Tesla’s Two-State Site Selection Solution for Gigafactory

Back in February, Tesla Motors, Inc. (NASDAQ: TSLA) clarified in an SEC filing that the site selection process for Tesla’s battery factory, known as the Gigafactory, had been narrowed down to four states – Arizona, Nevada, New Mexico and Texas.

Tesla Gigafactory

Tesla Gigafactory (photo – teslamotors.com)

Now, Bloomberg News quotes Tesla CEO Elon Musk as saying in an interview that the company is close to naming not one, but two states for the Gigafactory project, which calls for an investment of up to $5 billion and creation of up to 6,500 jobs.

Tesla is apparently planning to continue the site selection and negotiation process with both states all the way to a ground breaking.

The reasoning behind pursuing negotiations and preparation of two sites in different states for the same project is that Tesla wants to make sure they minimize the risk of delays in case any last-minute hiccups arise with one site.

Musk notes in the interview that it is highly unusual to start construction at two locations when the intention is to use only one, but they may eventually need another Gigafactory.

The prospect of being in the running for a future second Gigafactory may come as little consolation for the site which does everything Tesla wants right up to the ground breaking, but then is left with no project and regret at losing billions of dollars being pumped into the economy, millions in new tax revenues, and thousands of jobs being created.

According to the specifications made public by Tesla, the sites they are looking at have to be on lots that are 500-1,000 acres in size, offering the ability to build 10 million square feet of production space on one or two levels.

The timeline calls for Tesla to begin supplying battery packs from the Gigafactory in 2017, which gives them approximately three years to complete the site selection, finalize one location, build the factory and get it up and running. The plant will attain full production capacity by 2020. At that time, the Gigafactory is expected to be able to fulfill production demand for 500,000 Tesla vehicles annually and stationary storage applications, in the process reducing battery pack cost by 30 percent.

The location also needs to have open spaces adjacent to the Gigafactory site that will be suitable for wind and solar energy projects that will provide cheap and clean power for the Gigafactory.

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