Over the years, Tesla Inc. TSLA CEO Elon Musk openly discussed the near bankruptcy of the electric vehicle company. One item that helped the company avoid bankruptcy was a “loan” from the Department of Energy (DOE), but it was not a traditional loan as many believe.
What happened: In 2009, the Department of Energy gave Tesla a letter of interest for a potential loan. Tesla received a loan of around $500 million.
“It wasn’t a loan where they just gave you $500 million,” Musk said in a recent interview with the Silicon Valley Tesla Clubwhich is part of a three-video series on YouTube.
Musk called it a loan repayment where you had to spend money and then send bills to the DOE to be reimbursed for purchases.
The loan was not a binding document until 2010, and Musk said the DOE’s first repayment was in March or April 2010.
“If we had needed the loan money, Tesla would have gone bankrupt.”
Musk called the loan helpful in accelerating business, but stresses that it was “not life or death” as some people think.
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Prepayment of the loan: Musk said there were difficulties with loan repayments as the DOE wanted to guess business plans and change Tesla’s path forward.
“Was taking a lot of bandwidth to explain the new plan to the DOE,” Musk said.
Tesla decided to prepay the loan, despite the existence of a prepayment penalty. Tesla paid the full amount of the loan with interest and penalties.
“After the IPO in 2010, we repaid the DOE loan.”
Musk said taxpayers made money from the government loan to Tesla.
Tesla CEO adds in an instant that taxpayers lost another $14 billion from a loan to General Motors Company GM.
Photo: Courtesy of Tesla Inc.