Tesla Inc. said on Thursday it signed an agreement with lenders in China for a 12-month credit line of up to 3.5 billion yuan ($521 million) for the electric carmaker’s Gigafactory in Shanghai.
The company broke ground on the factory in January, and a Shanghai city government official said on Wednesday that the lending agreement is expected to be completed in May.
Tesla has said that the Gigafactory will cost around $2 billion.
In a filing, Tesla said it had amended its asset-backed lending credit agreement with a syndicate of banks, increasing revolving commitments by $500 million to a total of $2.425 billion, while extending the maturity date of the agreement by three years.
The credit agreement is secured by part of Tesla’s accounts receivable, inventory and equipment. Tesla borrowed $431.0 million under the agreement in 2018.
The amendment also doubled the letter of credit subfacility to $400 million from $200 million.
Producing cars locally is likely to help the company minimize the impact of the U.S.-China trade war, which has forced Tesla to adjust prices of its U.S.-made vehicles in China.
Keeping prices in check will also help Tesla fend off competition from a swathe of domestic EV startups such as Nio Inc., Byton and XPeng Motors.