Tesla To Break Ground for Factory in Two States

Apr 30, 2014 01:32 PM EDT | Jordan Ecarma

Tesla plans to break ground in two states for its planned battery plant to ensure a site is ready, making the competition between Arizona, Nevada, New Mexico and Texas even more interesting.

The four states are reportedly being looked at as possible sites for the upcoming Tesla "gigafactory," a lithium-ion plant that will cost $5 billion to build and be the largest battery factory in the world when it's completed, Bloomberg Businessweek reported.

"What we're going to do is move forward with more than one state, at least two, all the way to breaking ground, just in case there's last-minute issues," Tesla CEO Elon Musk told Businessweek in an interview this week. "The No. 1 thing is we want to minimize the risk timing for the gigafactory to get up and running."

Musk declined to specify which states are ahead in the running or when Tesla will announce the factory location. The Palo Alto, Calif.-based company has raised $2.3 billion through convertible note sales to build the factory.

The new plant is expected to employ 6,500 workers and will boost the local economy wherever it's built. Essential to the vision of a less expensive Tesla vehicle, the factory will produce batteries that are 30 percent cheaper than those available right now.

Musk, who also heads the commercial space venture SpaceX, hopes to build Tesla into the biggest electric vehicle producer worldwide.

Even though Tesla only plans to use one of the two chosen locations, another battery plant in the U.S. could be necessary in the future.

"We will end up spending more money than would otherwise be the case to minimize the timing risk," Musk told Businessweek.

Tesla is currently juggling plans for the factory and preparation to put a third-generation vehicle into production, two projects that have to work in tandem.

"There are a lot of moving parts, a crazy amount of moving parts," Musk told Businessweek. "If there's a laggard there, we'll have this massive facility and a ton of people trained and no ability to recoup revenue. It will be quite a bad situation."

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