Tesla is aiming to raise $1.6 billion directly from investors to finance the plant. The company plans to raise the money by selling convertible senior notes, half of them due in 2019 and the other half in 2021.
Tesla has identified one of four states in Nevada, Arizona, New Mexico or Texas for the site of the company's 'Gigafactory' which will help the EV maker reach its target of producing a competitively-priced, mass-market electric car by 2017. Tesla said the plant will open in 2017 and ship batteries to the company's assembly plant near San Francisco.
The plant, which will handle everything from processing raw materials to final assembly, will produce small, lightweight batteries for Tesla and may also supply other automotive manufacturers.
The new factory will be designed to lower battery manufacturing costs by focusing material, cell, module and pack production to one location. The high cost of batteries have been identified as a major block to widespread electric car adoption.
Tesla's Chief Executive Elon Musk said the company expects to build the factory with more than one partner, but admitted that a "default assumption" was that Panasonic, Tesla's existing battery cell partner, "would continue to partner with us in the gigafactory. The factory is really there to support the volume of the third generation car."
Tesla says the Gigafactory is designed to reduce cell costs much faster than the status quo and, by 2020, produce more lithium ion batteries annually than were produced worldwide in 2013. By the end of the first year of volume production of our mass market vehicle, the company expects the Gigafactory will have driven down the per kWh cost of our battery pack by more than 30 percent.
Each of Tesla's Model S sedan is powered by more than 7,000 lithium-ion battery cells, which Tesla are supplied by Panasonic. The battery cells are similar to those used in laptops but were jointly developed