(Yicai  Global) March 8 -- A group of Chinese lenders have made sure that Tesla  is getting all the money it needs to construct its first overseas  factory in Shanghai. The firm is closing some of its direct sales stores  in China to save up on costs amid rising debt. 

The  Shanghai branch of China Construction Bank, Agricultural Bank of China,  Industrial and Commercial Bank of China and Shanghai Pudong Development  Bank have signed one-year loan agreements with Tesla regarding a sum of  no more than USD521 million, state-backed The Paper reported, citing  bourse documents from the California-based carmaker.

Tesla  will need about USD500 million to build the plant, co-founder and Chief  Executive Elon Musk said in January. Local production in China is key  to reducing production costs while facing uncertainties in the future of  trade tariffs between China and the US.

The  firm is streamlining its global business model amid the increase in  borrowing. Tesla is reportedly closing down some of its China direct  sales stores and scrapping commission for sales reps, China's  state-backed International Financial news reported yesterday.

The  firm's yuan-denominated loans' interest rate will be 90 percent of the  one-year benchmark of the central bank, resulting to 3.915 percent, and  the dollar-denominated loan will be set to the London Interbank Offered  Rate plus one percentage point.

The  factory is expected to be completed by the end of this year and produce  Model 3 electric sedans and Model Y crossover sport utility vehicles,  as well as batteries, while aiming for an annual output of 500,000  vehicles. 

Editor: Emmi Laine