A new report claims that Elon Musk’s Tesla has agreed to take on a $1.4 billion loan from a group of Chinese banks to fund its new Shanghai manufacturing plant.
Reuters reports that Elon Musk’s electric car manufacturer Tesla will be entering into a new deal with a group of banks in communist China, taking a 10 billion yuan ($1.4 billion) loan to fund its new Shanghai production facility. The loan will be repaid over a five-year period and sources familiar with the matter claim that part of the loan will be used to roll over an existing loan.
Some of the banks included 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.
The Chinese banks offered Tesla a 12-month facility of 3.5 billion yuan which is due to be repaid on March 4, 2020, according to recent SEC filings from Tesla. Interest on the new loans is expected to be around 90 percent of CHina’s one-year benchmark interest rate, the same as the first 3.5 billion yuan loan. These rates are reportedly offered by Chinese banks to their best clients.
Tesla began construction on its Shanghai plant in January and claims to have begun producing vehicles from the plant. The Shanghai facility is Tesla’s first outside of the United States and has received great support from the Chinese communist party.