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Comment by noname123 | Hacker News Reader

The reason why Tesla is able to pay the Dept of Energy loan early is because of a secondary stock and bonds offering worth about >850+ million. In another words, Tesla is raising funds by generating more debt (from bondholders) and diluting share value (from shareholders), roughly about 3.5 mil out of 40 mil float, and using that money to pay the US govt.

TSLA rose on the news despite diluting shareholders is because coupled with the announcement, Elon Musk mentions that he will personally put an additional 100mil into the secondary offer; and general exuberance that TSLA will use the cash for more infrastructure build-out, a la Google, Yahoo during their heyday's. Make no mistake, this is as much a PR ploy by Tesla to pump up their offering.

It's incredibly smart for Musk and company to raise money in a very favorable environment as TSLA climbed from 45 to 90 after earnings. However, it remains to be seen if they can be still profitable. Note that they are still selling each car at a material loss; and only managed to show a profitable quarter by trading green credits they gained from their manufacturing. To truly scale, they need to either drive down the production cost of their cars down and broaden their market as there are only so much supply of carbon-emission credits on the market.

Disclosure: I trade TSLA options on volatility, without any directional bias.

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It's these type of posts that make it to the top of a thread that make me not want to check into HN.

Can't we celebrate a company, that was called out as a bad stimulus target during the presidential debates actually paying back all their loans ahead of time? If there was one place I hoped I could go to celebrate an innovative company's success, it would be HN.

I take particular issue with, "Make no mistake, this is as much a PR ploy by Tesla to pump up their offering."

Paying back $450mm in loans isn't just a "ploy" - it's actually raising the money and sending it back to the taxpayers. And, at the same time, doing something innovative and forward looking - building electric cars - which, (look at Fisker) - is NOT a slam dunk, even with green credits.

I, for one, am applauding Tesla today. We can do that without saying that they will be successful in everything, and in the future. But today they are.

> It's these type of posts that make it to the top of a thread that make me not want to check into HN.

Posts that provide insightful explanation about the story? Yes, less of that and more unqualified positive gushing, please. There is nothing wrong with offering an informed opinion, even if (especially if) it's not in full alignment with the prevailing attitude of the hivemind.

Man, I'm really not sure that you could have missed his point any more. How could you read what he wrote and POSSIBLY think he was arguing that we need "more unqualified gushing"? You pretty much just made up a strawman and beat the bejesus out of it for no reason...

I'll be the first to call out unqualified gushing, but if that's what we're calling a factual account of a company paying back a loan I simply have to disagree with you.

> It's these type of posts that make it to the top of a thread that make me not want to check into HN.

> Can't we celebrate a company, that was called out as a bad stimulus target during the presidential debates actually paying back all their loans ahead of time? If there was one place I hoped I could go to celebrate an innovative company's success, it would be HN.

It's right there in black in white: "I don't like that we have posts that aren't strictly celebratory in nature" (at least about Tesla). For the record, I'm most definitely a fan of Tesla and have utmost respect for the company, but that didn't stop me from appreciating the critical view of this story that was offered by noname123 (in which I learned some things I didn't know about).

Wait a minute did you just make up a quote out of thin air and misattribute it to someone else saying "it's right there in black [and] white"?

I don't see the quote anywhere, either.

The quote was at the start of my comment, after which I offered a way of reiterating it.

No, he is responding to the initial branch. The quote is there in black and white

This particular "informed opinion" contained nothing other than a repetition of the facts already present in the press release, packaged together with a little disdain-flavored "commentary".

If celebrating the actions of trendy companies and founders is what you're after, the vast majority of Hacker News should be very satisfying to you. Comments like the one you replied to are much rarer.

It's not the case that we have to blindly praise a company - but calling something as significant as raising $450mm in the public markets to pay back the government loans a "PR Ploy" saddens me, because that was a very real, and impressive accomplishment.

