In a boost for the Obama Administration and controversial federal clean-tech programs, electric vehicle maker Tesla Motors announced it paid back its $465 million government loan nine years early.
The U.S. Department of Energy oversees $34 billion in taxpayer-funded loans for 33 clean energy projects, and Tesla is the first American car company to pay back its loan. The DOE loans came under fierce criticism from Congressional Republicans in the wake of the high-profile 2011 bankruptcy of Fremont solar manufacturer Solyndra, with Republican presidential candidate Mitt Romney calling Tesla a "loser" in a presidential debate last fall.
"This is another important contribution to what the Obama Administration has done to preserve and promote America's auto industry," U.S. Energy Secretary Ernest Moniz said in a statement Wednesday. "This announcement is also good news for the future of America's growing electric vehicle industry."
Moniz noted that sales of electric vehicles in the United States tripled last year and said "Tesla and other U.S. manufacturers are in a strong position to compete for this growing global market."
Tesla's DOE loan was made through the Advanced Technology Vehicle Manufacturing program, which was chartered by Congress and signed into law by President George W. Bush with a goal of accelerating the market for energy-efficient cars. Tesla's loan was the smallest awarded in the program. Ford was awarded $5.9 billion, Nissan received $1.4 billion and Fisker Automotive got $529 million.
While Solyndra was a spectacular failure and Fisker is teetering on collapse, defenders of the DOE's cleantech loans point out that the vast majority of companies who got loans remain on track for repaying them.
Analysts said the move removes Tesla from the partisan politics that have shadowed federal government support for Silicon Valley clean energy companies and gives the company increased flexibility.
"Paying off the DOE loan allows Tesla to be free of criticism related to DOE loan programs," said Andrea James, an analyst with Dougherty & Company. "Tesla still receives government incentives in the form of tax credits on unit sales and state-based regulatory credits, but that is piecemeal compared to the DOE loan program, which was so politically charged."
But Tesla's early payment of the loan is unlikely to silence criticism of federal cleantech funding from Congressional Republicans, who say the government should not meddle in the marketplace.
"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 on Fisker's loan, said in an interview with Bloomberg News.
After making payments on its loan for more than a year, Tesla on Wednesday wired payment of $451.8 million to fully repay the loan with $26 million in interest and prepayment penalties. The payment was made using a portion of the $1 billion the company raised last week through offerings of common stock and convertible senior notes.
"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," Tesla CEO Elon Musk said in a statement.
Rep. Anna Eshoo, whose district is home to Tesla's Palo Alto-headquarters, welcomed the news.
"Federal investment in any innovative clean energy application carries risk, but, as Tesla has demonstrated, it can also create jobs, keep us a world leader in clean energy development and provide a return on investment to taxpayers," Eshoo said in an email to this newspaper.
