In a huge boost for the Obama administration and clean-energy firms, electric vehicle maker Tesla Motors Inc. announced Wednesday that it is paying back its $465 million government loan in full and nine years early.
The Department of Energy oversees $34 billion in taxpayer-funded loans for clean energy and other projects, but Tesla, based in Palo Alto, is the only United States car company in the vast portfolio of 33 projects to pay back its loan. The loan program faced fierce partisan fire in the wake of the high-profile 2011 bankruptcy of solar manufacturer Solyndra, and Republican presidential candidate Mitt Romney called Tesla a "loser" in a presidential debate last fall.
Tesla's loan was through the Advanced Technology Vehicle Manufacturing, or ATVM, program, which was chartered by Congress and signed into law by President George W. Bush. The goal of the program was to accelerate the market for energy-efficient cars, including electric vehicles. Tesla made its application while Bush was still in office. Tesla's ATVM loan was the smallest awarded: Ford received one for $5.9 billion, Nissan for $1.4 billion and Fisker Automotive for $529 million.
Tesla made payments on its loan in 2012 and in the first quarter.
Wednesday's wired payment of $451.8 million repays the full loan with interest. The payment was made using a portion of the $1 billion Tesla 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. "I hope we did you proud."
U.S. Rep. Anna Eshoo, D-Atherton, welcomed the news; Tesla's headquarters is in her district.
"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. As America faces spiking gas prices and extreme weather conditions, clean energy projects continue to be vital to our nation's economic and environmental future." Analysts said the move frees Tesla from the politics of the loan program.
"Paying off the DOE loan allows Tesla to be free of criticism related to DOE loan programs," said Andrea James, an analyst with Dougherty & Co. "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."
Tesla sells only one car, the $70,000 Model S, which it makes in the former NUMMI auto manufacturing plant in Fremont. Earlier this month the company reported its first quarterly profit. Its stock price has more than doubled since the first of the year and closed Wednesday at $87.24.