Tesla plans at least 2 battery sites in U.S., Musk says

Tesla may ultimately need more than a single gigafactory to build batteries in the United States, CEO Elon Musk says.

LOS ANGELES (Bloomberg) -- Tesla Motors Inc. is close to naming sites in at least two U.S. states for a planned battery "gigafactory" and will break ground at each to ensure one is ready to supply lithium ion packs within three years.

Tesla wants to boost global production of its Model S electric car by 56 percent this year and also plans a mass-market vehicle.

In February, the company said it would build the world's largest battery plant and that it was assessing sites in Arizona, Nevada, New Mexico and Texas.

The lower-cost battery packs are needed to ensure Tesla's proposed less expensive model gets to market on time, Tesla CEO Elon Musk said.

"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," Musk said in an interview Monday. "The No. 1 thing is we want to minimize the risk timing for the gigafactory to get up and running."

The new plant, requiring as much as $5 billion to build and ultimately employing as many as 6,500 people, is part of Musk's vision of turning Tesla into the world's dominant electric-car maker.

Along with making batteries that are 30 percent cheaper than are currently available, the plant would supply packs to Musk's SolarCity Corp., letting homes and buildings with solar panels store energy they generate.

Tesla in March raised $2.3 billion in a convertible note sale to help fund the battery plant. Musk declined to say which states are the leading candidates and when the company will announce its decision.

Multiple sites

While breaking ground at different locations with an initial goal of using only one may be unusual, Tesla may ultimately need more than a single gigafactory in the United States, he said.

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

Tesla's so-called third-generation car, following the $71,000 Model S sedan and Model X electric SUV due in 2015, would sell at a price comparable to BMW AG's BMW 3-Series sedan, or about half the base price of the Model S, Musk has said.

The design and preparation to produce that new model has to be done in parallel with the gigafactory, he said Monday.

"There are a lot of moving parts, a crazy amount of moving parts," Musk said. "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."

Musk had told reporters in China last week that the company was considering two locations, the Associated Press reported. Tesla shares rose 3.6 percent to $205.57 at 2:55 p.m. and had added 32 percent this year through Monday.

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