Tesla has signed an agreement to borrow 10 billion yuan ($1.4 billion) from a group of Chinese banks for its Shanghai “gigafactory” plant and rollover of existing debt, Reuters reported Monday, citing sources familiar with the matter.

China Construction Bank, Agricultural Bank of China, Industrial and Commercial Bank of China and Shanghai Pudong Development Bank are among the banks which agreed to the five-year loan facility, one of the sources told Reuters.

Much of the new loan will be used to finance Tesla’s wholly-owned Shanghai factory, which has already started producing cars after breaking ground in January, while most of the rest will be used to roll over a previous 3.5 billion yuan loan from the same group which comes due in March, according to Reuters.

Those lenders will offer a favorable interest rate for the new loan, pegged at 90% of China’s one-year benchmark interest rate. Chinese banks offer such rates to their top clients.

Tesla aims to produce at least 1,000 Model 3 sedans per week by the end of 2019 at its Shanghai plant, the carmaker’s first car manufacturing facility outside the U.S. and China’s first wholly foreign-owned car plant.

This month, the China-built Model 3 sedan was placed on a list of car models which are entitled to a government subsidy of as much as 25,000 yuan, helping the company keep prices down in the China market and avoid tariffs on US-made cars.

Contact reporter Ding Yi (yiding@caixin.com)

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