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Tesla Wins $465M in DOE Loans; Nissan Gets $1.6B for Electric Cars

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It’s official: Tesla Motors has won approval for $465 million in low-interest direct loans from the Department of Energy under the delayed Advanced Technology Vehicle Manufacturing Program. Tesla, which now sells a $109,000 electric sports car, has just been awarded what the DOE calls “conditional loan commitments” to set up manufacturing in California. This represents a huge step for the startup on its at-times bumpy road to producing the long-planned electric sedan, the Model S, and accelerating its nascent battery pack supply business.


The bulk of Tesla’s loans, $365 million, will finance a production facility for the Model S, likely in Southern California. (The site has yet to be finalized, Tesla said in a release this morning.) The remaining $100 million will help the company set up manufacturing for battery packs and electric drive trains, the Obama administration announced today in Dearborn, Mich., along with funding for Nissan (s NSANY) and Ford (s F), as rumored late yesterday.

The administration announced a total of $8 billion in loan commitments, including a whopping $5.9 billion to help Ford retool factories in Kentucky, Michigan (two states that have been vying for battery makers), Illinois, Missouri and Ohio to produce 13 “more fuel-efficient models.” Nissan North America is getting $1.6 billion to retool its Smyrna, Tenn., factory to build electric cars and batteries. More loans for carmakers and parts suppliers “large and small” are coming down the pike, and the DOE plans to announce them in the next “several months.”

The Energy Department has high hopes for Tesla’s Model S, which debuted in concept form earlier this year, and the agency expects to reach production volumes of 20,000 per year by the end of 2013. In a release this morning, the agency said, “This vehicle demonstrates how the emerging electric car is becoming more affordable: the Model S is expected to be roughly $50,000 cheaper than Tesla’s first vehicle, the Roadster.”

Tesla plans to sell the Model S with a base price of $57,400, putting it at the high end of the mass market. CEO Elon Musk said in the company’s release this morning, “Tesla will use the ATVM loan precisely the way that Congress intended — as the capital needed to build sustainable transport.”

The second DOE-backed Tesla facility, planned for Northern California, will produce battery packs for not only Tesla vehicles, but also cars from other automakers, according to a release from the DOE. Pilot-scale production is supposed to begin as early as 2011, with a ramp up to 10,000 packs by 2012 and 30,000 packs in 2013. To start, customers will include Daimler AG (s DAI), which took a stake in Tesla last month and struck a deal for the startup to provide battery packs for an electric version of the Smart Fortwo.

Nissan, however, has a head start and ambitious plans to produce electric vehicles for the mass market — as many as 100,000 units by 2012 — at prices competitive with conventional vehicles, partly by leasing the battery pack, the most expensive part of most electric cars. The company has a joint venture with battery maker NEC, and a decade-old alliance with France-based Renault that has been among the industry leaders when it comes to aligning partners for electric vehicle and charging infrastructure trials. As Nissan CEO Carlos Ghosn told the Financial Times, “If it’s not affordable, it’s not going to work.”

Model S photo credit Tesla Motors

42 Responses to “Tesla Wins $465M in DOE Loans; Nissan Gets $1.6B for Electric Cars”

  1. Clifford

    Although these cars for sale will have many possitives towards the average car buyer such as low emissions and no fuel the key question is are they a real benefit to the environment and are they worth the many they are being sold at? The answer is NO, they damage the environment too and when these cars for sale break you cannot simply take it to a normal garage, you will have to take it to a specialists garage with specialist prices.

  2. Taxpayers do not have unlimited funds — but the government continues to spend money like it’s their own pocket book.

    When capitalism’s business cycle veers into discomfort (unemployment, slowing sales and borrowing, etc.) — the State (government) now suppresses recession with monetary policy (making money cheap and abundant) and fiscal policy (quantitative easing, injections of liquidity, stimulus programs, etc.) so nobody feels pain. But the problems are still there, just hidden for a time by the bailouts. They will continue to grow until another bailout is needed (e.g. Chrysler).

    Capitalists and those that embrace the free market reject this narrow notion for many reasons. Chief among them is that fact that experience and progress is the byproduct as we surmount difficulty. The Marines say, pain is weakness leaving the body. These downturns are inefficiencies leaving the system. These loans will be used to prop up inefficient systems. Nobody truly learns. Nobody truly grows. Nobody progresses.

    Stop the paronioa: You do not need to boycott car manufactures that accept bailouts. Capitalism thrives when you make a decision that fits you. You should find the car that you want — and that meet the criteria important to you. Car manufacturers that accept bailout money will be required to add inefficiencies to their business model and are at a disadvantage to produce the car that meets your needs the best. You should make car manufacturers and dealers compete for your business.

    So if you are thinking about a car, check out this process on this blog:


    Ford Fan