Musk/Tesla aren't without their issues, and, as John Siracusa showed us on "Hypercritical" - you can simultaneously appreciate something but still point out all of its flaws in glorious detail -but it's the frequent reflex to use the pejorative when describing intent or action, even on a good day like this, that brings down the tone of conversation.

Ultimately Tesla is in the business of public opinion. Paying back the goverment far ahead of schedule when there is no need to necessarily do it, considering fairly favourable terms for the loan, can be considered a "PR Ploy" to play to that public opinion. After all, wouldn't they have just stated the fact and not compared themselves to other car manufacturers, even going to lengths to spell out the fact that they weren't bailed out?

It is not a bad thing, after all it is a smart move and one done so by good businessmen. But blindly assuming they are doing this from the good of their hearts "because we want to do the right thing and pay back our government" is just naive. I don't think you should consider the above as a negative comment either, there are those among us who value the business rational behind the decision, and don't get caught up in the PR fluff. I think everyone here respects and admires what Elon Musk is doing, and doing well.

Didn't the loan place a lot of restrictions on them? You have to trade off the low interest rate against that, especially when the rate they are getting with the bonds isn't that much worse.

I didn't read this comment nearly as negatively as you seemed to have.

It was a gut reaction to the "PR ploy to Pump" phrasing - which made TSLA sound like some kind of boiler-room operation engaging in shady behavior. Also, it would have been nice to come to HN and see the top rated article on TSLA calling out all the positives, rather than focussing no the Debt, Dilution, Loss that TSLA is experiencing.

It's important to take time to celebrate victories, ours, and the people/organizations we look up to.

Facts about debt, dilution, and loss are extremely interesting and relevant to the story. Moreover, it seems like the worst thing he had to say about TSLA is that they're very good at marketing. Which is pretty important for a car company.

The HN problem is with middlebrow dismissals at the top of threads. I'd submit that the comment at the top of this one is neither "middlebrow" nor dismissive.

"gut reaction to the "PR ploy to Pump" phrasing"

Without agreeing or disagreeing that it was a ploy or not I will say that my gut to "Pr ploy" is actually positive since success with PR is an essential ingredient to success overall. I don't look down up it in any negative sense at all.

Tesla takes money out of people's pockets (the tax payers)and gives rich people fancy cars to drive. Not sure how to celebrate that...

They payed back their loan to the tax payers by taking out a loan from someone else, not by selling a car at a profit and making a successful product.

Thank you for providing an actual middlebrow dismissal for comparative purposes.

I think they took a loan guarantee from DOE because nobody else was lending money back then and they needed funding to develop the Model S.

If my memory serves me right, they didn't need that funding to develop the Model S, they just took it to make the whole process a little bit less risky.

>> It's these type of posts that make it to the top of a thread that make me not want to check into HN.

I disagree. This is actually the kind of posts that makes me want to check into HN. The poster knows what he talks about and he shares his view on the matter.

For comparison, read the Reddit comments about the same link: http://www.reddit.com/r/technology/comments/1evskd/tesla_rep...

.. and next time, please skip the fallacy of attacking something irrelevant, i.e. what kinds of posts you like and what you think fits on HN, instead of the argument itself.

Notice: I'm only annoyed by the first two lines of your post, the rest I think is a valid argument.

I love that these types of comments are at the top of Hacker News. They add valuable information to the discussion. I don't understand how you expressing your admiration for Tesla is at odds with the interesting factual background of the comment you responded to.

I can't get a clear picture on how much Tesla's success is a result of government subsidies, loans, and windfalls.

For example, at one point Musk said 10% of their revenue was from selling carbon credits they get for each car they sell to other car companies.

What's difficult for me is there's no place where you can get a decent summary of the kind of government programs Tesla relies on or takes advantage of.

