Tesla secures $560m loan from Chinese bank for Shanghai factory

PALO ALTO, U.S. — Tesla said it entered into an agreement with a Chinese bank for an unsecured revolving loan facility of up to 4 billion yuan ($565 million) on Thursday, according to a regulatory filing on Friday.

The credit line will be used for “continued expansion of production at Gigafactory Shanghai,” Tesla said in the filing.

A branch of Industrial and Commercial Bank of China in Shanghai’s Pilot Free Trade Zone is the lender. The bank has previously participated in a 9 billion yuan ($1.29 billion) term loan that Tesla borrowed from a group of Chinese lenders in December 2019.

The bank group also granted Tesla a 2.25 billion yuan revolving loan facility at the time, which can only be used for expenditures related to production at the plant in Shanghai.

Both the previous loan and the new facility restrict the use of the funds and the money can not be accessed by Tesla for expenses outside China.

The 4 billion yuan revolver is priced at the market quoted interest rate published by an authority designated by the People’s Bank of China minus 0.35% if it is drawn in yuan. If Tesla borrowed from the credit line as U.S. dollar-denominated, the interest rate is set at one-year London Inter-bank Offered Rate plus 0.8%.

Over the past week, Tesla has halted production at its factory in Shanghai, which had been its only plant still in operation amid the global coronavirus pandemic, Nikkei Asian Review previously reported.

“Tesla Shanghai is adjusting to normal production due to test run[s] and maintenance of production lines that were carried out during the recent holidays,” the company said in a statement late Thursday, without indicating when production would resume. “All work is being executed according to plan.”