Tag archives for Government
Tesla Motors is no stranger to resistance from state dealer associations, which oppose the electric automaker’s factory-owned store approach. The best-documented standoff has been between Tesla and the Massachusetts Dealer Association, but has court or legislative battles happening in several states. The latest state dealer association the company is facing off with is the Texas Automobile Dealers Association, according to Automotive News.
Tesla VP of business development, Diarmuid O’Connell has among the highest barriers in the nation for the operation of a factory-owned store. Tesla currently operates two “galleries” in Austin and Houston, but in order to comply with current state franchise law, representatives cannot initiate or complete a sales transaction or deliver a vehicle on-site. Customers must contact a representative in California to complete the sales transaction, as well as arrange their own transport and delivery arrangements. Even in the area of service and warranty work, requests have to be routed through California, which then sub-contracts the work to the service centers in Texas.
To combat the contorted, Goldbergian work-arounds to sell and service vehicles in the state, Tesla is backing a bill in the Texas legislature that would change the states inflexible franchise laws to make it easier to operate factory-owned dealerships and service centers. But the state dealer association has been actively lobbying legislators and has participated in hearings, claiming that the traditional franchise dealer model is the best way to sell and service vehicles. The association is predicting failure of the Tesla-sponsored legislation that would allow them to operate, calling Tesla’s request for an exemption from existing franchise law “arrogant.”
Tesla continues to battle the Massachusetts dealer association with proposed legislation that would change the state’s dealer franchise law. The state’s dealer association is backing its own separate bill thwarting Tesla’s efforts. The one bright spot for Tesla lately has been Minnesota, where the state dealer association has temporarily suspended its pursuit of franchise law legislation that would have prevented Tesla from opening retail outlets in the state.
Source: Automotive News (Subscription Required)
The U.S. government would be more effective at spurring plug-in vehicle sales if it provided more financial incentives to consumers instead of automakers. At least, that’s the opinion in a Bloomberg News editorial.
Saying that finding alternatives to gasoline “a worthy public goal,” Bloomberg says the government should expand purchasing incentives beyond the $7,500 it provides for buyers of some plug-ins and hybrids. President Obama has said he wants 1 million plug-in vehicles to be on U.S. roads by 2015; the Corporate Average Fuel Economy (CAFE) standards he proposed last year would mandate about a 70 percent fuel economy improvement by 2025. Bloomberg figures the government should hand out money to buyers, not companies, to encourage sales:
Providing loans to companies that can get their own financing in the capital markets is a questionable way to reach [the goal]. A better use of government money would be to encourage consumer demand – by continuing, and expanding, tax credits or other incentives for people who buy vehicles that use little or no gas.
During the past three years, U.S. Treasury Department’s Federal Financing Bank has made more than $8 billion in loans at about a 1 percent interest rate to established automakers such as Ford and Nissan as well as advanced powertrain specialists like Fisker and Tesla, strictly for the purpose of developing electric-drive vehicles. Bloomberg called such a strategy “questionable.” Such automaker loans are guaranteed by the U.S. Department of Energy.
By Danny King
Tesla Motors is in the middle of a spat with the Texas Automobile Dealers Association, but that isn’t stopping CEO Elon Musk from mapping out his future plans in Texas. If Musk has his way, Texas could be home to Tesla’s second assembly plant, he told Automotive News. And if that weren’t enough, he said the new plant could produce an EV truck, if the company ever offers pickups.
Musk didn’t specify which cities he’s considering for the new plant, but he did say the process could start as soon as three years from now. “When we do establish a manufacturing plant outside of California, Texas would be a leading candidate for that,” Musk told Automotive News. California is currently Tesla’s biggest market and Texas has the potential of becoming the automaker’s second-largest money maker.
In addition to the logistical benefits for Tesla, the new plant will produce thousands of new jobs for the state. Musk also hinted that the new location could build an EV truck. “I have this idea for a really advanced electric truck that has the performance of a sports car but actually more towing power and more carrying capacity than a gasoline or diesel truck of comparable size,” Musk said.
First, though, Tesla must determine how it will sell cars in the state. As previously reported, only franchised dealers are allowed to sell cars in Texas, which means Tesla’s factory-owned stores (one in Austin and another in Houston) are prohibited from conducting any sales-related activity including test drives, financial transactions, or deliveries. The same applies for service work. Current owners must initiate service-related requests outside of the state before going to a subcontracted garage in Texas.