I agree. Let's applaude the lone electric car success.

i dont think you understand... sim1a.com

There's something bizarre about griping that they reached profitability from green credits. To clarify, these green credits were voluntarily paid by OTHER CAR COMPANIES like Fiat who did not innovate enough to develop their own green cars. In essence, these credits work similarly to carbon credits or sulfur credits. They are NOT paid by taxpayers or by the government in any way.

It was a capitalist regulation in California designed to provide financial incentives and produce more revenue for innovative green companies. Companies have the option to develop their own green cars, buy credits, or else cede the California market to competitors. Those incentives have been very successful. There are far more new models of low and zero emissions vehicles than ever before.

Remember the popular Saturn EV-1 from fifteen years ago? It and other green vehicles were killed because California removed its regulations mandating production of low emissions vehicles.

they are not free, they are paid by any consumer who directly or indirectly has a relationship with someone who purchases a vehicle from one of the makers who is paying these credits.

Voluntary my ass. If they don't pay what happens? Your fined. Its a tax. It is paid by consumers because they buy cars. If anything its California's way of having people in other states fund their initiatives.

I guess kudos can go to Musk for making sure his company is positioned physically and product wise to make the most from it. It is a disguised transfer from one company to another facilitated by the state. It is not voluntary if a fine results

Voluntarily it would take a lot to resist making maximal short-term profits from gas guzzlers for long term unproven gains such as the ones Musk's company has been doing. Are you saying governments shouldn't institute any regulations, including carbon credit systems, and everything should be decided by the free market?

Sure, it's not voluntary, but then again neither is most of the stuff that producers of things do. The consumer demand is the taskmaster, and thanks to government regulations, so is the public interest, in the form of policies designed to reduce carbon emissions and pollution.

I think unqualified free market advocacy amounts to basically a wish for there to be consumer interest only, without any system for representing public interest that uses any signal other than money. But taken to its extreme, the absence of any system to balance the money signal can lead to things like buying up lakes to dump in, or buying up all the judges in a town, just because you can pay off enough people. In a completely free market, if you are rich enough, you can theoretically buy enough institutions and mercenaries and set up enough corrupt judges to let you kill people for fun.

I suspect that the above commenter is skeptical about carbon emissions as a legitimate externality. There are also plenty of people who do not think we should be able to address externalities through legislation.

It is strange though because it is often the people who acknowledge or advocate the use market approaches who later complain about them when they are put in practice.

Usually those proponents advocate the use of market approaches free from governmental intervention; a market where the commodity is a virtual creation (carbon credits) by the government is obviously contrary to their preferences.

(Note: I'm not saying the approach is wrong, I'm just explaining the position. Personally, I still haven't found anyone making a decent libertarian position on the issue. The only ones I've read/listen boiled down to "I'm not a climatologist, but I'm pretty sure it's not a real problem")

Don't confuse free market advocacy with anarchy. Buying up judges, bribing other officials, and other fraudulent transactions, including stuff like misrepresentation of goods and other deceptive business practices, are not necessarily okay in a free market. However, direct government interference is. I don't advocate for a completely dog-eat-dog, caveat emptor society, but I do advocate for one in which those in power cannot control the flow of private wealth (often to their own benefit).

So then who is going to "interfere" on behalf of the society at large? On behalf of the environment? Will individual consumers do what's right for the common good, for the first time in ever?

Look, everyone is part socialist, part capitalist, part communist, part fascist, part anarchist. Just don't fall into the trap of thinking your current favourite blend of these colours is the one true path. If there's one thing you learn looking around the world, there are many blends that have proven to work comparatively well. (And others that clearly don't.)

I don't mean to imply I have the perfect system (though it obviously doesn't contain any errors I'm aware of), but rather that advocating a free market does not imply what he says it implies. Advocating a free market does not imply endorsing bribery and fraud. That was the extent of my point there.

I agree with you but the elephant in the room is, although you may be against "bribery and fraud" how would a community actually stop someone with enough money from doing just that, unless you do in fact have governments and regulations? What is going to balance the money signal? It's not enough to say that you are not for it, but what mechanism would the system actually have to deal with such abuses?

