Tesla will repay U.S. Energy Department loans five years early image

Tesla Motors has announced it will repay the loans to the U.S. Energy Department five years ahead of schedule in a plan approved by the government.

Tesla Motors received $465 million in loans to develop and build electric cars. According to the carmaker’s annual report, the U.S. Energy Department has approved amended terms of the loan agreements that enable it to complete repayment by December 2017.

Starting in 2015, Tesla will make accelerated payments from excess free cash flow, Chief Financial Officer Deepak Ahuja told Bloomberg. “Any remaining balance that’s there at the end of 2017 we’ll pay off as a balloon payment,” Ahuja said.

Tesla Motors has a goal of becoming profitable this quarter, with deliveries of its Model S Sedan forecast to rise to a record 20,000 units in 2013. Production hurdles in last year’s second half boosted operating expenses and generated a wider fourth-quarter loss for Tesla than analysts anticipated.

The original terms required repayment of the loans by 2022, 10 years after the funds were granted by the U.S. Energy Department. Tesla said on September 25 that it was working with the Energy Department on a modified repayment schedule. Amended terms of the loan agreements were registered on December 20 and March 1, Tesla said yesterday.