Tesla to build factory, new HQ in San Jose

San Carlos, Calif.-based Tesla Motors plans to build its newest factory and relocate its headquarters just a few miles away in San Jose.

For two months, the electric automaker has been searching for a site in the Bay Area to manufacture its four-door, electric Model S sedan, which is expected to have a price tag of about $60,000.

Tesla revealed late Tuesday it has agreed to sign a lease for 90 acres of undeveloped land near San Jose’s wastewater treatment center for the 600,000 square-foot plant.

Tesla plans to finance the $250 million factory through a $150 million loan guarantee from the U.S. Department of Energy and a $100 million private equity round led by Goldman Sachs.

The state is pitching in with a new incentive program for makers of zero-emission vehicles that will save the company about $8 million on $100 million of equipment for the factory and potentially give Tesla $1 million to train workers.

San Jose will lease Tesla the factory’s land rent-free for 10 years, and then charge $1.5 million a year for the next decade. The lease price will then increase 2 percent a year.

Tesla has said it expects the plant to directly create about 400 jobs, plus jobs added by suppliers drawn to the region. Tesla aims to produce 20,000 sedans a year that can travel about 200 miles on a charge of its lithium-ion battery pack.

The proposed site for the Tesla plant is part of the 2,400 acres of vacant buffer land around the Water Pollution Control Plant, which is jointly owned by the cities of San Jose and Santa Clara, both of which must sign off on the agreement.

New Mexico was planned to be Tesla’s home until California offered tax perks in late June (see Zero emission car makers get tax break in California).

Tesla's battery pack is manufactured in California, but the company's $109,000 high-speed Roadster is currently made in the U.K., with final assembly done in California. Tesla said it's now producing about 10 a week.

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