The irony is implicit -- the way to avoid the corruption of government bureacracies is to increase the size and power of said bureacracies.

Again, I am in favor of government, just not its economic interference. Reducing its economic interference actually reduces the motivation for corruption and bribery (not that I think that's enough). Bribery and corruption should still have legal penalties and be prosecuted by the government.

Abuse of wealth should still be a problem, but that doesn't require the government micromanaging that wealth.

I suppose you would argue that we should all just pay all externalities created by the free market even if they would simply bankrupt or kill us.

http://en.wikipedia.org/wiki/Externality

For example, if HSBC knowingly funded murderous, criminal gangs around the world, they should be allowed to finance killing because it helps them pursue profit?

http://www.rollingstone.com/politics/blogs/taibblog/outrageo...

Car companies had a clear choice. They could give up one profitable market or they could take appropriate actions contributing to the cause of reducing smog-related deaths in California. There is a very huge public cost for eliminating these regulations, as was PROVEN to everyone in the 1990s when most green cars were killed on the spot when earlier regulation ended.

Two points. (1)The externalities are not caused by either the car makers or the oil producers. They are caused by drivers. Driving creates the emissions, and under a fair system drivers should bear the costs. (2) Mandating fuel efficient cars has the same effect on consumption as reducing the cost of gasoline.

#1 is only partly true. California proved most pollution can be stopped by the car's factory-provided emission controls before the driver ever enters the vehicle. The car maker has a great macro effect in reducing pollution. This is hugely important to Los Angeles, which is located in a bowl and has suffered from a considerable number of smog-related deaths and health costs.

#2 is incorrect. They did not mandate fuel efficient cars to reduce consumption. They mandated a certain percentage of zero and near zero emission cars. As an electric vehicle owner, I can reassure you that this does not automatically result in more miles traveled.

Ummm... no. The car companies have three choices: 1) buy credits, 2) pay fines, 3) make low emission cars that earn their own credits. These kind of policies that are designed to prevent the "tragedy of the commons" happen all the time in government. You still might not agree with this type of governing, but your basic facts are wrong.

Don't forget 4) they can leave the market. It's not something they are forced to do in anyway, it is a voluntary choice to continue serving that market.

This is the most important point. The government of California is not god, and generally cannot force a business to do anything if you don't do business there.

All of the companies paying these credits are paying them because they choose to do business in that market.

The government is setting a price on the previously unpaid externality of carbon emissions.

The problem with this attitude is that pollution actually does have an economic, social and environmental cost. Putting in place regulations to ensure that the polluters pay that cost, instead of unfairly foisting it on everyone else, is perfectly sensible free market economics.

But it is a perfectly, wonderfully in fact, appropriate example of the government playing the role it is supposed to play by setting the terms of competition in the marketplace. Just as the government says I can't break into your house and take your stuff (which would just be another aspect of market competition, if you really liked your stuff you would have had better locks). If I do, you call the cops and punishment results. This isn't a waste of money or some sort of evil coercion, it's the government setting the rules we play by in a way that benefits everyone. Does the government always do this perfectly? Fuck no! But don't gripe about it when the system actually works!

You must remember that when the government decrees that everyone must do something or else and everyone does it, it is considered voluntary.

Yes, because our government is there by our voluntary action. If we find our government is making us do things involuntarily, we can change it.

What action did I take that constitutes my volunteering of government's legitimacy?

Existing on its soil. You can always move.

That's a little simplistic, don't you think? What about, for example, the minorities who are made to do things involuntarily?

That's what the signers of the Declaration of Independence thought as well.

However, my point wasn't about whether the government could be changed, how it could be changed, or what it could be changed to; but that its monopoly on the use of force doesn't make the actions people take based on its rules voluntary.

