Economy

Tesla enters into agreement with Chinese lenders for Gigafactory

Tesla enters into agreement with Chinese lenders for Gigafactory

American electric auto maker Tesla's Gigafactory in China's Shanghai is coming with a host of advantages.

The company unveiled the long-awaited $35,000 version of the Model 3 on February 28 and said the same day it will close most of its stores and shift sales online.

The latest financing maneuvers between the Fremont, California-based Tesla and Chinese banks comes as the ongoing trade war between the U.S. and China continues.

Tesla's China borrowing follows its biggest ever debt payment recently.

According to a regulatory filing, Tesla has secured US$521 million from four domestic banks - the Industrial & Commercial Bank of China, the Chinese Construction Bank, Agricultural Bank of China, and the Shanghai Pudong Development Bank. For dollar-denominated loans, the rate is 1% more than Libor.

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According to a settlement given by the Securities and Exchange Commission (SEC) to Tesla, among other points, Musk had to get his market-related potential tweets evaluated by Tesla lawyers before posting them on the social media platform for the whole world to see and react to, especially those that could affect investor decisions.

Musk previously said the Shanghai factory will produce Model 3 sedans and its upcoming Model Y SUV for the Chinese market.

Chinese electric vehicle (EV) maker NIO Inc (蔚來汽車) plunged the most on record after it lowered its first-quarter delivery outlook and canceled its plan to build a manufacturing plant in Shanghai.

In July 2018, China raised tariffs on USA autos another 25 percent, (from 15 percent to 40 percent) amid ongoing trade tensions in response to the Trump administration's tariffs on $200 billion worth of Chinese goods. -China trade war as well. Construction of the plant began on Jan 7 and it is scheduled to start mass production by 2020, delivering 250,000 cars annually.

Local manufacturing will also keep the company immune from the vagaries of any re-escalation of trade tensions between the USA and China.


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