Tesla’s new battery plant could spark bidding war

Article by Anita Panait, on March 3, 2014

A plan by Tesla Motors Inc. to build what co-founder Elon Musk described as the largest battery site in the world could prompt a bidding war between states wanting the 6,500 jobs the $5 billion investment could create. Tesla disclosed Wednesday that it is selling at least $1.6 billion of convertible notes to finance the 10 million-square-foot project.

It is exploring possible locations in Texas, Nevada, Arizona and New Mexico for the site. "This would rank as the most attractive industrial project out there," remarked Dennis Cuneo, president of DC Strategic Advisors LLC and a former executive Toyota Motor Corp. who helped it select manufacturing sites.

Tesla has called the project the "gigafactory,” which would make the carmaker a force in both US manufacturing and electric power. Musk envisions a battery site that would have more capacity than any other plant to produce lithium ion batteries.

"This has a huge impact beyond Tesla," said Harley Shaiken, a labor economist at the University of California, Berkeley told Bloomberg. "It gives enormous legitimacy to battery production and the future of the electric car because that lies in the battery. It's high stakes, high technology."

Tesla said in a presentation on its Web site that it is planning an investment of between $4 billion and $5 billion by the end of the decade, financing around $2 billion of the total.

The convertible bond offering could rise to $1.84 billion, according to a separate statement. The plant is considered as vital to Tesla becoming a volume carmaker capable of building 500,000 or more electric vehicles a year from an expected 35,000 this year, Musk has said.

Regarded as an evolutionary vehicle, the new Tesla Model S is an all-electric sedan that combines performance, safety, and efficiency. It has also set new standards for the car of the modern times by earning the highest possible safety ratings, having the longest range among electric vehicles and getting continuously better through over-the-air software updates.

Tesla’s architecture serves as the foundation of the safety capability of the new Model S. Since the battery is located on the floor, the Model S has a very low center of gravity. This attribute doesn’t only enhance its handling and performance, but also minimizes the risk of rollover. At the same time, the new Model S offers higher degree safety during a front-end collision, thanks to the fact that it has no engine. Having no engine gives the Model S a large crumple zone that could better absorb the energy of a frontend collision.

The low center of gravity of the new Model S is also thanks to the fact that its unique electric drivetrain is located beneath the car, making the EV as one of the safest on the road. Moreover, the NHTSA and Euro NCAP have also confirmed the safety record of the new Model S though the bestowment of the highest safety ratings possible. In addition, the new Model S has already a record of the lowest chance of occupant injury after tests in the United States.

The safety nature of the Model S is also helped by a number of standard active safety elements like automatic emergency braking and blind spot detection as well as collision warning, and lane departure warning. These could further be supported by optional convenience elements like autosteer, autopark, summon and traffic-aware cruise control.

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