Obama electric car loan repaid by Tesla, evading 'loser' label
Tesla Motors Inc., labeled a “loser” by Mitt Romney during the U.S. election, is giving President Barack Obama’s green-energy strategy a win after almost two years of failures pounced upon by Republicans.
The maker of the electric Model S car as early as May 22 will become the first recipient of a U.S. Energy Department vehicle loan to pay off its debt, Elon Musk, Tesla’s chief executive officer, said in a Twitter message May 20.
Tesla’s payoff may quell critics who said Obama shouldn’t have acted like a venture capitalist in picking green-energy companies to receive government loans and grants. Republican lawmakers have held up the bad bets made on plug-in carmaker Fisker Automotive Inc., its battery supplier A123 Systems Inc. and solar-panel maker Solyndra LLC as examples of rewarding untested companies for political reasons.
“The repayment can’t hurt in rehabilitating the reputation of the program,” said Mark Muro, a senior fellow at the Brookings Institution, a public-policy group based in Washington. “Time passes, some good things happen after unfortunate ones, and we will see these programs can be extremely helpful.”
Palo Alto, Calif.-based Tesla is repaying its loan nine years ahead of schedule, with taxpayers making at least $12 million on the $465 million lent.
“When they’re picking all these losers, it’s nice for them to have one where they can point to,” Representative Jim Jordan, an Ohio Republican who held a hearing last month on Fisker’s loan, said in an interview yesterday.
The $12 million taxpayers stand to make from the Tesla loan won’t offset losses of as much as $217 million that U.S. taxpayers may sustain on loans to Fisker and closely held vanmaker Vehicle Production Group LLC.
Both companies have stopped production, missed their first loan payments and are trying to sell their assets. The Energy Department recouped $26 million by seizing reserve accounts they had to set up to get their loans.
The three companies, though, borrowed only about $1 billion of the more than $8 billion given out under the alternative- energy vehicle program, which was created under President George W. Bush in 2007 and implemented by Obama in 2009.
The program’s payoff depends less on the startup companies than on Ford Motor Co., which got $5.9 billion. Ford, based in Dearborn, Michigan, said in a May 1 U.S. regulatory filing that it has $5.5 billion outstanding on its loan and is making quarterly payments of $148 million. Its payment schedule goes through June 2022.
Nissan Motor Co. which is based in Yokohama, Japan, and doesn’t file financial statements in the U.S., hasn’t released details about its $1.4 billion loan repayment record or schedule. It got its money to develop the all-electric Leaf and the batteries that power it.
“Nissan is honoring its commitment to the loan it received through the Department of Energy’s Advanced Technology Vehicles Manufacturing program,” Travis Parman, a U.S.-based spokesman, said in an e-mail. “The company is fully compliant with the terms of the loan.”
Musk, who co-founded the company, chafed last year at being lumped with Fisker, whose founders he once battled in court over accusations of stolen designs.
Musk announced his company would speed up its loan payments shortly after it was mentioned on the campaign trail. Last week, it disclosed an agreement with the Energy Department to fully repay the remaining $452.4 million balance from proceeds of a stock and debt offering.
Romney and his vice presidential running mate, Paul Ryan, referred to Tesla, Solyndra and Fisker as “losers” before the November election they lost to Obama and Vice President Joe Biden.
A123 filed for bankruptcy protection in October after supplying batteries to Fisker that caused some cars to shut down while driving. It got $133 million in U.S. assistance from another U.S. program.
Fisker, which received $193 million of its $529 million vehicle loan before being blocked from drawing down more, stopped making cars last year after the A123 supply disruption and recalls for its plug-in Karma.
Solyndra, which got a $535 million loan guarantee from a different Energy Department program, became the symbol of failure for critics of Obama’s green-energy lending after filing for bankruptcy in 2011. Ener1 Inc., parent of a battery company that received a $118 million Energy Department grant, sought bankruptcy protection in January 2012.
“The failure of a few high-profile companies has overshadowed the results of a larger number of companies that are meeting their requirements and are solvent,” said Alan Baum, an automotive analyst at Baum & Associates in West Bloomfield, Mich. “Of course, when non-payments occur, the companies move from low- to high-profile.”