Tesla is attempting to gain exemption from the state, but is facing resistance from the Texas Automobile Dealers Association. The automaker faced a similar battle in Minnesota, but has temporarily earned an exemption around that state’s franchise law.
Source: Automotive News (Subscription required)
Auto News, Dealers, Government, Hybrid Car/EV, Tesla
Bugatti Veyron Grand Sport Vitesse is World’s Fastest Convertible, Hits 254 MPH
Not long after offering 2.7 million additional shares, Tesla has just announced that the company has fully repaid the Department of Energy loan that wasn’t due until late in 2022. The announcement follows a string of recent company updates, including how Tesla sells and warranties the Model S.
Tesla wired $451.8 million to fully repay the loan with interest, and in a release the automaker says it is the only American car company to have fully repaid the government. Then again, Tesla currently only offers one vehicle, the lauded Model S. The larger and delayed Model X (pictured at right) is set to arrive next year.
UPDATE: Tesla isn’t actually the only American automaker to pay back government loans. Chrysler points out that, about two years ago, it paid back government loans to the U.S. and Canadian governments in full. For another perspective on this issue, read this Forbes blog.
So far, Tesla has worked with Mercedes and Toyota, and offered the all-electric Lotus-based Roadster, a car the company says had a 30-percent gross margin. More recently, we’ve heard about the Model S’ improved financing terms as well as a resale guarantee and a lenient warranty update. Next week, Tesla will reveal details on a revised supercharger system. Company co-founder Elon Musk hinted at the announcement on Twitter, saying there may soon be a way to recharge a Model S throughout the country faster than you can fill a gas tank.
The Department of Energy loan fit into the Advanced Technology Vehicle Manufacturing program of which Fisker was also a part. On the original $451.8 million loan, Bloomberg notes that taxpayers will make at least $12 million from the deal. Paying off the loan early was made possible thanks to the roughly $1 billion raised in last week’s new common stock and convertible senior note offerings.
While reaching truly stable financial ground is still anything but a certainty for Tesla, it appears the company is on the right track.
Source: Tesla, Bloomberg
By Zach Gale
Tesla has announced it will offer 2,703,027 shares of common stock along with $450 million worth of convertible senior notes that mature by 2018. The money raised from this public offering will primarily be used to pay off Tesla’s Department of Energy loan with interest.
Tesla CEO and co-founder Elon Musk will purchase $100 million worth of the shares himself, with $45 million purchased from the common stock offering and $55 million bought directly from Tesla in a private sale. The underwriters will have a 30-day option to purchase up to 405,454 additional shares and $67.5 million worth of convertible notes, which can be converted into cash or shares of Tesla stock when they mature.
Tesla stock ended trading today at $84.84 a share, up significantly from last week’s price in the mid- to high $50 range. The surge in price is attributable to Tesla posting its first quarterly profit, with the company generating $11.2 million net income in the first quarter of 2013.
Though Tesla’s revised financing option may have lead to higher consideration among luxury buyers, the brand is still only selling variations of one vehicle. Whether Tesla can maintain its momentum remains to be seen.
Early sales of electric vehicles like the Nissan Leaf and Mitsubishi i-MiEV may have proved underwhelming, but don’t count out the zero-emissions vehicles yet. At the Washington Auto Show, the Department of Energy announced the Workplace Charging Challenge signed by 13 companies including GM, Ford, Chrysler, Tesla, and Google. These companies have pledged to introduce a plan for workplace charging in at least one major company location. The DOE says the ultimate goal over the next five years is to increase tenfold the number of U.S. employers offering charging.
Also ambitious is the related EV-Everywhere Challenge. By the year 2022, the DOE hopes to see companies in the U.S. be the first to manufacture a five-passenger American electric vehicle that’s affordable and has a payback time of less than five years, yet still have a decent range so that families can use it without compromise. Helping to complete that picture will be additional fast-charging options scattered in various urban spaces.
“Having a robust charging infrastructure helps build range confidence, which boosts interest in and use of electric vehicles,” said Brendan Jones, Nissan’s director of electric vehicle marketing and sales strategy.
We’ve already reported on Tesla’s so-called Superchargers, and Nissan this week has announced its plans to add at least 500 quick-charging stations in the U.S. over the next 18 months, starting with 40 eVgo Freedom Station sites in Washington D.C. The sites can provide a Nissan Leaf an 80-percent charge in less than 30 minutes. Service plans offered by eVgo allow users to pay a monthly fee for unlimited charging.
