Tesla raises funding for Shanghai plant as whiff of cannabis lingers over Musk
TESLA has secured loans from Chinese banks to fund the electric car company’s “gigafactory” in Shanghai, which will help it accelerate production of its “mass-market” Model 3.
Four banks – China Construction Bank Corporation, Agricultural Bank of China, Industrial and Commercial Bank of China and Shanghai Pudong Development Bank – are lending 3.5bn renminbi (£400m) for the project.
At the start of the year Elon Musk, Tesla founder and chief executive, said the company would need about that amount to build the plant and get production of the Model 3 to the target of 3,000 a week.
Ground-breaking work on the gigafactory started in January and Mr Musk has said he wants the plant to begin production by the end of the year.
China is the world’s largest car market and he believes starting production in the country is crucial to the company’s future. With a trade war still brewing between the increasingly protectionist Donald Trump and Beijing, Tesla establishing a second production base outside California will ensure it can access the Chinese market without tariff burdens.
Unlike other automotive manufacturers, Tesla has managed to negotiate a deal where the China plant will be wholly owned, rather than a joint venture with a local partner.
While Mr Musk looks to have cleared hurdles in China, he could be facing fresh problems at home. According to reports, the secret-level security clearance he has through his role as boss of rocket company Spacex is being reviewed by the US military.
He may have broken security rules after the entrepreneur was seen smoking marijuana on a webcast with comedian Joe Rogan in September. Smoking the drug is legal in California.
Bloomberg reported that Mr Musk has had to refile a security form on which any drug use in the previous seven years must be admitted.
Spacex has won contracts with the Pentagon to launch US spy satellites since Mr Musk was seen smoking the drug, raising issues concerning his security clearance.
James Gleeson, a spokesman for Spacex, declined to comment to Bloomberg on the reports.
Soon after Mr Musk’s appearance on the webcast, Nasa said it would conduct a “cultural assessment study in coordination with our commercial partners to ensure the companies are meeting Nasa’s requirements for workplace safety, including the adherence to a drug-free environment”.
“We fully expect our commercial partners to meet all workplace safety requirements in the execution of our missions and the services they provide the American people.”
As well as launching satellites for the US military, Spacex is developing a spacecraft that will transport astronauts to and from the International Space Agency.