Tesla secures more than USD 500 million in loans from Chinese banks to build Gigafactory 3
Mar 11, 2019 (China Knowledge) - Tesla Inc. has managed to secure USD 521 million in loans from Chinese banks to build its first overseas plant, bring the company’s a step closure to being able to start production for its Model 3 cars in the country.
The loans are from China Construction Bank, the Agricultural Bank of China, the Industrial and Commercial Bank of China and the Shanghai Pudong Development Bank and will mature in March 2020. In addition, Tesla has also managed to make amendments on a separate asset-backed credit agreement which increases the amount it can borrow by USD 700 million.
The new loans come straight after Tesla completed its largest debt payment last week by settling a USD 920 million convertible bond that matured on March 1st, putting a strain on the company’s balance sheet that had USD 3.7 billion in cash and equivalents at the end of last year.
Tesla is now set to become the first foreign automaker to wholly own a manufacturing facility in China and the company aims to commence battery and Model 3 production at the factory by the end of the year.
As car sales continue to decline in China, starting local production in the country becomes increasingly important as a way for Tesla to reduce its production costs and remain competitive in the Chinese market.
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