March 19, 2019

Tesla gets $520 mn funding for first Chinese plant

11 March 2019, 10:32 | Joann Bryant

Musk speaks during an event at the site of the company’s manufacturing facility in Shanghai

Musk speaks during an event at the site of the company’s manufacturing facility in Shanghai

"Securing this site in Shanghai, Tesla's first Gigafactory outside of the United States, is an important milestone for what will be our next advanced, sustainably developed manufacturing site", Robin Ren, Tesla's vice president of worldwide sales, said in a statement to Reuters in Oct 2018.

The shares fell 21 percent in NY on Wednesday, after rising 62 percent through Tuesday since the firm's initial public offering in September previous year.

That's the message a group of institutional investors in Tesla is sending the electric-car maker and Chief Executive Officer Elon Musk in broadening its claim against him Thursday, saying his "repeated misstatements" continue to harm the company and its shareholders.

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

The latest financing maneuvers between the Fremont, California-based Tesla and Chinese banks comes as the ongoing trade war between the USA and China continues. - The Shanghai factory will allow the electric-car manufacturer to dodge the China-US tariff crossfire and can sell directly to the Chinese buyers.

Proceeds may only be used for construction of an production at Tesla's Gigafactory in Shanghai.

Tesla can now do so by borrowing at favourable rates. The interest rate of loans in Chinese yuan will be 90% of the one-year standard rate set by the People's Bank of China, while the rate is 1% higher than Libor for USD-denominated loans. For dollar-denominated loans, the rate is 1% more than Libor.

The announcement was made as the aspiring electric auto maker released its financial figures for 2018, showing a turnover of 720 million dollars, but also a net loss of 1.4 billion dollars - nearly twice as much as past year.

An average 18 percent decline in retail sales was reported for sedans, sport utility vehicles, multi-purpose vehicles, and minivans in February, according to the data from the China Passenger Car Association.

New regulations governing China's automotive sector, which came into effect in January, show that the government is determined to combat overcapacity and phase out cars that use fossil fuels.

Producing cars in China is likely to help the company minimize the impact of the US-China trade war, which has forced Tesla to adjust prices of its US-made cars in China.

In its filing, Tesla said it amended and restated its asset-backed loan credit agreement to increase the total lender commitments by US$500 million to about US$2.4 billion.

The amendment also doubled the letter of credit subfacility to $400 million from $200 million.

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