According to three sources familiar with the matter at hand, Tesla Inc has entered into $1.4 billion (10 billion yuan) loan agreement with a group of Chinese banks, for its Shanghai car plant.
Part of this amount will be used to roll over an existing loan.
Agricultural Bank of China, China Construction Bank, Shanghai Pudong Development Bank, and Industrial and Commercial Bank of China, are among the banks which have agreed to provide Tesla the loan facility, said a source with direct knowledge of the matter.
Earlier this year, the Chinese banks had already offered Tesla a 12-month loan facility of up to 3.5 billion yuan, which is scheduled for repayment on March 4, 2020, according to Tesla’s filing with the U.S. Securities and Exchange Commission.
A portion of the new loan will be used to partially offset repayment of the previous debt, according to a source. A second source has said, the remaining loan amount will be used for Tesla’s China operations.
The new loan’s interest rate will be pegged at 90% of China’s one-year benchmark interest rate, the same interest rate as the 3.5 billion yuan loan, said a source said. This rate is offered by Chinese banks only to their best clients.
Neither AgBank, CCB, SPDB, ICBC or Tesla immediately responded requests for comments.
Tesla’s Shanghai factory, is its first car manufacturing plant outside the United States; it is the centerpiece of its ambitions strategy to boost its sales in the world’s biggest auto market, a strategy aimed at avoiding U.S. import tariffs in China.
The Shanghai government has thrown its support behind the Tesla project, which would be China’s first wholly foreign-owned car factory and underscores a broader shift in government’s policy to open up its car market.
With the news reaching the market, Tesla’s shares rose rose by more than 3.6% on Monday, and crossed $420 for the first time.