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Tesla Inches Closer To Selecting Site For Gigafactory

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Tesla inched closer to selecting a site outside of Reno, Nev., for its $4 to $5 billion factory to produce lithium batteries for electric vehicles on Thursday, confirming a 600-acre site has undergone some pre-construction work, but fell short of committing to the site over unidentified candidates in Arizona, California, New Mexico and Texas.

In a conference call with shareholders Thursday, Tesla Motors CEO Elon Musk said the same type of work that has been completed at the recently-paused site 17 miles east of Sparks, Nev., will be duplicated at other sites before a final decision is made. The completed factory — called a ‘gigafactory’ by Tesla — is estimated to be about 10-million-sq-ft.

“We’ve essentially completed the creating of the pad — the construction pad — for the gigafactory in Nevada. In terms of creating a flat pad and getting the rocky foundations, that is substantially complete. There is still a little bit of work ongoing,” Musk says. “We’re going to be doing something similar in one or two other states.”

He says a motivation behind the decision to have multiple locations undergo site work is not only in order to test the site-dynamics, but to also assess permitting and other state and local issues.

“Before we actually go to the next stage of pouring a lot of concrete, we want to make sure we have things worked out at the state level: That the incentives are there that make sense and are fair to the state and Tesla. Tesla is not going to go for a deal that is not beneficial to both the state and Tesla,” he says.

Earlier on Thursday, Tesla Motors and Panasonic Corporation announced an agreement on the construction of the factory. According to Tesla Motors, it will prepare, provide and manage the land, buildings and utilities and Panasonic will manufacture and supply the cylindrical lithium-ion cells and invest in the associated equipment, machinery, and other manufacturing tools based on their mutual approval. Tesla will also manufacture the battery packs for its electric vehicles at the site.

"The gigafactory represents a fundamental change in the way large scale battery production can be realized. Not only does the gigafactory enable capacity needed for the Model 3 but it sets the path for a dramatic reduction in the cost of energy storage across a broad range of applications,” says JB Straubel, chief technical officer and co-founder of Tesla Motors.

Musk says actual construction costs for the facility will likely be $4 billion, or less, rather than the oft-mentioned $5 billion total cost before production can begin and that Tesla would likely cover 40 to 50 percent of the costs, Panasonic 30 to 40 percent and the state about 10 percent. Costs may reach $5 billion, he says, after post-construction enhancements are made.

“By 2020, we will be close to $4 billion — maybe slightly less than that — before we begin full-scale production,” he says.

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