US electric vehicle maker Tesla Inc and a group of China banks have agreed to a new 10 billion yuan ($1.4 billion), five-year loan facility for the automaker’s Shanghai car plant, and part of the facility will be used to roll over an existing loan.
China Construction Bank, Agricultural Bank of China (AgBank), Industrial and Commercial Bank of China (ICBC) and the Shanghai Pudong Development Bank (SPDB) are among the financial institutions which have agreed to give Tesla the financial support.
Earlier this year, the Chinese banks already offered Tesla a 12-month facility of up to 3.5 billion yuan, which is due to be repaid on March 4, 2020, according to a filing the automaker made to the US Securities and Exchange Commission.
SHANGHAI PLANT: That new loan will be partially used to roll over the previous 3.5 billion yuan debt. The rest will be used on the factory and Tesla’s China operations. The new loan’s interest rate will be pegged at 90% of China’s one-year benchmark interest rate, the same as the 3.5 billion yuan loan.
In January, Tesla broke ground on the factory and has started producing vehicles from its Shanghai plant. It aims to build at least 1,000 Model 3 cars a week by the end of this year. The factory, which is Tesla’s first car manufacturing site outside the US, is the centerpiece of its ambitions to boost sales in the world’s biggest auto market and avoid higher import tariffs imposed on US-made cars.
The Shanghai government has also thrown its support behind the Tesla project, which would be China’s first wholly foreign-owned car plant and a reflection of the government’s broader shift to open up its car market.