Tesla Gets $465M Federal Loans for Model S, Powertrain Production

Tesla Motors, Ford and other automakers will receive a total of $8 billion in federal loans to retool or build new factories for building fuel efficient cars, according to the U.S. Department of Energy Tuesday.

Tesla will receive $365 million for engineering and assembling its Model S, an all-electric sedan, and another $100 million for a powertrain factory. The San Carlos, Calif.-based company had asked for $350 million to build the Model S and another $100 million for a powertrain factory.

Ford will receive $5.9 billion through 2011 to convert its factories in Illinois, Kentucky, Michigan, Missouri and Ohio to make 13 car models, including gasoline and hybrid-electric vehicles. Nissan is set to receive $1.6 billion to reconfigure its factories in Smyrna, Tenn. to build electric cars and batteries, the DOE said.

The loans came from the $25 billion Congress set aside last September for the Advanced Technology Vehicle Manufacturing program. It's one of the federal financial aid programs for helping makers of cars, batteries and other parts suppliers to bring to market fuel-efficient and low-emission vehicles.

Tesla plans to build its manufacturing base in California, but has yet to finalize its site selections. When its CEO Elon Musk unveiled a prototype Model S in March this year, he said the company was looking at building in Southern California because of the availability of land that already had been used for manufacturing for at least 20 years.

The company originally wanted to build its Model S factory in San Jose, but the property it had in mind hadn't been used for manufacturing before. The DOE preferred to grant loans to companies that would re-use industrial sites, Musk said at the time.

Aside from selling cars, Tesla also offers powertrain engineering services. It inked a deal to supply lithium-ion battery packs for 1,000 Smart For Two electric cars by Daimler, which recently announced that it had taken a nearly 10 percent stake in Tesla. The powertrain factory, to be built around the San Francisco Bay Area, would include battery pack production, the DOE said.

The Model S would be the second model released by Tesla. The company was founded in 2003. The Model S is priced at $57,400 without factoring in the $7,500 federal tax credit. Tesla has received more than 1,000 pre-orders for the car, the company said.