Tesla has recently repaid in full the $614 million loan for the construction of its Gigafactory 3, a super factory located in Shanghai. After the news broke out, the rumor that Tesla may be preparing to leave the Chinese market spread fast on social media.
The construction of the Shanghai plant began at the end of 2018 and officially opened in December 2019.
“In April 2021, we fully repaid the $614 million in aggregate principal of our secured term loan facility in connection with the construction of Gigafactory Shanghai (the ‘Fixed Asset Facility’) and the facility was terminated,” Tesla stated in a Form 10-Q filed with the Securities and Exchange Commission (SEC) on April 27.
“After the termination, the $758 million of unused commitment under the Fixed Asset Facility included in the debt and finance lease table as of March 31, 2021 above was no longer available,” the statement read.
Chinese state media reported that the main funding for Tesla’s Gigafactory 3 came from syndicated loans. Since March 2019, Tesla has reached loan agreements with various banks in China. At the time, Tesla said it could borrow up to 9 billion yuan (about $1.382 billion) within three years, and mortgaged against the land and buildings of its Shanghai factory.
At present, Tesla Gigafactory 3 has paid off all its syndicated loans issued from Chinese banks.
A Chinese netizen said: “Elon Musk suddenly paid off the $614 million debt for Tesla’s Shanghai facility, which may be the prelude to Tesla’s withdrawal from China. The complex business environment and many uncertainties [in China] are making foreign companies anxious. Can forcing out foreign companies really make domestic companies rise?”
Another netizen wrote: “Now it can retreat at any time, without leaving a tiny bit of technology.”
Another netizen commented: “The main thing is that Tesla’s open patent drives the development of domestic new energy trams. It can be said that without Tesla, it would be difficult for our country to have domestic new energy trams.”
The CCP Uses Tesla to Drive Domestic Brands
In 2014, Chinese leader Xi Jinping set the tone that “the development of new energy vehicles is the only way for China to move from being a major automotive consumer to a strong automotive manufacturing country,” and has reiterated it since. To this end, the Chinese Communist Party (CCP) has invested heavily in subsidies for the electric vehicle industry and is suspected of stealing technology.In April 2018, Beijing pledged to lift the restriction on the proportion of foreign shares in special vehicles and new energy vehicles.
In July 2018, Tesla signed an agreement with Shanghai Lingang Free-Trade Zone to build a super factory as a sole proprietorship. The Shanghai authorities significantly streamlined the process, with the entire approval process taking less than five months.
Over the past five years, Tesla’s revenue in mainland China has exceeded $14 billion. China has become the second largest market for Tesla in the world after the United States.
Tesla Suppressed After Huawei’s IPO
Last month, China’s state media claimed that Huawei is the only Chinese company that is capable of competing with Tesla. Huawei’s first smart luxury all-electric car was launched in Shanghai on April 17.The FBI has stated that Huawei is a private company, but it is dependent on the Chinese regime for resources and funding. Huawei has been touted a “national champion” enterprise by the CCP, usually an official designation given to state-owned entities. This implies that the telecom conglomerate, which makes routers, cell phones, and other equipment, is a key element of the CCP’s economic policy, including the acquisition of foreign technology.
Former U.S. Secretary of State Mike Pompeo also said in a statement released last May that “Huawei is an untrustworthy vendor and a tool of the Chinese Communist Party, beholden to its orders.”
On April 20, state media Xinhua News Agency and other media outlets affiliated with the CCP Central Committee of Political and Legal Affairs issued a series of articles denouncing Tesla, forcing the electric carmaker to issue a public apology.
On April 22, Tesla released Zhang’s driving data before the accident, showing that she was driving at a high speed before the car crashed, and Tesla’s automatic braking system slowed her down considerably.
On April 23, state-run media Economic Daily issued an article saying, “Before the cause of the accident is identified, the relevant authorities should order Tesla to immediately suspend production and sales for rectification.”
On April 25, China Central Television (CCTV) described Tesla as “out of control.”
At the same time, complaints about Tesla have also emerged in many places in China. In February, Tesla was summoned by five departments, including the State Administration of Market Supervision and the Central Internet Information Office of the CCP, on the grounds that consumers had complained about the quality of its products.
Prior to that, data released by the China Passenger Car Association (CPCA) last October showed that in the third quarter of 2020, the Tesla Model 3 had the lowest number of complaints among all the best-selling passenger cars in China, with its complaint-to-sales ratio remaining stable at less than one in 10,000.
Taiwan scholar Hong Bo-xue said, “The CCP has been absorbing international funds and using various deceptions. When it grows stronger, it starts to get rid of the one that helped it. Taiwanese and Japanese businessmen have known this for a long time. Now the CCP has thrust the knife into Tesla, because it has learned to make electric cars and does not need Tesla anymore.”
