Tesla is looking to pay back $465 million in Department of Energy loans through an upcoming stock offering which could generate as much as $1 billion for the company. CEO Elon Musk, who often takes to twitter to defend the company and hint at upcoming announcements, tweeted the news on Tuesday.
This payoff comes more than a little early by about nine years and will net Tesla some serious savings on interest while giving taxpayers a tidy $12 million profit. It also marks a notable success in the highly criticized Department of Energy loan program.
The program was intended to give a boost to the development of low-emission, high-mileage vehicles, but not all automakers have managed to turn their loans into success stories. California automaker Coda has filed for Chapter 11 bankruptcy protection and there is speculation that Fisker might not be far behind.
It’s not just automakers who’ve managed to fail despite the government loan. Lithium-ion battery maker A123 declared bankruptcy last October and their liquidation has only just been approved by the courts. The plan calls for a repayment of just 65 cents on the dollar to unsecured creditors, but absolutely nothing of their $132 million government loan. Tesla has bucked a bit of a trend.
Originally the Tesla stock sale was expected to generate about $800 million, but Tesla made some changes based on its increasing share price over the last few months. They started in March at just $34 but are now sitting at $92 which, combined with a 30% increase in the offering size, will net the expected $1 billion.
The funds not spent on the loan repayment will be used on other projects that the automaker has in the pipeline like the Model X crossover which is due out next year. The money could also go towards the development of the smaller, cheaper Tesla that could make the cars affordable to a much broader market.
Nicole Wakelin fell in love with cars as a teenager when she got to go for a ride in a Ferrari. It was red and it was fast and that was all that mattered. Game over. She considers things a bit more carefully now, but still has a weakness for fast, beautiful cars. Nicole also writes for NerdApproved and GeekMom.
