Tesla Motors has repaid a government loan nine years early.
There’s some crowing about this from Obama administration officials and advocates of “green” energy.
But they might want to muffle their caws. Millions of people and businesses pay back loans early. It cuts their interest costs.
And let us not forget another automaker that once made a lot of noise about its early repayment of government money: Chrysler. In the late 1970s the automaker was on the verge of collapse. The federal government backed more than $1 billion in loans to help it stay in business. In 1983, Chrysler CEO Lee Iacocca made a big splash when he had his company repay the government in full about seven years early.
Twenty-five years later Chrysler was again on the verge of collapse. The federal government under Presidents Bush and Obama poured billions of dollars more into the company. It is now owned by Italian automaker Fiat.
Can the government really claim success if it has to rescue a major automaker every 25 years?
Tesla, of course, is nowhere near as big as Chrysler. The California-based maker of electric cars — high-end vehicles that sell for $70,000 each — received a federal loan of $465 million. On May 22 the company wired the government nearly $452 million to fully repay the loan.
“I would like to thank the Department of Energy and the members of Congress and their staffs that worked hard to create the ATVM [Advanced Technology Vehicle Manufacturing] program, and particularly the American taxpayer from whom these funds originate,” Tesla CEO Elon Musk said in a statement. “I hope we did you proud.”
The ATVM program was created during the George W. Bush administration, but it went into effect during the Obama administration.
Obama is an enthusiastic backer of electric vehicles, especially ones with big price tags. In addition to the loans subsidizing the $70,000 Teslas, our president, who presents himself as a champion of people of modest means, had his administration pour money into Fisker Automotive, a Finland-based automaker that sells an electric vehicle that starts at $110,000. The government backed $529 million of loans to Fisker. Last month Fisker was supposed to make a payment on the taxpayer money it has received. Fisker failed to make the payment because it’s gone nearly a year without building a car and has laid off nearly its entire workforce.
The Sacramento Bee informs us, “The Department of Energy oversees $34 billion in taxpayer-funded loans for clean energy and other projects, but Tesla, based in Palo Alto, is the only United States car company in the vast portfolio of 33 projects to pay back its loan.”
One for 33 is better than zero for 33. But not much.
Steve Stanek (email@example.com) is a research fellow at The Heartland Institute in Chicago.