Tesla borrows more than half a billion dollars from Chinese state bank

China is loaning Tesla more than half a billion dollars to expand its Shanghai car manufacturing plant, the company disclosed in a regulatory filing. The plant’s expansion comes as Tesla fights to reopen its factory in California, which had been ordered closed as the U.S. tries to curb the spread of COVID-19. On Monday Tesla told its American employees to return to work, defying local health officials.

The Industrial and Commercial Bank of China, China’s largest lender, is giving Tesla a credit line of up to 4 billion yuan ($565.51 million) which is to be used only for production-related expenditures at its Shanghai plant.

Last year loan agreements with Chinese banks for up to 3.5 billion yuan ($493 million) supported the first phase of Tesla’s Shanghai factory. The plant closed for two weeks in January under health orders from China’s government, before restarting production with support from local officials.

Production is up in China but sales are down

Despite its Shanghai plant now operating at full capacity, Tesla’s sales in China may have still been impacted by coronavirus shutdowns. Sales of Tesla’s Model 3 sedan plunged more than 64 percent in April compared to March according to the China Passenger Car Association (CPCA).

In an April 29 earnings call CEO Elon Musk said Tesla was lowering the price of its Model 3 cars in China. “We are making rapid progress on lowering the production cost in China, and we’re actually excited to announce on this call that we will be reducing the price of the Standard Range Model 3 basically tomorrow China time,” he said.

Tesla’s Shanghai factory opened in October of last year; the plant is Tesla’s first outside the United States, and has been supported through Chinese loans as part of a government push to invest in electric vehicles and reduce air pollution. China’s New Energy Vehicle market is now the largest in the world.

Production up in California too?

Since Tesla’s factory in the U.S. closed on March 23, Musk has pressed for California officials to allow it to reopen, calling the shutdown “fascist.” In a complaint filed

with the U.S. District Court in San Francisco, Tesla said the shutdown order “puts businesses deemed critical to the nation’s well-being by the federal and state governments between a rock and a hard place.”

Last Saturday Tesla sued Alameda County, where its factory is based, and Musk threatened to leave the state of California.

On Monday afternoon Musk tweeted that production was resuming: “Tesla is restarting production today against Alameda County rules. I will be on the line with everyone else. If anyone is arrested, I ask that it only be me.”