NIO abandons plans to manufacture its own cars amid widening losses

Tesla cars at a port in Shanghai. The US electric carmaker is popular in China- the world's biggest car market- but Chinese brands are catching

Tesla said on Thursday it signed an agreement with lenders in China for a 12-month facility of up to 3.5 billion yuan (521 million US dollars) for the electric carmaker's Gigafactory in Shanghai and secured new commitments from banks that could be used for investments in the United States and elsewhere.

Tesla's China borrowing follows its biggest ever debt payment recently.

Tesla's lenders of the unsecured loan include China Construction Bank Corp, Agricultural Bank of China, Industrial and Commercial Bank of China and Shanghai Pudong Development Bank Co.

"His conduct has not only cost Tesla shareholders dearly but threatens to expose the company to even greater liability and litigation in the future", the statement further said. Tesla borrowed 431.0 million US dollars under the agreement in 2018.

According to a filing by Tesla, as much as $520M in loans have been committed by Chinese banks.

Tesla is rolling its midsize Model 3 sedan out in Mexico for the first time, the company said.

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The change in plans represent a large change in direction for the company which had just started production of its first auto, the ES8 SUV past year. Construction of the plant began on Jan 7 and it is scheduled to start mass production by 2020, delivering 250,000 cars annually.

Chinese electric vehicle start-up NIO has abandoned plans to build a manufacturing plant in Shanghai after net losses doubled to $1.4 billion past year. Tesla said it raised $521million from Chinese banks as a term loan for raising the local factory.

However, in the company's financial disclosure last year, it shows that NIO's current agreement with JAC Motors puts itself at a disadvantage as JAC receives a fee from NIO for every vehicle that is manufactured and the EV startup also has to compensate JAC Motors for any losses sustained during the first 3 years of the deal.

Tesla's past year to $1.8 billion, the company disclosed in a filing with the U.S. Securities and Exchange Commission on February 19.

Manufacturing locally is expected to help Tesla avoid some of the impact of trade tensions between the USA and China, as well as reduce its production costs.

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