Tesla News: Electric Vehicle Car Company To Borrow $1.4 Billion From Chinese Banks For Shanghai Gigafactory

Electric vehicle company Tesla (TSLA) is to take the equivalent of $1.4 billion in loans from Chinese banks to financially support its factory in Shanghai, sources told Reuters.

The banks willing to give financial help to Tesla include China Construction Bank, Agricultural Bank of China, Industrial and Commercial Bank of China, and Shanghai Pudong Development Bank. The loan agreement will be a five-year facility and will be partially used to pay over an existing loan the automaker has already taken out. Tesla took out a loan of up to 3.5 billion yuan ($449 million) from Chinese banks this year which is set to be repaid in March.

The rest of the new loans will be used on Tesla’s Gigafactory, which is still under construction. The factory did, however, begin trial production in October, with Tesla believing China could be the biggest market for its Model 3 sedan.

"China is by far the largest market for mid-sized premium sedans. With the Model 3 priced on a par with gasoline powered mid-sized sedans, we believe China could become the biggest market for the Model 3," Tesla said in October. Tesla hopes that the factory will build at least 1,000 cars a week before the end of 2019.

The factory was partially built in order to avoid tariffs that have come from the U.S.-China trade war. By building Tesla vehicles on Chinese soil, Tesla hopes to avoid 40% import tariffs imposed by Beijing.

The factory is the first for the company outside of the U.S.

Tesla also announced that it is going to build a factory in Berlin, as Germany continues to offer subsidies to consumers of electric vehicles.