Tesla Motors is raising almost $2 billion for a new battery factory

Posted Feb 27, 2014

Tesla Motors has announced plans to raise almost $2 billion for a $4-$5 billion factory. The money will be raised through convertible senior note offerings. The money will be used for producing a “gigafactory” and Tesla will continue development of its third-generation lower priced electric vehicle. Tesla Motors said it plans to directly invest $2 billion into the gigafactory, which would cost $4 and $5 billion. Tesla’s partners will likely fund the rest of the factory. Panasonic and Sanyo are believed to be the partners in the gigafactory.


Tesla Motors said that the future growth of its cars depend on thousands of lithium-ion batteries that are packaged into battery packs. Tesla Motors CEO Elon Musk said that the company is aiming to produce 500,000 of its generation III cars per year. To hit this goal, Tesla Motors needed to build a factory that would have the equivalent of all of the world’s current production of lithium-ion batteries. Tesla is aiming to hit the 500,000 cars per year goal by around 2020.

The battery factory would enable Tesla to lower the battery pack cost by 30%. The total battery pack output will be 50 GW per year by 2020. The location for the 500-1,000 acre factory is not known, but it could potentially be Nevada, Texas, Arizona and New Mexico. The factory will be used to build substantially clean power and may create around 6,500 jobs.

Around half of the notes will be due in 2019 and the other half in 2021. Around $240 million will be made available to the underwriters to purchase in 30 days. This means that the offering could hit up to $1.84 billion.

[Source: Tesla Motors/GigaOM]