Tesla CEO says company is fine, repaying U.S. government loans
Romney during debate compares Tesla with Solyndra
 | Musk: "We have a duty at Tesla, having accepted this loan as a portion of our capital, to repay it at the earliest opportunity." |
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DETROIT (Reuters) -- Tesla Motors Inc. CEO Elon Musk dismissed fears the electric carmaker was in financial trouble and said it was making an advance payment on the federal loan used to make its Model S sedan.
Tesla last week cut its full-year revenue forecast due to a slower-than-expected rollout of the Model S and said it was raising another $150 million through a share offering.
The California company also disclosed last week that it had fully drawn down its $465 million U.S. Department of Energy loan facility, and the loan pact had been amended to delay repayment of a portion of the funds. The company agreed to make additional early payments starting next year and said it would work with DOE officials to develop an early repayment plan.
Republicans have criticized the Obama administration for the DOE's support of new-technology companies, citing the struggles of electric carmaker Fisker and electric battery maker A123 Systems Inc., as well as the bankruptcy last fall of solar panel maker Solyndra.
During Wednesday night's presidential debate, Republican Mitt Romney grouped Tesla with Fisker and Solyndra, calling them "losers."
Musk, in a blog posted before the debate on Wednesday, said misconceptions had arisen from last week's disclosures by the company and he wanted to correct the media's "wrong impression" that Tesla was in financial trouble.
"We described a relatively pessimistic scenario for Tesla, which was incorrectly interpreted by some to be what we thought was the most likely scenario," he said. "We raised the funds (from the stock offering) simply for risk reduction."
He reiterated that Tesla was on the verge of becoming cash-flow positive by the end of November and said it would not have to spend any of the new money it had raised until it began a major new vehicle program.
Tesla has an ambitious portfolio of future products. The next vehicle due is the Model X, a mid-size crossover based on the Model S. Tesla plans to begin building the Model X in late 2013.
A $30,000 compact sport sedan, aimed at competing with the BMW 3 Series, is due in 2015, a Tesla executive told Britain's Autocar magazine in July. The company also is considering production of a roadster about the same size as the sedan, according to Car and Driver magazine, citing a Tesla spokeswoman. Both cars would be based on the Model S.
Musk acknowledged the Model S launch was a few weeks behind schedule, but said the delay was not as bad as it appeared. Tesla last week said it expected to deliver up to 3,225 of the cars this year, compared with an initial target of 5,000. However, it also said it would exceed its 2013 target of 20,000 deliveries.
Musk said of the DOE loan, which accounts for a third of the company's capital raised to date, that Tesla has always made its payments on time and has never asked to delay repayment. He said the DOE's desire for advance payments was because the department expects the company's success to lead to the accumulation of large amounts of cash, not because of concern about Tesla's finances.
"The DOE is highly bullish about our future and doesn't want us to delay early repayment of the loan if we have the cash on hand to do so," Musk said.
He said Tesla will begin an advance payment on Wednesday to prefund the principal payment due next March.
"We have a duty at Tesla, having accepted this loan as a portion of our capital, to repay it at the earliest opportunity," Musk said. "We will do exactly that."
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