People don't like that those credits are temporary, subject to the whim of the government, and the entire source of Tesla's current profitability. It's a pretty big asterisk - you can't blame people for pointing it out.

How many emissions do you suppose get emitted by all the metal, plastic, and rare metals that get dug up to create a tesla. What exactly is green about it?

Wouldn't it be more green for our society to pay for mass transit instead?

But apparently the only way to get something done is through companies and the market...

The concern is that as they sell more cars outside of the US and California where there are no credits, it will decrease their margin.

"Make no mistake, this is as much a PR ploy by Tesla to pump up their offering."

I don't get your negativity here. The fact that a major green tech company working with government support is able to shift financing over to the private market is, indeed, a remarkable feat and is absolutely something they have a right to crow about. The government, too — it's an example of a progressive system working as designed.

As for PR's impact to stock price...TSLA is 70% institutional owned. Anybody with a material stake in the company is savvy enough to know that they're not suddenly self-sustainably cash-flow positive.

I don't get your negativity here.

It didn't read as negative.

Ploy, Noun: A cunning plan or action designed to turn a situation to one's own advantage. Synonyms: trick

It definitely has a negative connotation.

Not to me. Any plan designed to turn a situation to one's own disadvantage is by definition foolish.

Can we get away from splitting hairs here? Would we rather he have said:

"Make no mistake, this is as much a PR cunning plan or action designed to turn a situation to one's advantage by Tesla to pump up their offering."

? A synonym may be trick. But the definition you cited fits what was happening perfectly without intending the synonym. Synonyms aren't always interchangeable due to nuances in meaning differences.

Seriously. I feel like sometimes people argue not in regards to the content but actually to be right. They WILL split hairs just to be right.

"I don't get your negativity here."

I didn't get the negativity. He was just stating a reasonably deduced thought.

it's really hard to find a phrase starting with "make no mistake" that doesn't culminate with a negative or dismissive slam.

As urbandictionary puts it, "a weasel-y, thought-terminating phrase that is supposed to lend gravitas to a weak position in an argument. Used by doomsayers and the overly dramatic."

urbandictionary also lists "superman" as a sexual maneuver. Your move.

Damn.

They already raised all the money prior to this announcement. They raised debt precisely because they didn't want to dilute shareholders (too much) and give existing short positions an easy out. You certainly realize they could have easily funded $1B through shares only at their then stock price level.

Elon predicted $200M capex in the next quarter, mainly to complete tooling and optimize factory processes. He clarified that they are not looking to scale the manufacturing process any further than its current level (400-500 cars/wk).

Stock price is up because Tesla only had $200M in cash equivalents available, which is a pretty small number for a car manufacturer, especially one looking to develop a new model (Model X) for a 2014 release and expanding charging/sales/service infrastructure.

Disclosure: I think technical trading is bullshit.

Heh. It's all about the Alpha.

If I take a step back from this, I'd say it's bad strategy to bet against Elon Musk. IMHO, part of what makes his companies appealing is that he has a remarkable track record of keeping his head down and just getting sh!* done. I'm very impressed with his work ethic and vision and I think Tesla is going to go far.

Secondly, if he is successful and manages to bootstrap and entire electric car industry from the ground up, what kind of effect do you think this innovation is going to have on the world? Think of the massive investment in geopolitical resource availability that will be mitigated by the diversification of fuel options for auto transport.

He already hit one home run with PayPal, hit a triple with SpaceX, and might steal home with Tesla. He's a star player in a very sparse field of real innovators right now.

Disclosure: I also trade TSLA options, but I'm quite bullish on the company.

Musk had very little to do with PayPal. He built a competing product, X.com, which was acquired by PayPal. Musk then served as CEO and if his interview in "Founders at Work" is any indication, he didn't do much besides piss off Max Levchin before stepping down after a relatively short tenure.

I love what Musk has done post PayPal, but no reason to rewrite history here.

>Musk had very little to do with PayPal.

