Electric car maker Tesla Inc. is reportedly borrowing 10 billion yuan ($1.4 billion) from a group of Chinese banks in order to fund the ongoing construction of its new vehicle manufacturing plant in Shanghai.

The loan, which will be paid back over five years, is being funded by the China Construction Bank, the Agricultural Bank of China, the Industrial and Commercial Bank of China and Shanghai Pudong Development Bank, Reuters reported. Part of the loan will be used to roll over an existing debt, the report added.

The Chinese banks had previously lent Tesla about 3.5 billion yuan, which is due to be repaid by March 2020, according to Reuters. Some of the new loan would be used to pay off that amount, with the remainder earmarked to fund construction of the new factory and Tesla’s Chinese operations.

Tesla has already made rapid progress on the Shanghai plant since it broke ground at the factory in January, and has already begun producing vehicles there. It had previously said it hopes to build 1,000 Model 3 cars a week at the facility by the end of the year.

The factory is important for Tesla as the electric car maker is hoping to boost its presence in what is the world’s biggest market for automobiles. In addition, Tesla is hoping the factory will help it to avoid the higher tariffs that are imposed on U.S.-made cars in China.

For its part, China has embraced Tesla’s project, which is the first wholly foreign-owned car plant in the country, as it has big plans to open up its domestic car market, Reuters said.

“Tesla needs to expand beyond the U.S., and China is an attractive market with its government being a strong promoter of green technology,” said Holger Mueller, an analyst with Constellation Research Inc. “But as is often the case with Tesla, funding is not the challenge, but rather, execution. The milestone really is that Tesla is opening a second production facility and will hopefully apply the lessons learnt from the first site so the new facility can churn out high-quality cars.”

Photo: Tesla