How Tesla Motors Managed to Beat the "Solyndra Syndrome"

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I drive a 1994 Geo Prizm, rusted and sputtering, that came from a factory near San Francisco that was owned by a GM-Toyota joint venture that eventually flopped.

The car's held up all these years, but other than that, there's not much good to say about it, and the company that built it didn't amount to much, either.

It gives me a laugh to think that these days that very factory – rebuilt with money from the 2009 stimulus, no less – now makes the car that's the toast of Wall Street.

The U.S. government's $465 million loan turned the factory that built my Prizm into the launching pad of Tesla Motors Inc.'s (Nasdaq: TSLA) Model S, the luxury electric sedan Consumer Reports calls one of the best two cars it has ever tested. (The Model S tied the 2007 Lexus LS 460L, receiving 99 of 100 points.)

The plug-in Tesla has surpassed all expectations, but here's what's really extraordinary about the company: It's a government-financed clean-energy project that's actually a great American success story that even some conservatives can love.

Among big fans of Tesla Motors: Charles Payne, a co-host on FOX Business' "Varney & Co." who regularly touts the company and its stock.

With the success of the Model S, TSLA has skyrocketed from its 2010 IPO at $17 a share to $91.97 as of late Thursday and the company's valuation is approaching $10 billion.

Tesla Motors is Paying Back Its Government Loans Early

The company just sold convertible bonds to repay the government loan – five years early – and is selling about 2.7 million shares of stock to raise about $260 million more. Elon Musk, Tesla's founder, chairman and CEO, is also buying $100 million worth of stock personally, a move designed to show he's so convinced the stock will rise that he's betting his own money on it.

How refreshing to see such a success story financed in part by the same government program as solar panel maker Solyndra, which had gotten a $527 million loan guarantee and went bankrupt, and electric car maker Fisker, which is on the verge of bankruptcy and owes the U.S. government more than $180 million.

Paying back the loan will get Tesla Motors out from under any potential stigma of joining GM as a so-called Government Motors, a captive of the administration that funded it.

The Obama administration loan agreement included warrants to buy almost 3% of Tesla's shares – 3.09 million of them – for $7.54 a share, according to SEC filings. By repaying the loan, Tesla gets the warrants back before most of them vest.

"What Tesla has Accomplished Isn't Luck"

Meanwhile, analysts have raised ratings on TSLA stock, which also plans to develop an SUV and a lower-priced sedan.

Morgan Stanley analyst Adam Jonas reiterated his "Overweight" rating on Tesla Motors while increasing his price target from $47 to $103.

"What Tesla has accomplished isn't luck, it's real," he wrote Wednesday.

And the success starts with the Model S, a first-rate luxury car that continues to win rave reviews.

Priced at around $70,000 for the basic version, the car has dispelled fears it wouldn't sell. In fact, in the first quarter the Model S outsold the top three German luxury brands, the Mercedes Benz S Class, the BMW 7 Series and the Audi A8.

Tesla Motors also disproved critics' claims it would fail when it turned profitable in the first quarter of this year.

Betting against Tesla has proven to be a lousy strategy.

With the stock up over 100% in just the past month, Tesla has enjoyed an extra push from panicked short-sellers (as of April 30, 44.1% of TSLA shares were sold short) rushing to cover their positions.

In the end, the Tesla Motors story shows that for all the failures of the stimulus, the blind squirrels in Washington were able to find at least one juicy nut.

It seems almost as unlikely as turning my pumpkin-like Prizm into one of those Model S's that hits 133 mph within a quarter mile on the test track.

Maybe the old jalopy will have a second life yet.

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  1. Jack Huber | May 17, 2013

    Nice article Gary, with one big common error. Tesla obtained its loan under legislation passed and signed into law in 2008 during the Bush administration. An inconvenient truth?

  2. Cic100 | May 18, 2013

    Good article but wrong on where the money came from… It came from the 2007 Bush approved Advanced Vehicle Program…

  3. jackie cox | May 18, 2013

    tesla motors, solar city, and sPACEX may have bilked american taxpayers out of billions in political kickbacks for being an obama big donor, but eventually it will end, but not well.

    Bankruptcy expertes will hang around with promise after promise that the steady drain of dollars will come to a halt, and that government loans are being paid back with phony stock IPO's where vast P R Stunts get the unwary investor to give them money, but after 11 years, and lost billions, while making near 4,000 actual ev's " BRICKS " called green cars when reality has it that the cars are powered by coal fired power plants, and run on lithium ion laptop batteries, which all swell up and need to be replaced unless you forget to keep the battery charged at all times, which will make them fail sooner, costing almost as much as the car.

