Briefing: Tesla lands $500 million loan to fund Gigafactory in Shanghai
What happened: On Thursday, Tesla announced it secured a loan for up to RMB 3.5 billion ($521 million) to fund its electric car plant in Shanghai, the first Tesla factory outside the US. The funds will be available for 12 months and comprise about a quarter of the $2 billion estimated total necessary to build the factory. Construction started in January and, according to Shanghai authorities, it is expected to be completed in May.
Why it’s important: CEO Elon Musk’s car-making dream has faced headwinds during the US-China trade war. The company has had to reduce prices for cars manufactured in the US but sold in China and faces fluctuating import tariffs. Chinese consumers who bought the car before the price cut were dissatisfied. A factory in China precludes the company’s domestically produced vehicles from such issues, allowing Tesla to enter the Chinese automobile market without interruptions. The stakes remain high, as Musk has been a cause for concern among investors and consumers after retracting his promise of profits in the first quarter of 2019.
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