U.S. electric vehicle manufacturer Tesla and a group of China banks have agreed on a new 10 billion yuan ($1.4 billion), five-year mortgage facility for the EV giant’s Shanghai automotive plant, three sources aware of the matter said, a part of which will be used to roll over an existing loan.
China Construction Bank (CCB), Agricultural Bank of China (AgBank), and Shanghai Pudong Growth Bank (SPDB) are among the banks which have agreed to offer Tesla financial help, one supply with direct knowledge mentioned.
The Chinese lenders earlier this year already offered Tesla a 12-month facility of as much as 3.5 billion yuan, which is to be paid back on March 4, 2020, in response to a filing the auto manufacturer made to the U.S. Securities and Exchange Commission.
That new loan will likely be partially used to roll over the previous 3.5 billion yuan debt, according to the primary source. The second source stated the remainder would be used on the factory and Tesla’s China operations.
The brand new loan’s rate of interest shall be pegged at 90% of China’s one-year benchmark rate of interest, the identical as the 3.5 billion yuan loan, the primary supply stated. This is an interest rate that Chinese lenders offer to their best prospects.
Tesla, CCB, AgBank, ICBC, and SPDB didn’t instantly respond to requests for remark.
Tesla broke ground on the manufacturing facility in January and has begun producing autos from its Shanghai manufacturing plant. It aims to build at least 1,000 Model 3 automobiles a week by the end of this year.