A Federal Loan Was Repaid Here, Nine Years Early

The plant at 45500 Fremont Boulevard was built in 1984 as NUMMI, the joint venture where General Motors went to learn how Toyota made cars. It closed in April 2010. Tesla bought roughly 55 per cent of the site — 207 acres and about 5.4 million square feet of buildings — for around $42 million, and Toyota took a $50 million stake in Tesla the same month. Three months earlier, on 20 January 2010, Tesla had closed a $465 million loan from the US Department of Energy's Advanced Technology Vehicles Manufacturing programme, to finance Model S production at this factory and a powertrain facility in Palo Alto. On 22 May 2013 Tesla repaid it about nine years ahead of schedule, with a final wire of $451.8 million that closed out the facility with interest. It was the first of the ATVM automakers to repay in full. This loan is the subject of two claims that point in opposite directions, and both of them are wrong. The first is that Tesla was bailed out by taxpayers. That framing borrows its weight from the General Motors and Chrysler rescues of 2008 and 2009, which involved equity stakes and ended in real taxpayer losses. The ATVM programme was a lending programme, and Tesla repaid its loan early and with interest, so the government did not lose money on it. Published estimates of what the Treasury ultimately netted vary — figures of roughly $12 million and roughly $26 million both circulate — so the exact return is better stated as a range than as a number. The second claim is that Tesla therefore owed nothing to government support. That is not right either. $465 million of federal credit extended to an unprofitable carmaker in 2010 was not a small thing, and the ATVM programme existed precisely to de-risk companies that private lenders would not touch. Tesla also benefited from zero-emission-vehicle and regulatory credits, the federal electric-vehicle purchase credit that lowered the price of its cars to buyers, and later, very large state incentive packages in Nevada and New York. The Congressional Research Service's account of the programme puts Tesla's loan in proportion: Ford received $5.9 billion, Nissan $1.6 billion, and Fisker $532 million. Tesla's was the smallest of the four, and it is the one usually argued about. The honest version of this record contains both halves. Tesla took a large federal loan when almost nobody else would lend to it, and Tesla paid that loan back in full, early, and ahead of every other automaker in the programme. Neither half cancels the other, and leaving either one out is how the argument keeps going. Sources: US Department of Energy, "Secretary Chu Announces Closing of $465 Million Loan to Tesla Motors" — https://www.energy.gov/articles/secretary-chu-announces-closing-465-million-loan-tesla-motors · Tesla investor relations, "Tesla Repays Department of Energy Loan Nine Years Early" — https://ir.tesla.com/press-release/tesla-repays-department-energy-loan-nine-years-early · CNN Money, 22 May 2013 — https://money.cnn.com/2013/05/22/autos/tesla-loan-repayment/index.html · Green Car Congress, 22 May 2013 — https://www.greencarcongress.com/2013/05/tesla-20130522.html · Congressional Research Service R42064 on the ATVM programme — https://www.everycrsreport.com/reports/R42064.html · Tesla Form S-1/A on the NUMMI purchase — https://www.sec.gov/Archives/edgar/data/0001318605/000119312510147655/ds1a.htm · Palo Alto Online, 20 May 2010 — https://www.paloaltoonline.com/news/2010/05/20/historic-toyotatesla-deal-will-use-nummi-plant/