Electric Car Factory Finds Home In Silicon Valley
Posted on: Wednesday, 17 September 2008, 13:12 CDT
California electric sports car-maker Tesla Motors said ahead of a Wednesday announcement it is building a $250 million Silicon Valley plant to produce sedans that will roll onto U.S. highways in late 2010.
The company plans to produce an all-electric luxury sedan, called the Model S, at the plant with a retail price of around $60,000.
The two-seater Tesla Roadster has solid environmental credentials in the state that often sets national trends on clean air and energy.
The northern California town known for technology would be home to the factory and was rushing headlong toward so-called clean tech, according to San Jose Mayor Chuck Reed.
He said shifting from petroleum to electric vehicles would make a huge change to how the world moves.
“We are excited to be part of that happening. We've still got lots of other tech here, but the solar companies are growing," he said.
In a separate interview, Tesla Chief Executive Ze'ev Drori, said he expects manufacturing of the five-passenger, $60,000 Model S sedan to hit a rate of over 15,000 a year by the last quarter of 2011. Tesla will build the factory on its own.
Drori said they have enough money, adding that Tesla is a couple of months away from closing up to $100 million in private equity financing, and that the U.S. Department of Energy has approved $150 million in loan guarantees. The state of California also has offered significant tax breaks.
San Jose along with the State of California devised an incentive program estimated at around $150m (£84m) to persuade Tesla to site its new plant in the city.
San Jose put land into the deal, while California came up with a hefty $100m financing package.
The first 10 years of the 40-year lease on the 90-acre plot will be rent-free. After that a yearly lease payment of $1.5m will be paid over the next ten years with a 2% increase year on year for the last 20.
Mayor Reed said he believed this part of the package was worth around $50m (£28m) but stressed the land was not being used anyway.
"A lot of investment decisions are based on faith in the future and confidence in the future and this 250 million dollar project is a real stamp for us and a vote of confidence in San Jose.”
Zero-emission vehicles are in the works from other carmakers as well, and major manufacturers including General Motors Corp and Toyota Motor Corp are racing to make plug-in hybrids that can drive on battery power and then switch to gasoline when they need power.
"I am sure there will be competition," said Drori. "We hope there will be competition. Competition will accelerate demand."
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Source: redOrbit Staff & Wire Reports
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