Published: Sun, March 10, 2019
Business | By Eloise Houston

Tesla gets $708m in loans for first factory in China

Tesla gets $708m in loans for first factory in China

Electric carmaker Tesla Inc has won more than US$520 million in loans from Chinese banks to build its first overseas auto plant near Shanghai, which would make it the first foreign automaker to wholly own a factory in China.

Tesla chief executive Elon Musk was in China in January for the groundbreaking of the factory, where he said he planned to approach local banks for the money to get the plant built and into production.

According to a regulatory filing, Tesla secured the funds from four Chinese banks - the Industrial and Commercial Bank of China, the Chinese Construction Bank, Agricultural Bank of China and the Shanghai Pudong Development Bank.

Tesla shares rose more than 2 percent in after-hours NY trading.

The fresh borrowing follows Tesla's largest-ever debt payment last week.

Ground-breaking work on the Shanghai gigafactory started in January and Mr Musk has said he wants the plant to begin production. The automaker said in October it compared with its Chinese peers.

Tesla can now do so by borrowing at favourable rates.

An average 18 percent decline in retail sales was reported for sedans, sport utility vehicles, multi-purpose vehicles, and minivans in February, according to the data from the China Passenger Car Association.

Local manufacturing also will help the company sidestep any re-escalation of trade tensions between the USA and China. In its filing, Tesla said it had amended its asset-backed lending credit agreement with a syndicate of banks, increasing revolving commitments by 500 million to a total of 2.425 billion USA dollars, while extending the maturity date of the agreement by three years. The amendment also doubled the letter of credit subfacility to 400 million from 200 million US dollars.

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