That's rather inaccurate. Musk's company was X.com and Thiel/Levchin/Noseks's was called Confinity. They had a 50/50 merger in early 2000, and at first the new company was called X.com.

Furthermore, Confinity[1] was doing Palm Pilot payments under the PayPal brand[2], while X.com was working on internet money transmission over email. Which idea was more useful in the long run? (hint: if you chose Palm Pilot's - you're wrong)

Much of the disinformation stems from a book called the "The Paypal Wars" written by a Thiel fanboy, that is embarrassingly biased. Musk writes:

"The only negativity in recent years was due to a book called The PayPal Wars, written by a sycophantic jackass called Eric Jackson. This guy was one notch above an intern at PayPal in the first few years of the company, but gives the impression he was a key player and privy to all the high level discussions. Eric couldn't find a real publisher, so Peter funded Eric to self-publish the book. Since Eric worships Peter, the outcome was obvious - Peter sounds like Mel Gibson in Braveheart and my role is somewhere between negligible and a bad seed. However, to his credit, Peter didn't realize the book would be as bad as it was and apologized to me personally at a Room 9 board meeting at David Sacks's home in LA."[3]

Post-merger it's hard to say who did what exactly, and Levchin for example was instrumental in Paypal's anti-fraud system, a key development that allowed the company to navigate around a potentially ruinous situation.

The bottom line is, 3 hyper-smart guys (Thiel, Levchin and Nosek), don't give away essentially 50% of their shares to some someone else (X.com) on a whim. This was a calculated and deliberate decision. Similarly, it's unlikely Musk would have succeeded alone either, and thus why they are all called co-founders of PayPal, Inc.

[1] http://en.wikipedia.org/wiki/Confinity

[2] http://www.halplotkin.com/cnbcs029.htm

[3] http://gawker.com/230076/an-alternate-history-according-to-e...

My knowledge of this comes directly from the Levchin interview in Founders at Work by YC's own Jessica Livingston. I consider that a primary source.
Regarding the name, PayPal the product -- which included a web app and not just the Palm Pilot product -- launched before the merger. I remember evaluating both x.com and paypal when I was in high school selling computer parts on auction -- at Haggle.com.
Finally, starting your comment with "Sigh, blah blah middlebrow blah blah" just kind of makes you seem.... yeah.

So wait... Levchin counts as a primary source but Musk doesn't?
It must be fun to give more weight to the side you support.

> So wait... Levchin counts as a primary source but Musk doesn't?
> It must be fun to give more weight to the side you support.
No, actually an interview with Musk is a primary source, too. You realize "primary source" is an actual thing and not just something I made up? Are you trolling or just being argumentative for no reason?

I know that's what the PayPal Wars book implies but Musk has argued against this version of history pretty strongly - http://gawker.com/230076/an-alternate-history-according-to-e.... I imagine the truth is somewhere between the two extremes.

According to the "PayPal wars" book PayPal didn't acquire X.com, it was a 50-50 merger. It is true (again, according to this book written by a PayPaler) that Musk wasn't as important to the PayPal success as the "funder" title would imply, but he did drive innovation into the space as a competitor and then saved the company from the hands a clueless CEO.
It's very hard to say if PayPal would have succeeded without him. For one, it would have probably been much harder for PayPal to raise 100 Mio without the X.com merger. They got that amount shortly before the dotcom crash, so it was crucial for their survival.

> Musk had very little to do with PayPal
That's false.

cars are not an innovative technology. Cars that run on electricity existed since the 1920s and only recently mass produced by the likes of Nissan and others. Telsa sells expensive, heavy cars that run on batteries. Yes they are shiny. You know what would be innovative? Mass transit on a mass scale, away from automotive transport...
but there is no money to be made on any market for that..

