Tesla said the new plant, nicknamed the "Gigafactory," would be
built in one of four states: Nevada, Arizona, New Mexico or Texas.
By 2020, Tesla said, the plant would be able to make more
lithium-ion batteries in a year than were produced worldwide in
The company said the plant will open in 2017 and ship batteries to
the company's assembly plant near San Francisco.
The Palo Alto, California-based maker of high-priced electric cars
plans to raise the money by selling convertible senior notes, half
of them due in 2019 and the other half in 2021, it said in an 8-K
filing with the U.S. Securities and Exchange Commission,
Analysts believe the factory may ultimately cost $5 billion to $6
billion to build and will be funded with the help of some of Tesla's
Japanese suppliers, including Panasonic Corp <6752.T>.
The plant, which will handle everything from processing raw
materials to final assembly, will produce small, lightweight
batteries for Tesla and may also supply other automakers.
Battery costs have been a major stumbling block to widespread
electric car adoption in the United States, according to analysts.
Tesla's new factory will lower costs by shifting material, cell,
module and pack production to one spot.
In Tesla's earnings conference call last week, Chief Executive Elon
Musk said the electric car maker expects to build the factory with
more than one partner, but a "default assumption" was that
Panasonic, as a current battery cell partner, "would continue to
partner with us in the gigafactory."
"The factory is really there to support the volume of the third
generation car," Musk, a billionaire entrepreneur, said on the call.
[to top of second column]
"We want to have the vehicle engineering and tooling come to
fruition the same time as the "Gigafactory." It is already part of
one strategy, one combined effort."
Tesla, which Musk founded in 2003, posted better-than-expected
fourth-quarter results last week and said deliveries of its luxury
Model S electric sedan would surge more than 55 percent this year to
more than 35,000 vehicles.
By comparison, the best-selling car in the United States last year,
the Toyota Camry, sold about 408,000 in 2013.
In after-hours trading, Tesla shares were up about 2 percent at
$258.60, adding to a 2 percent gain in regular trading.
Earlier this week, Consumer Reports named the Model S car its
overall top car pick for 2014. The magazine cited the Model S's
"exceptional performance and its many impressive technological
innovations," though the magazine called it "pricey" at $89,650.
(Reporting by James B. Kelleher and
Bernie Woodall in Detroit; Editing by Cynthia Osterman and David
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