Tesla Motors to Construct Lithium Ion Battery Factory

Tesla Motors, Palo Alto, Calif., has announced plans to build a large-scale factory to produce lithium ion batteries. By working with its battery manufacturing partners, the company says that this gigafactory will help it to achieve economies of scale and minimize costs, which also will reduce the cost producing its electric car.

The company hopes to reduce the per kWh cost of its battery packs by more than 30 percent by the end of the first production year of the mass-market vehicle, reducing cell costs faster than the market sees now. It also hopes to produce more lithium ion batteries annually than were produced worldwide in 2013.

The company has not announced where the factory will be built, but four states are in the running: Arizona, Nevada, New Mexico, and Texas. The plan is to have the factory built by 2015, install the equipment in 2016, and then start production in 2017. The company hopes to be producing 500,000 cars per year by 2020. It currently produces 35,000 cars per year.

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