Chinese Banks Loan $1.4 Billion to Tesla
While Elon Musk very recently presented his Gigafactory project and even opened his first factory in China, local banks have just signed an agreement with Tesla. They will provide a $1.4 billion loan to the electric car manufacturer.
China loves Tesla and is letting it know. The Californian manufacturer has just signed an agreement with a group of Chinese banks: a new loan of 10 billion Yuan, or 1.4 billion dollars. The objective: build the Gigafactory.
According to anonymous sources, this loan will also be used by Tesla to partially fill an existing debt of 500 million dollars that must be repaid by 4 March 2020 at the latest. The remainder of the $1.4 billion loan will be used for both the factory (Gigafactory) and Tesla’s operations in China.
The group of Chinese banks would include the China Construction Bank, the Agricultural Bank of China, the Industrial and Commercial Bank of China and the Shanghai Pudong Development Bank.
Tesla first inaugurated its Chinese plant in January, which is already producing vehicles with the goal of producing 1,000 Model 3 per week by the end of the year. Eventually, weekly production at the plant is expected to reach 3,000 Model 3.
A great first
It is the first Tesla plant outside the United States but also the first 100% foreign-owned automotive plant in China. This illustrates the local government’s decision to open its market to other countries.
The electric car manufacturer hopes to consolidate its presence in the world’s largest automotive market. Based in Shanghai, the Gigafactory will allow Tesla to reduce manufacturing costs and thus be more competitive in the market. An equally recent report states that the company aims to reduce prices for the Tesla Model 3 by 20% or more by next year in China.
Currently, a Tesla Model 3 in China costs 355,800 yuan ($50,800), but if the 20% reduction takes place, prices should start at less than 300,000 yuan ($42,800).