Tesla has negotiated a 10 billion yuan ($1.4 billion) loan with Chinese banks to be facilitated over a five-year period. The electronic vehicle maker intends to invest the funds in its Shanghai Gigafactory opened in January.
Insiders claim the loan from the China Construction Bank (CCB), Agricultural Bank of China (AgBank), Industrial and Commercial Bank of China (ICBC) and Shanghai Pudong Development Bank (SPDB) will be used for operations in its Gigafactory in Shanghai. In addition, the US EV-maker will use this new loan to roll over an existing loan of 3.5 billion yuan offered to it earlier this year in a 12-month facility plan by Chinese banks.
A source noted that the new loan is pegged at 90% of China’s one-year benchmark interest rate the same as the previous 3.5 billion yuan loan. One of the best rates in the current market.
The Shanghai plant is Tesla’s first manufacturing sites outside the USA, a strategic investment to increase sales and beat China’s hefty import tariffs. China is Tesla’s second largest market following the US.