    HIGH CRIME, TREASON, THEFT, PHONY EV MARKET, WHEN WILL IT END ??? when barry parts ways with america and stops giving american taxpayer cash to the bankruptcy expert elon who will hang around until such time as no more cash can be jacked from america, then like his political kickback obamonomics he will slink off into whereer it is slime goes to, generally down hill but with all the missing cash, he will join his butties, the elitest who control our nation, until our youths rising anarchy remove them from our nation, and hopefully the world

  4. jackie cox | May 18, 2013

    ha ha ha ha its obvious the ballot box no longer works for our nation

  5. Chad | May 18, 2013

    @jackiecox I think with most other things Green loans and Obama you have a point. With Tesla, you seem to be dead wrong. This company has been talked about like it was a government induced zombie entity before by of the far right wing crazies. Can I get some dumb Palin love? The problem is that everything is subsidized. Big Oil, Big Pharma, Big Agro and most of these guys hurt the consumer in one form or another. While the technology and production isn't perfect, it is a start down the right path and seems to be a viable product. The problem with most disbelievers is that they want a perfect product made perfect from day one and that's not how innovation happens.

    • jackie cox | September 23, 2013

      how green is an electric car powered by the grid, where 85 % comes from coal fired power plants more than 100 which release emissions above 375 degrees with tocix particles in the gas phase, that cool off high above the local atmoshere entering the hydrological infrastructure across our nation raining down poisonous So, NO, and whatever toxic elemtntal compounds are in the species of coal.

      The green card is just another of elons bankruptcy artist schemes played out on the american taxpayer and unwary investor throwing their money away on his trio of comoanies that will be consumed in fraud whenever honest government allows the FBI to study the fraudulent NYSE phony IPO's, who operate with las vegas ethics.

      The backing by obama who promised to reward his supporters and punish his oponents is what empowers obamas bankruotcy schemes destined into bankruptcy because like wind and solar its just bad science, when considering the other energy variables and sources entering the market.

      Lithium plugins cannot compete with hydrogen fuel cell automotive power, wind and solar after throwing away unknown billions supplies our grid with near 2 % at a 40 % greater cst than normal grid suppliers, the new thorium powered reactors, become radioactive when bombarded by neutrons, turn off the neutron generator and radioactivity ends, Thorium vastly more available and cheaper than uranium, would already be our source of energy where it not for lawyers and academic caste system grant masters calling the shots as the MOB (feral reserve banking cartel sees it) trying for globalization, their one world power, a cartel of oligopolies who supply the world with landfill, using; slaves, servants, hirelings, to do the actual work hiding behind predatory laws they pay to enact in our corrupt pseudo elected government.

      Imagine some states have 7 days of voting without having to show an ID, an act of election fraud so great it overwhelms our investigative resources, beginning with ACORN, the Obama developer.

      We a nation under occuparion by the world class mafia's puppet obama who rules by executive order ignoring the constitution, with lobbies paying the criminal senate to back up his ongoing treasonous govrnment like the last puppet presidents continues to export our jobs, tossing away our independence while punishing the majority of americans, as we descend in quality of life under the legal-medical-insurancefraud-extortion mafia, and prisons of servitude.

      The federal reserve controlled government no onger serve our nation, instaed seek to destroy us as they fear another Lincoln, Garfield, Kennedy might attain power , removing them from control of our monetary system, taking whatever they want without regard for law, operating uder the very real threat of death to politicians who oppose them, Loncoln, Garfield, and Kennedy tried to remove the federal reserve from power, their reward <<>> by the federal reserve, who operate criminally throughout the world funded by american taxpayer money, and illicit drug and human traffic, while dominating the lega medical industry trading clan, broadcasting,publishing, academic caste system believing we are whatever we; read, see, hear, and forced to do by the laws which control what we can say and do, removing our right to make what we consume or arise each day in an effort to do the right things in life.

  6. FredN | May 18, 2013

    Anyone notice this company sold 2100 cars to date and, as a result, has been awarded by the leftists supporting this joke of an administration by increasing the stock price far above it's true value of perhaps $1.95 a share. Ford has a p/e of over $10.00, worldwide in scope and has sold more than 645,000 in 2012. Expanding the size of their plant in Kansas City, adding 2000 employees and it's stock price is $15.08 as of the close on Friday. How insane is this!

    Also, only the rich that the left so loves to "hate" can afford this joke. All the left is trying to do is sell everyone on 'government' picking winners. No government has EVER picked winners and none ever will. Time to really do some 'intelligent' articles.

