Tesla Scores Major DOE Loan

By Douglas A. McIntyre Updated Apr 28, 5:53AM EDT · Published Jun 23, 9:50AM EDT

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Tesla S Image Tesla Motors is getting a solid backer above and beyond any investment: Uncle Sam. The company announced that it has received approval for about $465 million in low-interest loans, from none other than the US Department of Energy, to accelerate the production of affordable, fuel-efficient electric vehicles.

The company said it plans to use $365 million for production engineering and assembly of the all-electric family sedan (Model S). This is no go-cart sedan either. The Tesla Model S can carry up to seven people and can travel up to 300 miles per charge. It has an anticipated base price of $49,900 after a $7,500 US federal tax credit.

The company noted that the Model S lifetime ownership costs are equivalent to a conventional car with a sticker price of $35,000. This is due to the low cost of electricity vs. gasoline and a relative lack of service and maintenance.

Tesla expects to start Model S production in late 2011 in a state-of-the-art assembly plant employing about 1,000 workers.

The other $100 million is earmarked for a powertrain manufacturing plant, and that plant will also supply all-electric powertrain solutions to other automakers to accelerate the availability of mass-market electric vehicles. The new facility will employ about 650 people.

Tesla is in the final stages of negotiation for facilities in California. Based on how dire the situation is in California, it is not a stretch to think that Tesla has the upper hand in the negotiations.

The loans are part of the Advanced Technology Vehicle Manufacturing Program which are being announced by auto companies today that are meant to give incentives to new and established automakers to build more fuel-efficient vehicles.

Tesla is one of the companies that many investors expect to come public. You can imagine that this will give the company more leverage for an initial public offering when it wants to. It has raised venture capital and Daimler is a 10% stake holder based on the most current information we have.

Jon C. Ogg
June 23, 2009

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.