I don't know what you are talking about. That's about as close to apples and oranges as I can think.
In order to have mass transit, you need to have the MASS part. Mass transit only works in areas with sufficient population density and predictable traffic patterns to make the investment in that infrastructure worthwhile. Electric cars, however, help extend the reach of the existing electrical infrastructure into transportation.
In the area where I live, we have extensive commuter and long-haul rail. I also saw two different Tesla cars on the road in my neighborhood.
The first portable computers were large, heavy, and expensive. Given the technology curve and the total addressable market of transportation, I'd expect we will see much more attention to that solution given the wall we've hit with hydrocarbon based transportation.

"TSLA rose on the news despite diluting shareholders is because coupled with the announcement, Elon Musk mentions that he will personally put an additional 100mil into the secondary offer"
Dilution doesn't care who does the diluting - a share issued to Elon Musk dilutes as much as a share issued to TIAA-CREF. Regarding the double down, I do not believe Elon Musk's commitment to Tesla was in doubt previously. Its effects were probably limited to the marketing of the issue.
More critical is: (a) TSLA maturing to where it can issue debt (albeit, of the convertible type), (b) its extrication from a volatile political situation, and, (c) its new liquidity buffer. I do not think it is appropriate to characterise it as a "PR ploy". As you mentioned, they are still unit loss-making - that those losses need to be financed is more than superficial.

I've been a vocal critic of Tesla and the DoE loan program, and I'm really glad to see Tesla pay off the loan and move into private markets. I want to root for this company to succeed and now I feel like I can do that. Taxpayers still got ripped off given the size of the loan relative to the company, and the huge downside risk, but I'm glad Musk pulled it off!

There's one more reason to repay the loan early: it prevents the US from exercising 3M stock warrants worth about $250M. The fund raising also allowed Elon to borrow money against his other holdings to purchase more Tesla stock off the open market.
Agreed that sustainable profitability is an open question: because Tesla knew they would be raising more money after their first profitable quarter, they could pull put all the stops for maximum profitability, and go back to spending more once the round was in the bank. Will that happen? Unclear. But when you raise money you usually spend it.

Considering the terms of the government loan were very favorable (rates equal to the interest rates on Treasury notes in 2010) it doesn't make sense to me that they would want to pay it off early and get rid of all that liquidity. As a quickly growing company didn't they have something better to spend that $450 million on?

Well there are some restrictions imposed on Tesla by this load.
See http://www.businessinsider.com/elon-musk-borrows-150-million...
There is says that the loan requires Musk to have a 65% ownership of the company which of course is expensive to maintain when they are raising money.

I interpret it as a way to keep competitors at bay. "The public markets can fund electric cars. No more government loans are needed for us, or anyone else for that matter."

Like a butt-load of positive PR? I think they calculated that the positive PR value (or maybe mitigating negative PR) was worth the incremental cost of capital from the normal markets vs. from the DOE

They paid it off early because the loan came with restrictive agreements that prevented Tesla to stay competitive. This is from Tesla's own words, see my post. https://news.ycombinator.com/item?id=5755082

Yeah, that puzzled me too. The PR couldn't be worth that much, could it? How could the interest possibly be more expensive than the stock dilution?
Unless they just don't like having debt outstanding which seems understandable... though with debt that cheap...

> selling each car at a material loss
Is that true? I know the company overall would not have turned a profit without the credits but was under the impression that they currently had positive gross margins on the Model S.

Gross margin, and it's tiny without the credits. Tesla's most recent quarter resulted in an operating loss and a net loss.
Edit: my bad. Seems the net income was slightly positive last quarter (with regulatory credits included, without them it's a big old negative).

Even without regulatory credits included, they made a profit. Check the filing: total profit for the quarter was $96.3 million, and revenue from ZEV and other regulatory credits was only about $85M.

But the Model S itself is gross margin positive? That's all I was wondering.

The gross margin is 17%, but I was surprised to learn that includes ZEV credits.
From 10Q: >During the first quarter of 2013, we recognized $67.9 million in ZEV sales, which contributed to our gross margin.
http://ir.teslamotors.com/secfiling.cfm?filingID=1193125-13-...

