• 40 mins Shell Restarts Bonny Light Exports
  • 2 hours Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 8 hours Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 13 hours British Utility Companies Brace For Major Reforms
  • 17 hours Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 19 hours Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 20 hours Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 21 hours OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 22 hours London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 23 hours Rosneft Signs $400M Deal With Kurdistan
  • 1 day Kinder Morgan Warns About Trans Mountain Delays
  • 1 day India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 2 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 2 days Russia, Saudis Team Up To Boost Fracking Tech
  • 2 days Conflicting News Spurs Doubt On Aramco IPO
  • 2 days Exxon Starts Production At New Refinery In Texas
  • 2 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 3 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 3 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 3 days China To Take 5% Of Rosneft’s Output In New Deal
  • 3 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 3 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 3 days VW Fails To Secure Critical Commodity For EVs
  • 3 days Enbridge Pipeline Expansion Finally Approved
  • 3 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 3 days OPEC Oil Deal Compliance Falls To 86%
  • 4 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 4 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 4 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 4 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 4 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 4 days Aramco Says No Plans To Shelve IPO
  • 7 days Trump Passes Iran Nuclear Deal Back to Congress
  • 7 days Texas Shutters More Coal-Fired Plants
  • 7 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 7 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 7 days Chevron Quits Australian Deepwater Oil Exploration
  • 7 days Europe Braces For End Of Iran Nuclear Deal
  • 8 days Renewable Energy Startup Powering Native American Protest Camp
  • 8 days Husky Energy Set To Restart Pipeline

Breaking News:

Shell Restarts Bonny Light Exports

Russia Goes All In On Arctic Oil Development

Russia Goes All In On Arctic Oil Development

Fighting sanctions and low oil…

Why Petrol Powered Cars Aren’t Going Anywhere

Why Petrol Powered Cars Aren’t Going Anywhere

Internal combustion engines are still…

James Burgess

James Burgess

James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…

More Info

DoE Lost Billions in Deal with Tesla

DoE Lost Billions in Deal with Tesla

An article on Slate.com has basically claimed that the government lost more money investing in Tesla than it did in Solyndra. A bold statement considering that Solyndra defaulted on its loan, and Tesla has already paid their loan off, nine years early, and with interest; but here is the reasoning.

In 2009 the global financial crisis was still in full affect. General Motors and Chrysler were heading towards bankruptcy and Tesla had suffered a year of layoffs, cancelled orders, and record losses. The US Department of Energy came to Tesla’s rescue with an offer to lend the company $465 million at incredibly low interest rates. Four years later and Tesla is a roaring success. Valued at more than $12 billion on Wall Street it offers a sharp contrast to Solyndra.

Related article: Bob Lutz Plans to Convert the Fisker Karma into a V8 Gas Guzzler

The DoE invested in Solyndra to the tune of $528 million, yet Solyndra failed to keep its costs down and eventually dissolved, leaving the DoE $528 million out of pocket. Tesla on the other hand paid their entire $465 million loan back with an additional interest of $12 million, on the face of it the DoE are $12 million dollars up, yet in reality they lost potentially billions of dollars in this deal.

The problem is that the feds had Tesla over a barrel and they didn’t use that position to negotiate a proper deal, a deal that other venture capitalist companies would certainly have made, a deal that reflected the risk that the DoE was making when it made the investment. At the time Tesla estimated that a loan from a venture capitalist would charge interest rates of 30-40%, so they were desperate to receive the federal loan at 3-4%, but the DoE did not take advantage.

The government earned a 2.6% return on its investment, yet Elon Musk, who also invested in Tesla at the beginning, earned more than a 3,500% return. The difference being, he negotiated to convert his $38 million loan into stocks in the company, which are now worth $1.4 billion.

Related article: Is the Solar Energy Bubble Finally Bursting?

Just how many billions could the government have earned if it had demanded stock options?

The DoE has defended their decision to not request stock in Tesla, saying that “the loan program wasn’t intended to generate profit; the goal of the program is to provide affordable financing so that America’s entrepreneurs and innovators can build a strong, thriving and growing clean energy industry in the United States.”

By. James  Burgess of Oilprice.com



Join the discussion | Back to homepage

Leave a comment
  • Martin on June 04 2013 said:
    The government is not a "for profit" entity. The government did a good thing here, saved jobs and helped a struggling company. Good on them and here you are bad mouthing them cause they're not greedy pigs. Nice going.
  • Buck on June 03 2013 said:
    The DOE did exactly what should have been done, other than not making the loan in the first place(no such thing as free market these days). The government should never ever be allowed stock options as this is facsism plain and simple look up the definition.

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News