Tesla Motors announced plans Wednesday to build a factory that it says will ultimately produce more lithium-ion batteries per year than the total amount currently produced worldwide, and at a drastically lower cost.
The announcement to build a 500- to 1,000-acre “Gigafactory” came just a day after Consumer Reports named the Tesla Model S the Best Car of the Year. Its shares have since risen roughly 20%, giving Tesla a market value of more than $31 billion. Tesla also filed plans late Wednesday for a $1.6 billion convertible bond offering to fund the planned factory.
“It … will allow us to achieve economies of scale and minimize costs through innovative manufacturing, reduction of logistics waste, optimization of co-located processes and reduced overhead,” Tesla executives said in a written statement about the facility. “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 cost of our battery pack by more than 30 percent.”
Along with its partners the company said it will spend between $4 billion and $5 billion on the factory through the year 2020, with Tesla directly investing roughly half of that sum. The factory will employ 6,500 people and allow the automaker to produce 500,000 Tesla vehicles by 2020, which will be a boon considering the fact the company has struggled to keep up with production demands.
Hawthorne, Calif.-based Tesla has not announced a location yet but said it is considering sites in Arizona, Nevada, New Mexico and Texas.
Click here to see diagrams of the proposed factory.
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Source: Forbes Business