Tesla and 15 others being considered for DOE's Loan Guarantee Program
ALTERNATIVE FUEL VEHICLES PROJECT
Tesla Motors
New Mexico is the proposed location for this project, which plans to build a battery-electric powered vehicle with enhanced range that can be produced for the consumer market.
With those words, the U.S. Department of Energy yesterday approved Tesla's pre-application for a federal loan guarantee program for "Innovative Clean Energy Projects." 143 projects submitted pre-applications, and of the 16 accepted pre-applicants, Tesla was the only vehicle project. You can see the full list here.
The loan guarantee program is authorized by Title XVII of the Energy Policy Act of 2005 (EPAct) and is now in the final stages. While Tesla is the only direct vehicle manufacturer to still be in the running, there are a lot of alternative fuel (hydrogen, biofuel, solar, etc.) projects in the list of 16. The DOE announced not only the projects that are being asked to submit full applications, it also clarified the final regulation of how the loan guarantee works. According to the DOE:
The final regulation provides that the Department may issue guarantees for up to 100% of the amount of a loan, subject to the EPAct limitation that DOE may not guarantee a debt instrument for more than 80% of the total cost of an eligible project. Under the final rule, if DOE issues a guarantee for 100% of a debt instrument, the loan must be issued and funded by the Treasury Department's Federal Financing Bank. While Congress must provide authority in an appropriations act for the loan guarantees that the Department will issue, DOE's intent is to only issue loan guarantees if borrowers and project sponsors pay the "credit subsidy cost" for any loan guarantee they receive. Therefore, DOE does not plan to use taxpayer funds to pay for the credit subsidy costs of these loan guarantees.
The DOE believes that the 16 programs being considered for these loans have a "reasonable prospect" of repaying them, so that should say something about official expectations for Tesla's business plan.
[Source: DOE]
Reader Comments (Page 1 of 1)
Kardax 11:17AM (10/05/2007)
I think the best way Tesla can ensure their success with this is to ask for a guaranteed loan to help build the WhiteStar sedan factory. The factory could then be used as collateral on the loan, greatly reducing the risk faced by the creditor.
With this loan and all the other financing that Tesla is attracting, plus profits from Roadster sales, they should be able to delay their IPO for quite a long time.
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Joseph 2:51PM (10/05/2007)
Hmm...
Doesn't this mean that if Tesla does get the loan that they'll have to pay at least 20% or more of it upfront?
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Bill 3:50PM (10/05/2007)
Uncle Sugar's got the money!
Dust off some Carter-era projects and line up at the trough!
Go ahead, design us a car that needs a million dollar hydrogen fuel cell
Since that's "green", you'll never have to pay any of your "loan" back (skip the part where you're reforming natural gas to get that H2)
Plenty o' cash for everybody!
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