Published: Sun, March 10, 2019
Money | By Ralph Mccoy

Tesla receives funding for first Chinese plant

Tesla receives funding for first Chinese plant

Tesla's "Gigafactory" in Shanghai has secured loans of up to 3.5 billion yuan ($520 million) from Chinese banks, according to the company's filing to the Securities and Exchange Commission (SEC) in the USA on Thursday.

Tesla has been focusing a fair amount of Model 3 production on foreign markets, especially Europe and China.

People familiar with the matter said the two Tesla stores in Shanghai will soon be closed and all sales personnel will no longer receive sales commissions, the International Finance News reported.

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

In January, Tesla in Shanghai and production is expected to begin in the second half of this year.

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"Another reason for terminating the Shanghai factory plan is that the Chinese government this year introduced some new policies to encourage vehicle manufacturers and research and development institutions to further develop vehicles through cooperation", Xie said.

Sales there have been on the rise for years, although they slipped 2.8 per cent last year.

The funding, announced on Thursday, is an important boost for the California-based firm, which has been in negotiations with Beijing for years over building the plant in the world's biggest electric auto market.

Manufacturing locally is expected to help Tesla avoid some of the impact of trade tensions between the United States and China, as well as reduce its production costs.

In its filing, Tesla stated it had modified its asset-backed lending credit agreement with a syndicate of banks, boosting revolving commitments by $500 million to an overall of $2.425 billion, while extending the maturity duration of the agreement by three years.

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