Hannah Grace Tech 10.06.2021 06:Oct AM EDT

Elon Musk Reveals Truth About Tesla's $1.4 Billion Debt to China Banks

Tesla CEO Elon Musk has revealed the truth about Tesla's debt to China. In his tweet, Musk wrote that "Tesla always pays its debt."

Last 2019, China banks granted a $1.4 billion loan to the electric vehicle and power company. The said loan was used to develop Tesla's first car manufacturing factory outside the U.S.

Elon Musk, Tesla's Debt to China Banks

For a detailed back story, Tesla and a group of China banks agreed to a $1.4 billion loan for the company's Shanghai car manufacturing facility, per Reuters. In addition, the five-year loan was used to roll over former debts.

As mentioned, the facility is said to be Tesla's first-ever car manufacturing plant outside the US. This facility is called the Giga Shanghai.

Among the banks that granted Tesla financial support include China Construction Bank (CCB), Agricultural Bank of China (AgBank), Shanghai Pudong Development Bank (SPDB) and Industrial and Commercial Bank of China (ICBC). The said financial support is pegged at 90 percent of China's one-year benchmark interest rate. This rate is offered to China's best clients only.

In relation to the said loan, the $ 1.4 billion debt seems to be repaid in full. Twitter user @JPR007 has proof of this. On his Twitter thread, he indicated that the $1.4 billion loan on Tesla's Q2 2021 balance sheet no longer exist. This means that any restrictions on Tesla's loan have ended, per CleanTechnica. The Twitter user furthered that on March 31, the China loan facility has a balance of $614 million and in December 2020 it has a balance of $616 million.

He concluded that Tesla fully repaid its $1.4 billion debt to China within 16 months.

This conclusion was acknowledged by Tesla CEO Elon Musk.

Tesla always pays its debts
— Elon Musk (@elonmusk) October 5, 2021

CleanTechnica furthered that this is not the first time Tesla has paid its debt early. Among the evidence proving that Tesla is a good payer is in 2010 when it has a $465 million debt to the U.S. Department of Energy. After nine years, Tesla has paid the debt in full.

Tesla Giga Shanghai: Everything You Need to Know

Aside from the interesting fact that Tesla has fully paid its debt to China, Tesla also partnered with them to have a car factory.

In January 2019, Tesla has built and manufactured vehicles from its Shanghai factory. As per Reuters, the said factory was made to avoid higher import tariffs that U.S. made cars have. Aside from this, it also made to boost sales in the world's biggest auto market.

In addition, Tesla also relies on the Shanghai factory to meet global demands for its vehicle, per South China Morning Post.

For what it's worth, Tesla's Giga Shanghai's electric car production is on demand. In a video, Tesla's main parking lot is full of new cars. Tesla Model Y has an unofficial production rate of about 1,600 units per day.