Tesla has announced that it has secured $1.29 billion (9 billion yuan) from Chinese banks to assist with construction and production at its Shanghai factory. The China-based Gigafactory 3 will be crucial to Tesla’s operations in the country, where 3,000 Model 3 vehicles will be produced weekly for sale in the biggest electric car market on the planet. With the new factory, Tesla will also be able to sidestep tariffs that are appearing due to the U.S.-China trade war.
The firms lending the money to Tesla include China Construction Bank Corp, Agricultural Bank of China, Shanghai Pudong Development Bank, and Industrial and Commercial Bank of China. Aside from the 9 billion yuan loan, Tesla has also signed agreements for an unsecured revolving loan facility of up to 2.25 billion yuan, which will also be spent on the new Gigafactory 3.
According to Reuters, Tesla may also use some of the loan to pay off 3.5 billion yuan in debt that is due for repayment by March 4, 2020. This will leave just under 8 billion yuan to invest in work at the factory.
According to Tesla’s Q3 2019 report, Gigafactory 3 was built in 10 months and is ready for production. The firm said that the factory was around 65% less expensive to build than its Model 3 production system in the U.S.