Tesla’s stock (TSLA) is up more 1.5% in pre-market trading today after it was reported that the automaker secured $1.4 billion in loans from Chinese banks for Gigafactory 3 and its operations in China.
Reuters reported the news this morning:
US electric vehicle maker Tesla Inc. and a group of China banks have agreed a new 10 billion yuan ($1.4 billion), five-year loan facility for the automaker’s Shanghai car plant, three sources familiar with the matter said, part of which will be used to roll over an existing loan.
The existing loan was worth over $500 million, it was secured in March after Tesla started construction at Gigafactory 3 in Shanghai earlier this year, and it is due in March 2020.
Reuters reports that China Construction Bank (CCB), Agricultural Bank of China (AgBank), Industrial and Commercial Bank of China (ICBC) and Shanghai Pudong Development Bank (SPDB) are the banks behind Tesla’s new deal.
The publication says that they offered Tesla some great terms:
The new loan’s interest rate will be pegged at 90% of China’s one-year benchmark interest rate, the same as the 3.5 billion yuan loan, the first source said. This is a rate that China banks offer to their best clients.
Tesla is already producing vehicles out of Gigafactory 3, but the company is expected to expand the factory significantly over the next year to produce more parts locally, as well as start Model Y production.
With the new made-in-china vehicles, Tesla’s fleet is expected to also expand much faster in the country, which will require Tesla to expand its infrastructure in the country.
Last month, Tesla delivered over 5,000 cars in China.
Now Tesla is steadily producing and shipping made-in-China Model 3 vehicles out of Gigafactory 3, but we have yet to hear about the automaker delivering the vehicles as it appears to still be a holdup with sales approval in the market.
Tesla’s stock was up over 1.5% in pre-trading this morning as the company is breaking new all-time highs since last week.
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