Over the years, Tesla Inc TSLA CEO Elon Musk has discussed openly how close the electric vehicle company was to bankruptcy. One item that helped the company avoid bankruptcy was a “loan” from the Department of Energy (DOE), but it wasn’t a traditional loan that 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.
“That was not a loan where they just give you $500 million,” Musk said in a recent interview with the Tesla Silicon Valley Club, which is part of a three-video series on YouTube.
Musk called it a loan reimbursement where you had to spend money and then send invoices to the DOE to get refunded for purchases.
The loan was not a binding document until 2010 and Musk said the first reimbursement from the DOE came in March or April of 2010.
“If we had needed the money from the loan, Tesla would have gone bankrupt.”
Musk called the loan helpful to accelerate the business but highlights it was “not life or death” as some believe.
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Paying Back Loan Early: Musk said there were struggles with the loan reimbursements as the DOE wanted to second guess business plans and change Tesla’s path forward.
“Was taking up a lot of bandwidth to explain new plan to DOE,” Musk said.
Tesla decided to pay back the loan early, despite there being a penalty for early payment. Tesla paid the entire loan amount with interest and penalties.
“After IPO in 2010, we paid back the DOE loan.”
Musk said taxpayers made money on the loan from the government to Tesla.
The Tesla CEO adds in a bit of a shot that taxpayers are still down $14 billion from a loan made to General Motors Company GM.
Photo: Courtesy Tesla Inc.