Tesla Secures $1.4 Billion Loan from Chinese Banks for GF3

A group of Chinese banks has agreed to extend a 10 billion yuan five-year loan facility to Tesla, to support Gigafactory Shanghai:

U.S. electric vehicle maker Tesla Inc (TSLA.O) 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.

Reuters

During construction, Tesla had originally taken out a short term 1-year loan to cover the costs of construction. That loan will now be rolled over into the new five-year loan, which will also provide new capital for additional expansion at Gigafactory Shanghai.

China Construction Bank (0939.HK) (601939.SS) (CCB), Agricultural Bank of China (1288.HK) (601288.SS) (AgBank), Industrial and Commercial Bank of China (601398.SS) (1398.HK) (ICBC) and Shanghai Pudong Development Bank (600000.SS) (SPDB) are among the banks which have agreed to give Tesla the financial support, one source with direct knowledge said.

Reuters

That’s 3 of China’s “Big Four” state-owned banks. This suggests Tesla has strong support among Chinese banks and the Chinese government for all the financing they need for GF3.

The Chinese banks earlier this year already offered Tesla 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 the automaker made to the U.S. Securities and Exchange Commission.

That new loan will be partially used to roll over the previous 3.5 billion yuan debt, according to the first source. The second source said the rest will be used on the factory and Tesla’s China operations.

Reuters

The battery factory at GF3 will probably receive the majority of the funding, but it looks like Tesla’s China operations outside of manufacturing might see some of that cash as well.

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.

Reuters

Their best clients? Didn’t anyone tell them Tesla is on the verge of bankruptcy? (Sarcasm)

The factory, which is Tesla’s first car manufacturing site outside the United States, is the centerpiece of its ambitions to boost sales in the world’s biggest auto market and avoid higher import tariffs imposed on U.S.-made cars.

The Shanghai government has also thrown its support behind the Tesla project, which would be China’s first wholly foreign-owned car plant and a reflection of the government’s broader shift to open up its car market.

Reuters

Tesla’s first factory outside the United States. China’s first wholly-owned plant by a foreign automaker. This sounds like it might be important!

Tesla shares rose to over 3.6% in Monday’s session to cross $420 for the first time. 

Reuters

And people are starting to figure that out.

Tesla secures $1.4 billion loan for Gigafactory 3 from three of the big four Chinese banks. Congratulations @elonmusk @tesla !

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