Tesla and a group of China banks have agreed a new 10 billion yuan ($1.4 billion), five-year loan facility for the electric vehicle maker’s Shanghai car plant, reports Reuters.
China Construction Bank (CCB), Agricultural Bank of China (AgBank), Industrial and Commercial Bank of China (ICBC) and Shanghai Pudong Development Bank (SPDB) are among the banks which have agreed to give Tesla the financial support, one source with direct knowledge said.
The Chinese banks earlier this year 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 U.S. Securities and Exchange Commission.
That new loan will be partially used to roll over the previous 3.5 billion yuan debt, according to the first source. The second source said 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, the first source said. This is a rate that China banks offer to their best clients. Tesla, CCB, AgBank, ICBC and SPDB did not immediately respond to Reuters’ requests for comment.
Tesla broke ground on the factory in January 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 United States, is the centerpiece of its ambitions to boost sales in the world’s biggest auto market and avoid higher import tariffs imposed on U.S.-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. ($1 = 7.0119 Chinese yuan).