Tesla "gigafactory" to cost $5B, power up to 500,000 cars annually

As promised, Tesla Motors has announced more details surrounding its proposed “gigafactory.” The project may prove bigger than analysts initially expected, requiring up to $5 billion in total investment through 2020.

Sites in Nevada, New Mexico, Arizona and Texas are under evaluation for the 10-million-sq-ft factory, which will spread across as many as 1,000 acres. It will utilize solar and wind power, generated on-site, and employ up to 6,500 people.

The company aims to begin production in 2017 and ramp up to full speed by 2020, at which time the single factory will exceed the entire current annual output of lithium-ion batteries.

Reaching 50-gigawatt-hour capacity is expected to be necessary for the company to reach its sales goal of 500,000 vehicles per year, while also providing battery packs for use in other industries.

The ambitious numbers will also require a significant reduction in battery costs to enable a mass-market vehicle to travel 200 miles and cost less than $35,000.

“As we at Tesla reach for our goal of producing a mass market electric car in approximately three years, we have an opportunity to leverage our projected demand for lithium ion batteries to reduce their cost faster than previously thought possible,” the company said in a statement. “By the end of the first year of volume production of our mass market vehicle, we expect the Gigafactory will have driven down the per kWh cost of our battery pack by more than 30 percent.”

Once the site has been chosen, construction should begin this year.