Tesla enters into agreement with lenders in China for Gigafactory

People visit a Tesla Model S car during the Auto China 2016 in Beijing, China, April 25, 2016. REUTERS/Jason Lee/File Photo

Tesla Inc stated on Thursday it signed an agreement with lenders in China for a 1-year facility of up to 3.5 billion yuan ($521 million) for the automaker’s Gigafactory in Shanghai and secured new commitments from banks that could be utilized for investments in the United States and elsewhere.

The company started the factory in January. A Shanghai city government official stated on Wednesday the factory is anticipated to be finished in May.

Tesla has stated that the Gigafactory is going cost about $2 billion.

In its filing, Tesla stated it had modified its asset-backed lending credit agreement with a syndicate of banks, boosting revolving commitments by $500 million to an overall of $2.425 billion, while extending the maturity duration of the agreement by three years.

The credit agreement is secured by part of the automaker’s accounts receivable, inventory and equipment. Tesla borrowed $431.0 million under the agreement in last year.

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

Producing cars in China is can help the company minimize the effect of the U.S.-China trade war, which has forced Tesla to modify prices of its U.S.-made cars in China.

Keeping costs in check will also help Tesla fend off rivalrly from a swathe of domestic electric vehicle startups including Nio Inc, Byton and XPeng Motors.

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