Electric automaker Tesla Motors has paid off its loan to the federal government long before it was due, thrilling its supporters and officials in the Obama administration, while proving its Republican detractors wrong.
During the 2012 presidential race, both Mitt Romney and Sarah Palin labeled the Palo Alto-based Tesla a “loser” and a bad example of President Barack Obama’s investment in alternative energy projects.
The U.S. Department of Energy loaned the company $465 million in 2010 to help continue its development of high-end, electric-powered cars, like the Model S luxury sedan.
According to Elon Musk, Tesla’s co-founder, the company had another five years to pay the government back (while the Energy Department claimed the number was actually nine years).
Instead, it fully paid off the debt this month, thanks to a surge in its stock price. "Having accepted taxpayer money, I thought we had an obligation to repay it as soon as we reasonably could," Musk told The Wall Street Journal, “If economics were the only consideration, we would not have done this.”
“The reason the loan is being paid off is not because of vehicle sales,” Patrick J. Michaels, a director at the Cato Institute, a libertarian think tank, told The New York Times.
That may be true, but Tesla posted some nice first-quarter sales nonetheless, according to Green Car Reports. Tesla’s $70,000 Model S outsold the comparable Mercedes-Benz S Class, 4,750 to 3,077, followed by BMW 7-Series at 2,338 and Audi A8, 1,462. The Cadillac XTS outpaced them all at 7,130.
The Los Angeles Times pointed out that it is also true that Tesla has benefited from the state of California, whose interest in fostering a competitive electric car market includes granting the company Zero Emission Vehicle environmental credits that it can sell to other automakers. They could be worth $250 million and save the company $35,000 per Model S sale.
Earlier in the month, Tesla announced its profits exceeded Wall Street estimates, it raised its estimate for sales of the Model S and was pronounced by Consumer Reports to be the best car it has ever tested.