Considering the 2013 Motor Trend Car of the Year is the all-electric Tesla Model S, and the “extended-range electric” Chevrolet Volt earned the golden calipers in 2011, increasing charging infrastructure sounds like a good idea to us. Before a national hydrogen refueling infrastructure gets any traction, perhaps the Workplace Charging Challenge and EV-Everywhere Challenge will help boost sales of electric vehicles.
Source: DOT, GM, Ford, Nissan
By Zach Gale
The 0-60 mile per hour acceleration time of the top-of-the-line Tesla Model S is 4.4 seconds. Now, the federal government is looking for Tesla Motors to similarly pick up the pace.
The electric vehicle maker, which received a $465 million credit line from the U.S. Department of Energy, is being asked to speed up its repayment pace once Tesla starts paying off the loans later this year, the company said in a Securities and Exchange Commission document.
Tesla is supposed to begin payments in December and has until October 31 to put together a proposal outlining its faster repayment schedule. This new schedule is required because of a September 24 waiver that changes Tesla’s specified current ratio of assets to liabilities, writes Bloomberg News. Tesla CFO Deepak Ahuja told Bloomberg that the company could beat its 10-year repayment schedule if Tesla becomes profitable earlier than expected. Thus far, the DOE told Bloomberg, “Tesla has made loan payments on time and in full.”
Earlier this week, Tesla, which has never been profitable, reduced its 2012 revenue forecast by about $160 million to as much as $440 million because of supplier issues and other delays related to the Model S, and said it was about a month behind schedule with its vehicle deliveries. As of September 23, reservations stood at about 13,000. Tesla said in July that it may start repaying its loan before its first payment due-date in December. As of late June, Tesla had yet to draw down the last $33 million of the loan.
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By Danny King
Following the bankruptcy of solar-panel maker Solyndra, the House Republicans are eager to cut green-jobs programs. – The ill-fated solar panel manufacturer was the first company to receive money from the Obama administration’s green-tech stimulus loan. One of the other programs under scrutiny is the U.S. Department of Energy’s (DOE) Advanced Technology Vehicles Manufacturing Program (ATVM). The same program loaned Tesla Motors $465 million back in June 2009.
Tesla used the ATVM loan to open an electric powertrain facility at its Palo Alto headquarters and revamp the former NUMMI plant to build the Model S electric sedan.
Earlier this week the automaker posted a blog on its website defending the program. Tesla says it employed 400 people before the original loan. The loan helped add 1000 jobs and plans to add another 1000 jobs in the next year.
Tesla’s website doesn’t specify how much in additional loans the company needs or what it would be used for. It does say that the electric automaker “has raised an additional $620 million in private investment capital.”
The last line on the blog post says, “Tesla has no pending completed applications with the DOE.”
In light of government spending cuts and a bankrupt solar-panel manufacturer, do you think Tesla should be asking for another loan from the federal government?
Update 09/28/2011, 10:40 a.m.
A follow up call to Tesla spokeswoman Khobi Brooklyn confirmed the last line of the company’s blog post: “Tesla has no pending completed applications with the DOE.”
Source: SF Gate, Tesla
By Jason Udy
In what could prove to be a symbolic moment for the strength and potential of the electric vehicle industry, Tesla Motors, on its company blog, announced its intention to re-pay its Department of Energy Advanced Technology Vehicle Manufacturing loan five years ahead of schedule, with the last payment being on 2017, instead of 2022 the original deadline for payback of the loans.
In the heated political climate surrounding government-subsidized green energy initiatives, the company was quick to point out the that ATVM loans were initiated and approved under the Bush administration, and were completely separate from the federal bailout of General Motors and Chrysler, as well as being the smallest of the ATVM loans granted, the others being Ford at $5.9 billion, Nissan at $1.4 billion, and Fisker at $529 million. Tesla’s loan was for $465 million.
In the blog post, Tesla VP of Business Development, Diarmuid O’Connell, said the company expected to show a modest profit in the first quarter of 2013, excluding non-cash option and warrant-related expenses.
The company’s upcoming models were briefly mentioned in the post, including the Model X crossover, and the third-generation model, described as a high-volume, low-price model, sometimes referred to as the “Blue Star.” During its development, the Model S was coined the “White Star” by many automotive media outlets.
However, being a publicly-traded company, Tesla is under the scrutiny of investors and regulators, and announced that its annual report would be delayed due to errors in its filing, according to Bloomberg. Some unpaid capital expenditures from 2011 and 2012 will be re-classified as operating activities in the revised report.
Source: Bloomberg, Tesla