Tesla has fully paid off hundreds of millions of dollars in loans for the company’s Shanghai mega-factory, and the related loan contracts have been terminated. Rumors on the Internet that Tesla is preparing to retreat from China have suddenly begun to fester. An article by a current political writer points out that while Tesla does have a motive to pull out of China, it also shows signs of continuing to expand in the country.
According to the Xinjing Daily, a filing by Tesla with the U.S. Securities and Exchange Commission (SEC) on the evening of April 28 showed that the company had paid off a $614 million loan for its Shanghai mega-factory, that the contract had been terminated and that the unused $758 million under the fixed asset credit included in the company’s debt and finance lease schedule would no longer be available.
The report also mentioned that the main funding for Tesla’s Shanghai plant came from a Chinese syndicate. Since March 2019, Tesla has repeatedly entered into loan agreements with several domestic Chinese banks, including a secured term loan agreement signed in December 2019 in which Tesla agreed to have a secured loan of up to RMB 9 billion over three years, with its fixed asset facilities secured by the land and buildings of the Shanghai plant. And Tesla’s latest filing with the SEC shows that the company’s Shanghai mega-factory has now paid off all of its loans from the Chinese syndicate.
On the other hand, judging from Tesla’s revenue in the Chinese market, the company does have sufficient financial resources to repay the said loans.
Over time, claims that Tesla, which has fully paid off its Shanghai factory loans, may be preparing to pull out of China have been making the rounds on Chinese online social media platforms.
(Screenshot from WeChat)
Will Tesla, which has already shed its loan burden, really “roll up” and withdraw from China?
There has been a lot of speculation and debate on the Internet about this issue. Some people think that according to Tesla CEO Elon Musk’s past style of doing things, he is likely to pull Tesla out of China. But others say that Tesla is only paying off its loans for cost-cutting reasons, and that it will never work for a bank if it can achieve a self-perpetuating cycle, a so-called “rational choice”.
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