Tesla chooses Nevada for its $5B Gigafactory

Tesla may still build in more than one state

slide showing tesla motors gigafactory statistics from feb 2014 presentation 100457895 l

Tesla Motors appears to have chosen Nevada as the site for its $5 billion battery factory, known as the Gigafactory.

According to published reports and a tweet by Nevada Gov. Brian Sandoval, work on the factory has begun at an industrial park outside Reno.

According to Sandoval's tweet about a "major economic development," the announcement will be made at 4 p.m. PT today.

Nevada was vying for the Gigafactory, which will provide about 6,500 jobs, against California, Texas, Arizona and New Mexico.

slide showing candidate states for tesla motors gigafactory from feb 2014 presentation 100457932 l Tesla

Four states have been vying for the $5 billion Tesla battery factory.

According to an Associated Press report, a spokesman for Tesla said company representatives would be at the Nevada Capitol for the announcement, but offered no other details.

Preparation for the factory have begun at the Reno Tahoe Industrial Center, but no firm commitments had been made as Tesla was awaiting economic incentive packages from other states hoping to woo the Palo Alto, Calif. carmaker.

Tesla CEO Elon Musk said earlier this year the company planned on spending millions to prepare sites in two or three states. And, there's still the possibility that Tesla could build a second factory in one of the other states.

Tesla is building the Gigafactory, which refers to gigawatts of power produced, in anticipation of the launch of its mass-market sedan, the Model 3. Unlike its $70,000 Model S sedan, the Model 3 is expected to retail for $35,000 when it's released in 2017.

Tesla's batteries could drive renewable energy market

As battery technology evolves, it could pave the way to cost effectively store both wind and solar-generated energy and connect to electrical power grids. The technology also could be used by businesses and homes, which could virtually remain off the grid except in emergencies.

But the availability of less expensive electrical storage could also fuel the growth of utility and business-grade solar farms, which act like a conventional power plant by feeding electricity to the grid, and providing power at night as well.

Last month, Panasonic penned a deal with Tesla to help build the Gigafactory, which it hopes will produce half a million electric-vehicle batteries per year.

Last year, Panasonic extended a 2011 agreement to supply Tesla with automotive-grade lithium-ion battery cells. Panasonic increased its supply to nearly 2 billion cells over the course of four years.

Reducing the cost of the batteries with economies of scale will be crucial to lowering the prices of its cars, Tesla has said.

By Tesla's own estimates, the project to build a battery factory is expected to drive down the per-kilowatt cost of its own lithium-ion batteries by more than 30% in the first year of production. The factory is expected to open in 2017.

By 2020, Tesla believes its Gigafactory will produce more lithium-ion batteries in one year than were produced worldwide in 2013.

Copyright © 2014 IDG Communications, Inc.

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