blog/tesla-motors-is-the-first-automaker-to-repay-all-of-its-government-loans#ixzz2UAzQ3Is6

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