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Tesla Pays Off DOE Loan Much Earlier

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Tesla Motors Inc. (TSLA - Free Report) kept its promise of paying off the $465 million U.S. Department of Energy (DOE) early and its actually turned out much earlier! The electric carmaker received the loan in Jan 2010 and agreed on a 10-year repayment program. However, the situation became so much favorable that the company repaid the full outstanding amount of the loan in the second installment itself.

Last December, Tesla made its first DOE loan repayment of nearly $13 million. Yesterday, the company paid off the remaining $451.8 million using the near-$1 billion proceeds from the common stock and convertible senior note offering made last week.

Tesla’s share prices started soaring following the reports of its first-ever quarterly profit on May 8. After the earnings release, share price surged as much as 57.2%.

On May 14, Tesla shares hit new 52-week high of $97.12, which is above its previous level of $88.00 a day before. The last closing price of $87.24 represented a whopping one-year return of 183.2% and year-to-date return of 146.7%.
Last week, Tesla offered 2.7 million shares and $450 million in convertible debt due in 2018. Tesla had also given a 30-day option to its underwriters to buy an additional 405,454 common shares and $67.5 million in notes.

Tesla’s chief executive officer and cofounder Elon Musk plans to purchase $100 million worth of shares at the same public offering. Currently, Musk holds about 27 million shares of Tesla, which is equivalent to roughly 24% of the company's outstanding shares.

In 2012, Tesla lost $396.2 million or $3.69 per share compared with $254.4 million or $2.53 per share in 2011. Due to a good start in 2013, the company had expected to repay its DOE loan much earlier and boost production of vehicles to lower production cost.

Tesla reported its first-ever quarterly profit of $15.4 million, or 12 cents per share (on an adjusted basis) in the first quarter of 2013 compared with a loss of $79.3 million or 76 cents in the corresponding quarter of 2012. This indicated a whopping positive earnings surprise of 271.4% given the Zacks Consensus Estimate of a loss of 7 cents for the quarter.

Revenues jumped manifold to $561.8 million from $30.2 million in the first quarter of 2012. Thanks to the impressive 5,000 units of Model S electric car sales during the quarter.

The automaker continued to supply full electric powertrains and battery packs to Toyota Motor Corp. (TM - Free Report) for their RAV4 EV program. It also completed various deliverables under Daimler’s (DDAIF - Free Report) Mercedes Benz B-Class EV program, which contributed to total development services revenues of nearly $7 million.

Tesla expects to manufacture 5,000 Model S vehicles in the second quarter of the year. For full year 2013, the company expects to deliver 21,000 Model S cars globally, up 5% from its prior guidance of 20,000 units.

Shares of Tesla retain a Zacks Rank #3, which implies a short-term (one to three months) Hold rating. Currently, Peugeot S.A. with Zacks Rank #2 (Buy) is performing well in the broader automotive industry.

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