New Mexico is the proposed location for this project, which plans to build a battery-electric powered vehicle with enhanced range that can be produced for the consumer market.
With those words, the U.S. Department of Energy yesterday approved Tesla's pre-application for a federal loan guarantee program for "Innovative Clean Energy Projects." 143 projects submitted pre-applications, and of the 16 accepted pre-applicants, Tesla was the only vehicle project. You can see the full list here.
The loan guarantee program is authorized by Title XVII of the Energy Policy Act of 2005 (EPAct) and is now in the final stages. While Tesla is the only direct vehicle manufacturer to still be in the running, there are a lot of alternative fuel (hydrogen, biofuel, solar, etc.) projects in the list of 16. The DOE announced not only the projects that are being asked to submit full applications, it also clarified the final regulation of how the loan guarantee works. According to the DOE:
The final regulation provides that the Department may issue guarantees for up to 100% of the amount of a loan, subject to the EPAct limitation that DOE may not guarantee a debt instrument for more than 80% of the total cost of an eligible project. Under the final rule, if DOE issues a guarantee for 100% of a debt instrument, the loan must be issued and funded by the Treasury Department's Federal Financing Bank. While Congress must provide authority in an appropriations act for the loan guarantees that the Department will issue, DOE's intent is to only issue loan guarantees if borrowers and project sponsors pay the "credit subsidy cost" for any loan guarantee they receive. Therefore, DOE does not plan to use taxpayer funds to pay for the credit subsidy costs of these loan guarantees.
The DOE believes that the 16 programs being considered for these loans have a "reasonable prospect" of repaying them, so that should say something about official expectations for Tesla's business plan.