Back in 2018, Tesla gained access to the largest auto market in the world and became the first automaker in China with completely foreign control.
Less than 1 year ago, Tesla began building a factory in Shanghai and built it with Chinese, lightning-fast speed. In January, the first shipments made in China Model 3, will be delivered to their owners. Now Gigafactory 3 aims to produce at least 1000 cars per week.
According to Reuters, Tesla Inc and a group of Chinese banks have agreed to provide a new five-year loan at the Shanghai Gigafactory for the automaker for 10 billion yuan ($1.4 billion). Part of this loan will be used to extend an existing loan.
China Construction Bank, Agricultural Bank of China, Industrial and Commercial Bank of China and Shanghai Pudong Development Bank are among the banks that have agreed to provide Tesla with financial support, a source with direct knowledge said.
Bankers and investors believe that Tesla is a successful company that produces an incredibly amazing product. Gigafactory 3 and made in China Model 3 , in their opinion, have a great future. That is why many of them are asking to offer Tesla China for the loan.
No other car company has such an arrangement from investors and bankers, so they are forced to ask for loans themselves.
Chinese bankers and investors highly value Tesla’s potential; they understand that the company has a revolutionary product that will change the world.
Earlier this year, Chinese banks already offered Tesla a 12-month loan of up to 3.5 billion yuan, due on March 4, 2020, according to a statement by the automaker sent to the U.S. Securities and Exchange Commission.
According to the first source, this new loan will be partially used to prolong the previous debt in the amount of 3.5 billion yuan. A second source said the rest would be used at the Tesla plant and operations in China.
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, which only confirms what Chinese investors and bankers see in Tesla a huge potential.
The Shanghai government also supported Tesla, which will be the first Chinese car factory to be wholly owned by a foreigner.
Tesla is certainly a high-potential company that deserves special attention. Tesla's mission is to accelerate the transition of the world to sustainable energy. One solution that should help this is to produce a cheap electric car that most of people can afford to buy. Tesla is clearly following the plan. It is worth noting that thanks to the Chinese government, investors and banks, Tesla's goal will be achieved more rapidly.
About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.