Electric vehicle giant Tesla is gunning for a 10 billion yuan ($1.4 billion) loan from Chinese banks. exclusively. The automaker will use the 5-year loan for expanding its Shanghai car plant, Reuters reported citing sources familiar with the matter.
The Chinese banks that would offer the credit line to Tesla include China Construction Bank, Agricultural Bank of China (AgBank), Industrial and Commercial Bank of China and Shanghai Pudong Development Bank. The Shanghai factory is Tesla's first car manufacturing site outside the United States.
Tesla focus on China
Tesla is rightly focusing on China given the growing demand for electric vehicles in that country. Electric car sales touched 1.98 million worldwide in 2018 according to a report by International Energy Agency. China is not only the largest market for new cars but is also the biggest market for electric cars. More than 1 million electric vehicles were sold in China last year.
Some part of the new loan will be used to service the existing loan from Chinese banks, the report added. Tesla had already availed a 12-month facility of up to 3.5 billion yuan earlier this year. a filing with the US Securities and Exchange Commission showed.
Tesla launched the Shanghai factory in January. The US company plans to make around 1,000 Model 3 cars a week by the end of this year. Tesla, as well as the banks, did not immediately respond to requests for comment, the agency said.
The China support
Earlier reports had said that the Chinese government was going all out to support Elon Musk and his company Tesla. The Chinese industry ministry said earlier this month that Tesla Model 3 Made-in-China cars in its lists of vehicles recommended for government subsidy.
Although the level of subsidy is still not clear, it will definitely give Tesla's market a boost in China. According to Reuters, a document published by the Ministry of Industry has recommended two variants of Made-in-China Model 3 vehicles, which were on the list for new energy vehicle subsidies.