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Tech Radar: Tesla fills up nearly $2B loan in investments for Shanghai Gigafactory

The equity research firm, JL Warren Capital says Tesla lines up nearly $2 billion in loans to build its factory in Shanghai. China backers of Tesla expects to include Shanghai Pudong Development Bank, China Construction Bank, Agricultural Bank of China, and Commercial Bank of China.

The JL Warren is a New York-bound investment research company. It mainly focuses on companies from China and including U.S. companies having essential exposure in China. JL Warren expects from Shanghai Gigafactory backers to include a few banks in Tesla’s investment plans. That includes Shanghai Pudong Development Bank, China Construction Bank, Agricultural Bank of China, and Commercial Bank of China.

Tesla’s investments in China

The country shows a critical growth for Tesla market. In January, Tesla’s CEO, Elon Musk talks up its company’s plan in the country on its latest earnings call.

Musk says, “We need to bring the Shanghai factory online.” He added, “I think that’s the biggest variable for getting to 500,000-plus a year. Our car is just very expensive going into China. We’ve got import duties, we’ve got transport costs, we’ve got higher costs of labor here.”

JL Warren tracking Chinese companies listed in the United States reveals Tesla’s new financing. For instance, the near $500 million investment of Tesla initial application on Shanghai Gigafactory building. It doesn’t include the overall financing.  Therefore, the total project loan should amount to about $2 billion.

During the fourth-quarter earnings call of Tesla, Musk says, “(Tesla would need) something in the order of $0.5 billion in CapEx to get to the 3,000 vehicle rate in Shanghai.”

JL Warren analysts

However, as analyzed by JL Warren, the initial stage on financing is at about 3.9 percent interest rate. That was underneath the People’s Bank of China rate od 4.35 percent. Now those should get Tesla its assembly line operation to produce the initial 250,000 electric sedans lower-end Model 3.

Meanwhile, Tesla has no report or any confirmation details of the loans. In addition, the company’s spokesperson declines to comment on the narrative.

Tesla and JL Warren

Subsequently, Tesla disputes JL Warren even in the past. For instance, in 2017, JL Warren reports about Tesla’s 6,000 cars shipped to China which are still unsold.  Tesla then says to Forbes that the research firm’s data was “inaccurate and not credible.”

China-based Automakers Benefits

Since 2012, automakers from China benefits from $60 billion worth of rewards and incentives. According to ZoZo Go, an auto-tech advisory firm, it was intended to make new energy vehicle affordable.

But Tesla misses out the benefits as a U.S. company without an operating factory from China. But still, as of now, Model S amounting at around $80,000 in the United States would cost at around $140,00 in China upon taxes.

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