tesla plans 'gigafactory' for mass-market autos

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Tesla Plans 'Gigafactory' for Mass-Market Autos Feb 27, 2014 8:12am Morning Money Memo: Tesla Motors has notably ambitious plans for growth as it builds on the sizzling success of the luxury Model S electric car and moves into the mass market for zero-emission vehicles. The cutting-edge automaker says it's considering sites in Nevada, Arizona, New Mexico and Texas for a battery factory that would employ about 6,500 people. Tesla expects to start construction this year and complete its "gigafactory" in 2017. The proposed plant would cost up to $5 billion. Tesla says it will invest $2 billion in the 10-million-square-foot factory. Its partners will invest the rest. The company didn't identify those partners Wednesday, but its battery supplier, Japan's Panasonic, is expected to be among the investors. The new factory will provide enough batteries to supply 500,000 vehicles by 2020. RELATED: Consumer Reports Names Tesla Model S Its Top Pick Tesla sells just one model, the Model S sedan, which starts around $70,000. But it plans to begin making a crossover, the Model X, later this year, and wants to bring a lower-cost, mass-market vehicle to market in 2017. Tesla said the factory would help lower its battery costs by about 30 percent. The firm also announced that it plans to raise $1.6 billion in a debt offering. The proceeds would

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Page 1: Tesla Plans 'Gigafactory' for Mass-Market Autos

Tesla Plans 'Gigafactory' for Mass-Market Autos

Feb 27, 2014 8:12am

Morning Money Memo:

Tesla Motors has notably ambitious plans for growth as it builds on the sizzling success of the luxuryModel S electric car and moves into the mass market for zero-emission vehicles. The cutting-edgeautomaker says it's considering sites in Nevada, Arizona, New Mexico and Texas for a batteryfactory that would employ about 6,500 people.

Tesla expects to start construction this year and complete its "gigafactory" in 2017. The proposedplant would cost up to $5 billion.

Tesla says it will invest $2 billion in the 10-million-square-foot factory. Its partners will invest therest. The company didn't identify those partners Wednesday, but its battery supplier, Japan'sPanasonic, is expected to be among the investors. The new factory will provide enough batteries tosupply 500,000 vehicles by 2020.

RELATED: Consumer Reports Names Tesla Model S Its Top Pick

Tesla sells just one model, the Model S sedan, which starts around $70,000. But it plans to beginmaking a crossover, the Model X, later this year, and wants to bring a lower-cost, mass-marketvehicle to market in 2017. Tesla said the factory would help lower its battery costs by about 30percent.

The firm also announced that it plans to raise $1.6 billion in a debt offering. The proceeds would

Page 2: Tesla Plans 'Gigafactory' for Mass-Market Autos

help finance the new factory and the lower-cost vehicle.

After a prolonged rally, Tesla stock is now trading close to $260. One year ago its per-share pricewas just $35.

The U.S. government's auto safety watchdog says it will investigate whether General Motors actedquickly enough to recall 1.6 million older-model small cars. If wrongdoing is found, GM could be hitby a multimillion-dollar fine.

Under federal rules, automakers are required to notify the National Highway Traffic SafetyAdministration within five business days after knowing it has a safety defect in its vehicles. Thisweek GM doubled the number of cars in the recall for faulty ignition switches. The problem has beenlinked to crashes that caused 13 deaths.

There are fresh signs this morning that the U.S. home-building market could be picking up. Better-than-expected construction numbers helped lift U.S. stocks slightly Wednesday. Bank lending forland development and construction is reported to be increasing. That's a sign the supply crunch fornew homes could ease in coming months, according to The Wall Street Journal.

Investors might be disappointed by Baidu's quarterly earnings report. The owner of China's mostpopular search engine says profits fell 0.4 percent, compared to the year before. But consider this:Sales soared more than 50 percent. The surge in revenues shows impressive growth in the world'sbiggest Internet market as hundreds of millions of consumers shift to smartphones and otherwireless devices.

Richard Davies Business Correspondent ABC News Radioabcnews.com Twitter: daviesnow 212-456-5100

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