FILE PHOTO: a China-made-Tesla Model 3 electric vehicles will be seen on the Gigafactory by the electric car maker Tesla Inc. is in Shanghai, China, December 2, 2019. REUTERS/Aly Song
BEIJING/SHANGHAI (Reuters) – U.S. electric car maker Tesla Inc. (TSLA.O) -, and a group of China’s banks have agreed to a new 10-billion-yuan ($1.4 billion), five-year credit facility for the automaker, the Shanghai automotive plant, three sources familiar with the matter said, in part, will be used for the roll-over of an existing loan.
China Construction Bank (0939.HK) (601939.SS) (CCB), Agricultural Bank of China (1288.HK) (601288.SS) (AgBank), the Industrial and Commercial Bank of China (601398.SS) (1398.HK) (ICBC), Shanghai Pudong Development Bank (600000.SS), (SPDB) are among the banks that have agreed to provide Tesla with the financial support of, a source with direct knowledge said.
For the Chinese banks, which earlier this year offered the Model, a 12-month facility of up to 3.5 billion yuan, which is due to be repaid on March 4, 2020, according to a filing by the automaker is made to the U.S. Securities and Exchange Commission.
The new loan will be partially used in order to roll out over the last 3.5 billion yuan of debt, according to the first source. The second source said that the rest of it will be used in the factory of Tesla’s China operations.
The new loan, the interest rate will be pegged at 90 percent of China’s one-year benchmark interest rate is the same as the 3.5-billion-yuan loan, the first source said. This is the rate that China’s banks offer to their best customers.
Model, CCB, AgBank, ICBC and SPDB does not immediately respond to Reuters’ requests for comment.
Tesla broke ground on the facility in January, has started the production of vehicles for the Shanghai plant. The goal is to build at least 1,000 of Model 3 cars in a week or so before the end of the year.
The plant, which was its first production car, the site is outside of the United States of america, is at the heart of its ambitions to boost sales in the world’s biggest auto market, to avoid the higher import tariffs imposed on AMERICAN cars.
The Shanghai government has thrown its support behind the Tesla project, which would be China’s first wholly foreign-owned car factory, and is a reflection of the government’s broader shift to open up the car market.
– Edited by Ryan Woo and Jacqueline Wong