Elon Musk Says Daimler Saved Tesla, Not the American Taxpayer

Elon Musk might have become a controversial public figure in the last couple of months. That's because he's focusing on buying the social media platform Twitter rather than fixing the dire outlook at Tesla. Some people are being laid off, while his attention as an executive seems to always be elsewhere. But surviving the incoming economic crisis, transforming space travel, and keeping in touch with an international fanbase is not easily manageable. All this didn’t bode well with those that are keeping Tesla accountable for every little error possible.

This context has brought back a couple of statements that may be incorrect. Elon Musk accepted the invitation to interview with Tesla Owners Silicon Valley. He spent a decent amount of time clearing some things out.
Back in 2007-2008, the world was succumbing to a deep financial crisis. Many lost their jobs, savings, and retirement investments. On top of all that fiasco, people were being asked if they should “back a high-end electric carmaker.” Many said no. But now, here’s what Musk says happened.

The CEO explains that back then, it was Daimler that saved Tesla from closing its business for good. According to Elon Musk, it wasn’t the American taxpayer that first came to offer much-needed support. He says the German company’s investment was “essential to Tesla’s survival, not the government loans.”

Daimler wanted to make an electric smart car just to calm down the regulators. Afterward, they decided it would be good for city use too, but the company needed the right technology for a good powertrain. They were also interested in finding out how the EV would behave in tests that were specifically tailored for target demographics. At the time, the wisest decision was to use somebody else’s expertise. They got to Tesla because the Roadster was already making waves internationally, and they unknowingly bailed them out.

The entrepreneur says this subject is still a misunderstanding because back then, General Motors (GM) received “a flat-out freaking donation from taxpayers,” Chrysler enjoyed “a bunch of money,” and Ford got a loan of $5 billion.

Elon Musk says that only after Daimler injected cash for the Smart deal did Tesla receive in mid-2009 “a non-binding letter of interest” from the Department of Energy (DoE). That piece of paper contained the confirmation that a loan was possible. They applied but ended up with a different result.

In fact, says Musk, Tesla never got a loan that was similar to what other auto manufacturers received at the time.

“That was not a loan where they just give you $500 million. That was one where you spend the money, you provide invoices, those invoices are provided to DoE, and they then refund you based on the audited expenses that you paid. It’s not like a lump sum type of thing. (…) It’s a loaned reimbursement. Nothing’s given for free. It would not be possible to use that as advanced capital to make something happen,” said Elon Musk about the money received from the U.S. government. Moreover, he underlines that the agreement entered into effect in 2010, and the reimbursements took months to arrive. By then, the recession was already over.

“If we had needed the money from that loan, Tesla would’ve gone bankrupt,” stated the CEO.

He also points out that until today, Tesla and Ford are the only American car companies that haven’t gone bankrupt post-2009.

Moreover, Musk says the DoE loan Tesla got was paid back in full after the initial public offering (IPO) in 2010. That meant the company had to pay the interest and the early repayment penalty too.

“Taxpayers made money on the loan [Tesla got],” said Elon Musk.