Tesla to build plant, headquarters in San Jose

The factory initially will employ about 1,000 people and be able to produce 15,000 cars a year when it opens in late 2010, Chief Executive Ze'ev Drori said today.

Construction costs will be more than $100 million and, as part of incentives from the state, California will buy and lease to Tesla assembly machinery valued at about the same amount, he said.

"This is about bringing 1,000 clean tech jobs to San Jose to replace the loss of more traditional manufacturing jobs in our area," said Chuck Reed, the city's mayor. "We want to be a center of green-collar manufacturing jobs."

Tesla, which said that construction of the plant will start next year, is expanding to boost its lineup beyond the $100,000 Roadster, a rechargeable sports car powered by 900 pounds of lithium-ion batteries.

Since Elon Musk, Tesla's chairman and main investor, said in 2006 that the closely held company would be the first successful modern producer of electric cars, General Motors Corp., Toyota Motor Corp. and Nissan Motor Co. have announced plans for competing plug-ins.

"This is going to be a fully integrated facility that will include marketing, sales, planning and assembly," Drori said. "We're designing it with capacity to expand to 30,000 vehicles a year without increasing the structure."

The so-called Model S sedan Tesla will build in San Jose is a five-passenger car intended to travel 240 miles on a single charge, with a base price of $60,000, Drori said. Tesla's current headquarters is in San Carlos.

San Jose will lease 89 acres for the new facility, letting Tesla use it rent-free for 10 years, Reed said. To facilitate local use of Tesla models and other electric cars, the city will also build public charging stations into streetlights.