- Tesla has reportedly received a 10 billion yuan ($1.4 billion) five-year loan facility from Chinese banks to build a factory in Shanghai
Tesla has reportedly received a 10 billion yuan ($1.4 billion) five-year loan facility from Chinese banks to build a factory in Shanghai as it plans to start delivering the Model 3 vehicle. This loan facility will be essential for Tesla in order to build on its momentum in the largest market for electric vehicles.
Part of the loan will be used to roll over an existing loan. Some of the banks involved in this deal include China Construction Bank, Agricultural Bank of China, Industrial and Commercial Bank of China, and Shanghai Pudong Development Bank are some of the banks involved in the process, according to Reuters.
Tesla’s new car registrations in China have been climbing to several thousand vehicles every month compared to less than 500 a year earlier. That figure is expected to substantially jump after the Model 3 vehicle starts selling in China at a price that is cheaper than the imported versions.
Tesla may reduce the price of locally assembled vehicles in China by 20% or more starting next year. Tesla will be able to lower its prices by avoiding higher import tariffs on cars made in the U.S.
Earlier this year, the Chinese banks offered Tesla a 12-month facility of up to 3.5 billion yuan, which is due to be repaid on March 4, 2020. So the new loan will be used partially to cover that debt along with setting up Tesla’s operations in China.
In January, Tesla broke ground on its vehicles at its plant in Shanghai. And the company is planning to build at least 1,000 Model 3 vehicles per week by the end of this year. This factory is Tesla’s first manufacturing facility outside the U.S.
This week, Tesla’s shares passed $420 for the first time.