I didn't see it broken out in the financials, but I didn't look terribly hard. I don't think it's unreasonable to assume it's similar to the overall gross margins in the low single digits (2% by my math - ignoring emissions credits).

Note that they are still selling each car at a material loss; and only managed to show a profitable quarter by trading green credits they gained from their manufacturing.
I'm not sure that's entirely accurate. I'm looking at their quarterly results for Q1 2013: gross profit was $96.3 million, but the ZEV credit sales were only $67.9 million for the quarter. Unless I'm missing something, it would appear that they are profitable even without taking the ZEV credit sales into account.

I believe you are missing something.
"During the first quarter of 2013, we recognized $67.9 million in ZEV sales, which contributed to our gross margin. ZEV credit revenue should decline in future quarters relative to our automotive sales as we grow our sales outside the United States and earn fewer credits on the 60 kWh Model S battery variant for those sales that occur in the United States. Other regulatory credit sales recognized during the first quarter of 2013 were $17.1 million." (1Q2013 10Q, p. 22).
$67.9 + 17.1 = $85M in revenue from ZEV + other regulatory credits. Presuming these credits have a nominal cost-I would imagine they're almost 100% margin, given that they're pieces of paper--that leaves $96.3 - 85 = $11.3M in gross profit from selling cars.

Ah, good catch! I did miss that note about the $17.1 million. Also, the $11.3M is partly from other stuff - selling drivetrains for the RAV4 EV, selling apparel, etc - not just selling cars. However, it would seem my main point still stands: it's not accurate to say Tesla wouldn't be profitable without the ability to sell energy credits.

Where do you get 40M for the float? Yahoo indicates 73M. Plus doesn't dilution go against all outstanding shares (115M)?
http://finance.yahoo.com/q/ks?s=TSLA+Key+Statistics

The point about green credits in interesting. I suspect you will find many people who argue that it should be considered a legitimate business strategy, and other who view it as an artificial market that could evaporate at any given time depending on the whims of congress.

I still think it's better for the private sector to assume the risk inherent in that debt than it is for the public sector to do so.

I'm not even mad at noname123 for posting this! I'm not! It's totally legit to make this post, although it's not as good as it could be, it's fine. JUST STOP UPVOTING IT!

WHO IS UPVOTING THIS PREDICTABLY NEGATIVE SHIT ON HN? What is this? How does this happen? I'm just stunned. Every single time. It's never even the "that's awesome! Keep in mind, there's this additional context" posts, it's just the "this isn't actually awesome, here's why" posts.
NO. It's awesome that a private company sold stock that is hot because they're doing well to pay back public debt. Good for fucking them. People wanted to buy it because they see it as valuable, and they paid back the American people with some of that money. Good for them, period.

> WHO IS UPVOTING THIS PREDICTABLY NEGATIVE SHIT ON HN?
People who are interested in views that are contrary to the mainstream and don't want HN to become an echo chamber.
People who value critical, insightful analysis and discussion by people who are willing to question the "party line" of a particular product's marketing department and fan club.
People who don't care about catering to the whims of people who can't stand to read "negative" things on the internet.
> NEGATIVE SHIT
I question this characterization of noname123's comment. The third paragraph I read as healthy skepticism, not negativity for its own sake. It's certainly information that a responsible investor would want to carefully consider.
The comment certainly wasn't "shit," it was well-thought-out and informative. The commenter certainly did his homework.

HN needs to not be an echo chamber, but the comment sections are becoming the opposite. If you're trying to justify a really pedantic but generally uniformative post (you say it's informative - how? I suppose you could have missed the 10 earlier HN threads about the stock sale, but it wasn't unknown info) by its third paragraph being healthily skeptical I think you're losing steam.
The problem isn't pointing out these facts - it's framing them as THE narrative and in a purely negative light.

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