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Comment by guelo | Hacker News Reader

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?

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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...

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