The Palo Alto, Calif.-based electric-car maker said the proposed plant would open in 2017 and reach full capacity production in 2020, producing enough cells for 500,000 electric vehicles annually as well as stationary electric storage applications.
Tesla said the total investment will be $4 billion to $5 billion, with about $2 billion coming from the automaker and the rest coming from its partner Panasonic and other companies that might join the venture.
Panasonic, the primary battery supplier for Tesla’s Model S, is considering a nearly $1 billion investment with other Japanese suppliers in the battery factory.
A final site has not yet been chosen for the enormous factory, which will occupy roughly 10 million square feet and eventually employ 6,500 workers. But Tesla has narrowed its options to four states — Arizona, Nevada, New Mexico and Texas — setting off fierce competition among them to seal the deal. The “green” factory will be largely powered by renewable sources of energy like solar and wind, making any of those states a good location.
“By the end of the first year of volume production of our mass market vehicle, we expect the Gigafactory will have driven down the per kWh (kilowatt hour) cost of our battery pack by more than 30 percent,” Tesla said in a blog post.
Tesla said it would raise $1.6 billion through a bond issue that would help finance the factory, it said in a regulatory filing. Tesla will offer $800 million aggregate principal amount of convertible senior notes due 2019 and $800 million aggregate principal amount of convertible senior notes due 2021. The company plans to grant the underwriters a 30-day option to purchase as much as an additional $120 million due 2019, and an additional $120 million, due 2021, for a total potential offering size of as much as $1.84 billion.
Tesla will use the money for the development and production of its more affordable “Gen III” electric car, the development of the Tesla Gigafactory and other general corporate purposes.
Tesla Chief Executive Elon Musk also is chairman of SolarCity, a solar energy provider that now offers Tesla battery packs to users of its solar arrays. The battery packs store energy for use during peak demands or nighttime use.
Tesla shares have soared this year, rising almost 82% from a low on Jan. 13 to close at a record $253 on Wednesday. It climbed to as high as $262.50 in after-hours 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.
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