Tesla Motors on Wednesday revealed plans for a proposed $4 billion-$5 billion “gigafactory” that will provide half a million lithium-ion batteries annually for its electric vehicles by the end of the decade.
“The Gigafactory is designed to reduce cell costs much faster than the status quo and, by 2020, produce more lithium ion batteries annually than were produced worldwide in 2013,” the company said in a blog post Wednesday afternoon, predicting that battery production costs would be 30 percent lower than today.
The plant is expected to cost between $4 billion and $5 billion, with Tesla kicking in $2 billion, the company said. Partners, such as Japan’s Panasonic, are expected to contribute to the project.
Once running at full capacity in 2020, the plant is projected to produce more than 500,000 batteries, matching Tesla’s expected output of 500,000 vehicles. It currently sells fewer than 2,000 of its Model S electric vehicles a month.
To finance the factory and develop a mass market vehicle, the company announced a $1.6 billion convertible note offering, with an $800 million set maturing in 2019 and another $800 million set due in 2021. The notes can be converted to cash, Tesla stock or a mix of both.
The offering is aimed at taking advantage of Tesla’s high profile among investors right now. The Palo Alto, Calif.-based carmaker’s stock jumped more than 700 percent over the past 12 months.
-Michael Strong and Paul A. Eisenstein contributed to this report from The Detroit Bureau.
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