Computer-generated image of proposed Tesla Motors GigafactoryEnlarge Photo
With an estimated cost of $5 billion and the goal of producing more lithium-ion battery cells than any previous manufacturing facility, the Tesla Motors [NSDQ:TSLA] 'Gigafactory' is one of the most ambitious industrial projects in recent times. Five states were competing for the lithium-ion battery factory and the 6,500 jobs it's expected to create, and now Tesla has picked a winner.
That winner is the state of Nevada. The deal was announced at a news conference in the state capital of Carson City today. However, it was already known that Nevada was a lead possibility as Tesla had completed excavation work at a site in Reno recently. So far, it's said this location is just one of several possibilities, as Tesla has hinted that it will build more than one Gigafactory.
The company originally announced four finalists—Arizona, Nevada, New Mexico, and Texas—with an aggressive bid by California putting the Golden State close to the lead. While strict regulations don't make it an ideal place for large-scale manufacturing, California is home to Tesla's headquarters and the assembly plant that builds the Model S sedan.
However, the California legislature adjourned last week without acting on a bill that would have provided incentives for Tesla. The automaker is thought to have needed an incentive package worth at least $500 million from the winning state, as well as easy access to electricity and transportation infrastructure.
Tesla previously said it would break ground before the end of the year, and have the Gigafactory churning out battery packs at full capacity by 2020. That's shortly after when the Model 3 electric car is expected to hit showrooms. Japanese firm Panasonic is one of the key partners for the Gigafactory, which is expected to be the world’s largest and most advanced battery factory when it comes online around 2017.
Batteries produced on the massive scale afforded by the Gigafactory will be necessary for Tesla to achieve the Model 3 sedan's $35,000 target price and meet expected sales volumes. CEO Elon Musk has said the Model 3 can't go into production without battery packs from the Gigafactory.
“I would like to recognize the leadership of Governor [Brian] Sandoval and the Nevada Legislature for partnering with Tesla to bring the Gigafactory to the state,” Musk said at today’s announcement. “The Gigafactory is an important step in advancing the cause of sustainable transportation and will enable the mass production of compelling electric vehicles for decades to come.”