Tesla reached an agreement with a group of Chinese banks to secure over $500 million in loans for its new Gigafactory in Shanghai

Reuters/Aly Song

• Tesla said on Thursday that it has signed an agreement with Chinese banks for a loan of up to $521 million to build its first overseas Gigafactory in Shanghai.
• Construction of the factory began in January and CEO Elon Musk said it will be ready as soon as this summer.
• Tesla has said the Gigafactory will cost around $2 billion, and could help the company buffer against the ongoing trade war between the US and China.

Tesla said on Thursday that it signed an agreement with Chinese banks for a loan of up to $521 million to build its first overseas Gigafactory in Shanghai.

The electric-car company has said the Gigafactory will cost around $2 billion, and could help the company buffer against the ongoing trade war between the US and China.

Construction of the factory began in January and CEO Elon Musk has said it could be ready as early as this summer. A Chinese government official said Wednesday that the factory is expected to be completed in May, Reuters reported.

Musk previously said the Shanghai factory will produce Model 3 sedans and its upcoming Model Y SUV for the Chinese market. The CEO said Model 3s could start rolling off of its assembly line by the end of the year.

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The new factory would double the size of Tesla's global manufacturing capabilities, Reuters said.

Tesla also has Gigafactories in the Nevada deserts and in Buffalo, New York. The Shanghai factory will be the first auto plant in China that's entirely owned by a foreign company.

The loans were declared in a regulatory filing, which also said the company amended a separate asset-backed credit agreement which widens how much Tesla can borrow by up to $700 million, Bloomberg reported. The news outlet also Tesla and its financing partners extended the maturity date of some of its commitments until 2023.

The latest financing maneuvers between the Fremont, California-based Tesla and Chinese banks comes as the ongoing trade war between the US and China continues.

According to a newstudy by economists at the New York Federal Reserve, Princeton, and Columbia, the trade war had cost American consumers and importers about $1.4 billion per month by the end of 2018.

Bill Bostock contributed to this report.

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