Tesla to raise $1.6 billion to build battery factory
By James B. Kelleher
(Reuters) - Tesla Motors Inc (TSLA.O: Quote) said on Wednesday it plans to raise $1.6 billion from investors to finance a new battery factory that will help the upstart U.S. automaker reach its goal of producing a lower-priced, mass-market electric car by 2017.
Tesla said the new plant, nicknamed the "Gigafactory," would be built in one of four states: Nevada, Arizona, New Mexico or Texas. By 2020, Tesla said, the plant would be able to make more lithium-ion batteries in a year than were produced worldwide in 2013.
The company said the plant will open in 2017 and ship batteries to the company's assembly plant near San Francisco.
The Palo Alto, California-based maker of high-priced electric cars plans to raise the money by selling convertible senior notes, half of them due in 2019 and the other half in 2021, it said in an 8-K filing with the U.S. Securities and Exchange Commission,
Analysts believe the factory may ultimately cost $5 billion to $6 billion to build and will be funded with the help of some of Tesla's Japanese suppliers, including Panasonic Corp (6752.T: Quote).
The plant, which will handle everything from processing raw materials to final assembly, will produce small, lightweight batteries for Tesla and may also supply other automakers.
Battery costs have been a major stumbling block to widespread electric car adoption in the United States, according to analysts. Tesla's new factory will lower costs by shifting material, cell, module and pack production to one spot.
In Tesla's earnings conference call last week, Chief Executive Elon Musk said the electric car maker expects to build the factory with more than one partner, but a "default assumption" was that Panasonic, as a current battery cell partner, "would continue to partner with us in the gigafactory." Continued...