    • Nick | June 3, 2013

      don't be jelous

    • jackie cox | September 23, 2013

      the real value of tesla stocks are nil since 2002 and billions of dollars disappearing down the rabbit hole of elon musk, less than 5,000 cars have been built, forbes magazine is an investment journal calling tesla car of the year is an act of misdirection from an investment journal where journalistic integrity does not exist.

      musks IPO when released had no takers so elon bought 15 million dollars of stock setting his own price, paying bonuses to NYSE stock advisors who sold his stock, which in time will become the worthless stock it is, when bankruptcy arrives planned back in 2002, when he stole the green ??? car company from its designer Eberhardt, who won in court accepting 20 million to keep his mouth shut as elons P R Stunts lay claim to have started up tesla, paypal, etc, like obama when he opens his mouth lies come out,he too is just another puppet of the MOB, trained in Canada to go into the USA and commit bankruptcies elevating stock prices by fraud, eventually folding, like sharper image, and many other frauds originating in Toronto, and Montreal, where canadian officials reluctant to cooperate with american investigative authority, canada-toronto-Montreal are places where international criminals can buy asylum status from immigration quebec, TO, who refuse to extradite their paying clients, their sister cities in america—chicago, nyc, like the US pseudo electorates have turned to crime in their bid to rule the world with the MOB, obamas daddy

  7. FredN | May 18, 2013

    Over 645,000 F-150 pickups. Sorry.

  8. James Freeman | May 20, 2013

    For a fascinating story, do re-search on the name, TESLA. You will understand Mr. Tesla was greater than Mr. Edison in the field of electricity.

  9. ElectroPig Von Fökkengrüüven | May 20, 2013

    Please keep in mind, people, that lithium is another "finite resource", and so, by adopting lithium power and drive systems, we are following in the exact same path as we are now: Creating a market which WILL require a return to naturally available, annually renewable fuels.

    Why not just skip out the next century's worth of environmental destruction, the next century's worth of "market dominance", the next century's worth of "what are we going to replace this with next?" speculation, and just go straight back to renewable fuels now, before we dismantle the existing fuel storage and distribution networks, and have to rebuild them all over again?

    Not that there's anything wrong with electric cars…just that we can not allow the destruction of the existing market just to create another limited-life, depletable fuel source powertrain.

    We need to stop USING UP resources on this planet, and start using RENEWABLE resources…if we don't, mark my words, we WILL go through the exact same problem we face today with petroleum-derived fuels. They WILL run out, and they WILL need a replacement. This is a mathematical certainty that CAN NOT be avoided.

  10. Dardinov | May 22, 2013

    The reason why Tesla will succeed and Solyndra Failed is because Tesla actually makes a product that works. I saw the Solyndra booth at a trade show in 2009 and like everyone else in the crowd around their display, i asked, what is the price per watt? Which is like asking what does gas cost per gallon. They would never answer that question and based on the way the product looked, you could tell it wasn't close to regular old PhotoVoltaics in efficiency. It was DOA and shouldn't have been funded. I've been in solar for 20 years and can spot a dud a mile away.
    By the time all of the conservatives are converted into something that actually resembles "CONSERVATIVE" we pry won't even be using Lithium ion batteries. One look at phys.org will tell you things are moving away from Lithium. But from the looks of it, most people posting here won't be able to leave the fox "news" teat and get a look at cold hard data. Especially when they are predisposed to thinking anything the gov't does is evil. Yeah, can't wait till Raytheon controls all of the HMO's in this country. How bout Haliburton taking over adult foster care facilities? Hey Squib, need some guinea pigs? We have an unlimited supply of baby boomers you can do trials on…..
    back to my point. Go drive a Tesla. Like the Beatles, they have made everything in their industry OBSOLETE but you won't know that till you drive one. Oh yeah, you'll miss that process of "let me get my manager" when you are negotiating how far over you have to bend in the car dealership as they offer you $800 for your 2004 Sienna with 120k miles on it while they are trying to sell you chevy sedan that gets 24mpg.
    All of the Tesla nay sayers should go to tokyo and have some Fukushima fresh sushi. I strongly recommend the blue fin tuna. Or you could wait another 6 months and have it in the Bay area.

    • RJF | May 23, 2013

      Dardinov is right on the money. What Tesla is really doing is developing and fine tuning the technology behind the car and offering a fantastic driving machine in the process. The Lithium battery is not the point, it's simply the current means of powering the technology and will change with time. Those of you out there who can't see the forrest for the trees need to step back, perhaps leave the political landscape completely behind, and try to think and reason like rational human beings. If you can bring yourself to do this, you will see the beauty of Tesla's achievement, pure technology wrapped up in the guise of a common means of transportation. If all you have to offer are tired old political rants, do it to the mirror, we really don't want to read your petty banter here.

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