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Tesla and several Chinese banks have reached an agreement on a new loan to the electric vehicle maker to finance the operation of Tesla's new Shanghai factory as well as roll-over an existing 3.5 billion yuan loan.
Tesla takes out a new loan from Chinese banks to finance the operation of their Shanghai plant
In a new report from Reuters, several Chinese banks have agreed to a new five-year, 10 billion yuan loan for electric vehicle maker Tesla, equal to about $1.4 billion. Most of the new loan will go to financing the operations of Tesla's new Shanghai vehicle plant which has already begun producing vehicles after breaking ground in January, while also rolling over an existing 3.5 billion yuan loan.
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Among the banks involved in the deal are China Construction Bank (CCB), Agricultural Bank of China (AgBank), Industrial and Commercial Bank of China (ICBC) and Shanghai Pudong Development Bank (SPDB), according to a source familiar with direct knowledge of the agreement.
The existing 3.5 billion yuan loan was a 12-month facility that is due to be repaid on March 4 of next year. The interest rate on Tesla's new loan will reportedly remain the same as the existing one, which is pegged to 90% of China's one-year benchmark interest rate.
Tesla broke ground on its Shanghai factory in January, making it the automaker's first manufacturing site outside the United States and is considered a major stepping off point for the company to increase sales in the Chinese market — China the world's largest auto market — and avoid the heavy import tariffs imposed on US-built cars.