A group of Chinese banks has agreed to provide a loan to Tesla Inc. of more than 10 billion yuan ($1.4 billion), a five-year loan facility, to help further set up the gigafactory in Shanghai, China.
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 from which it has secured the financial support as Reuters reported.
Tesla announced that it would construct a gigafactory in Shanghai, the first production site outside of the United States, in July 2018 at the cost of approximately $2 billion. The factory dubbed as Gigafactory 3 will produce Model 3, Model Y, and lithium-ion batteries used in Tesla’s electric vehicles.Â
In January, Tesla broke the ground for the Shanghai gigafactory. Tesla started to take pre-orders soon after, and in October this year, it confirmed it had finished the trial production of Model 3. The sales, however, are expected to begin anytime, as the company received approval from the government a few weeks back.
A drone video by Jason Yang shows that the mass production of cars. Model 3 vehicles are spotted parked around the factory.
In China, the locally manufactured Model 3s pricing starts at 355,800 yuan (~ $50,000). Tesla aims to build at least 1,000 Model 3 cars a week by the end of this year.
Why is Tesla looking for a loan?
In a nutshell, it is expected that the loan will cover up the two expenses. The company will complete the repayment of a previous debt that it took. It will also help Tesla building the next phases of Gigafactory 3. However, this is not the official statement so far but from the inside two sources.
In early 2019, Tesla accepted a 3.5 billion yuan loan for 12-month according to filings with the United States Securities and Exchange Commission (SEC). The loan is due to be repaid on March 4, 2020, and it helped the automobile manufacturer to set up the factory and produce Model 3 cars.
The company moreover, is looking to expand the gigafactory to produce Model Y cars and other equipment as reported.
Tesla shares rose ~3.6% to all-time high $421 today after the news.
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