Funding secured: Tesla announced today that it has secured a $521 million loan from several Chinese banks in order to build the first phase of its Gigafactory 3 in Shanghai.
The company wrote in a SEC filing published today:
“On March 1, 2019, Tesla (Shanghai) Co., Ltd. (“Tesla Shanghai”) entered into a Syndication Loan Agreement (the “China Loan Agreement”) with China Construction Bank Corporation (Shanghai Pudong Branch), Agricultural Bank of China Limited (Shanghai Changning Sub-branch), Industrial and Commercial Bank of China Limited (Shanghai Lingang Sub-branch) and Shanghai Pudong Development Bank Co., Ltd. (Shanghai Branch), as lenders, pursuant to which Tesla Shanghai may draw funds from time to time on an unsecured term facility of up to a total of RMB 3.5 billion (or the equivalent amount drawn in U.S. dollars). The proceeds of such loans may be used only for expenditures related to the construction of and production at our Gigafactory Shanghai. The China Loan Agreement will terminate and all outstanding loans will mature on March 4, 2020, and the loan facility is non-recourse to Tesla or its assets.”
The money could be enough for the first phase of Tesla’s factory in Shanghai, which the automaker wants to bring online by the end of the year and produce 3,000 Model 3 vehicles per week.
Ultimately, Tesla wants to grow the facility to a much higher capacity and it plans to spend about $2 billion to make it happen.
A previous report suggested that Tesla was in the process of borrowing $2 billion from Chinese banks to build Gigafactory 3.
Activity at the site in Shanghai shows that Tesla is still working on the foundations of the facility.
On top of the $521 million on loan from Chinese banks, Tesla also announced today that it increase asset-backed lending credit agreement by $500 million to a total of $2.425 billion, while extending the maturity date of the agreement by three years.
CEO Elon Musk has been focused on turning a small profit at Tesla lately and not rely on capital raise. Instead, the company is turning to loans when it comes to its need for capital.
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