Has Debt-Free Tesla Made Obama a Winner at Last?
The recent successes of certain automakers have afforded Barack Obama #winning status. During the 2012 U.S. Presidential election, Republican challenger Mitt Romney attacked Obama for his $49.5 billion bailout as well as his position on offering aid to electric-car companies and their suppliers.
However, recent news from General Motors (NYSE:GM) and Tesla Motors (NASDAQ:TSLA) may have Romney biting his tongue. Not only did GM top its 2010 initial public offering price for the first time in two years last week, but as of Wednesday, Tesla is the first recipient of a U.S. Energy Department vehicle loan to pay off its debt fully. Tesla, labeled a “loser” by Romney, now appears to be the winner.
Elon Musk, Tesla’s chief executive officer, tweeted on Monday that the company would “probably” repay the Energy Department loan — worth $465 million and extended in 2009 — as soon as Wednesday, which just so happens to be a full nine years ahead of schedule. The announcement also comes in the wake of a near-perfect score for the company’s Model S car from Consumer Reports magazine.
The success of the Model S-maker may help silence Obama critics who didn’t agree that certain green-energy companies should receive government loans and grants. When prompted about Tesla’s recent announcement, Ohio Republican Jim Jordan said in an interview to Bloomberg on Tuesday: “When they’re picking all these losers, it’s nice for them to have one where they can point to.” If nothing else, it is clear the Republicans favor the word “loser.”
Nonetheless, despite Tesla’s success, other electric car makers aren’t faring as well. Plug-in carmaker Fisker Automotive, its battery supplier A123 Systems Inc., and solar-panel maker Solyndra LLC have all faced big troubles, as Bloomberg points out. A123 filed for bankruptcy in October, Fisker’s $529 million vehicle loan was blocked, and Solyndra, the recipient of a $535 million loan from a different Energy Department program, also filed for bankruptcy.
A123 and Fisker’s failures were connected, as the former was supplying batteries to the latter that caused some vehicles to shut down during driving. Following its A123 supply disruption and recall for the plug-in Karma, Fisker was prevented from drawing from more of its vehicle loan. Unfortunately, these high-profile failures managed to overshadow a number of companies that met with success.
Because the three companies only borrowed about $1 billion of the more than $8 billion given out under Obama’s alternative-energy vehicle program, the payoff rests more largely on Ford Motor (NYSE:F), which received more than half of that at $5.9 billion. Ford continues to make quarterly payoffs that are scheduled to go through June 2022.
Another major player in the loan debacle, Nissan Motor Co., has yet to reveal a schedule for when it can be expected to repay its $1.4 billion loan being used to develop the all-electric Leaf and accompanying batteries.