Headquartered in Palo Alto, California,
Tesla Motors, Inc.
) has eliminated California from the list of potential locations
for its Gigafactory, according to sources. The reason behind the
decision is not known. However, higher manufacturing costs in the
region, specifically real estate prices, and politics are the
probable grounds of rejection.
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The Government of California offered many locations to Tesla as
the potential construction site for the Gigafactory. However,
Tesla rejected the proposal.
Tesla's total sales in California comprised more than one-third
of the company's total global sales last year. Moreover,
California's pollution-control policies help the automaker to
generate substantial revenues from the region.
Tesla plans to construct Gigafactory to produce lithium ion
batteries in collaboration with various partners. The electric
carmaker's Japanese battery pack supplier,
), is rumored to be one of the partners. The automaker expects
the factory to provide economies of scale and reduce production
costs based on innovative manufacturing techniques, reduced
logistic wastes, optimization of co-located processes and lower
Tesla is considering 500-acre to 1,000-acre sites in Nevada,
Arizona, New Mexico and Texas for the construction of the
factory, which will employ around 6,500 workers. The automaker
intends to initiate construction this year and complete the
factory by 2017. The Gigafactory will supply lithium-ion
batteries to Tesla's Fremont, Calif., assembly plant.
By 2020, Tesla expects the annual lithium ion battery production
at the Gigafactory to exceed the total global production in 2013.
The factory is expected to produce enough battery packs to build
around 500,000 electric cars by 2020. Also, by the end of the
first year of operations, per kWh cost of production of battery
packs is expected to be reduced by over 30%.
Tesla currently carries a Zacks Rank #2 (Buy). Some other
automobile stocks worth considering are
Tata Motors Limited
Toyota Motor Corporation
). Both the stocks carry a Zacks Rank #1 (Strong Buy).