Tesla Inc. is counting on the Shanghai government to help obtain loans from some of the biggest Chinese banks to fund its planned factory in the city, according to people familiar with the matter.
At least four lenders have begun the appraisal process on the loans, said the people, asking not to be identified because the information is private. Some banks have signed confidentiality agreements with the Shanghai government and Tesla, and are in advanced negotiations, the people said.
The Shanghai government’s information office didn’t immediately respond to a faxed request for comment. A Tesla spokeswoman declined to comment.
The banks have yet to decide on the size of the loans and interest rates, said the people. Tesla has said it plans to use mostly local debt to fund the Shanghai factory, which Bloomberg News previously reported would require investment of US$5 billion.
Local governments in China have been chasing and competing with each other to entice electric-vehicle manufacturing projects as the nation has a goal to lead the world in cars powered by electricity. Tesla negotiated for years with Shanghai’s government before inking a preliminary agreement in July to build the 500,000-unit-a-year factory in the city.
As the world’s largest car market, China is key to Tesla Chief Executive Officer Elon Musk’s goal of dominating electric vehicles. Musk tweeted that he is considering taking the money-losing company private at US$420 a share and has secured the funding to do so. At that price, the electric-car maker would have a valuation of US$82 billion.
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