"Electric Carmaker Tesla To Build New Factory, Headquarters in Silicon Valley" Green Car Advisor

Electric Carmaker Tesla To Build New Factory, Headquarters in Silicon Valley

Tesla Motors, which recently abandoned plans for a factory in New Mexico after California Gov. Arnold Schwarzenegger offered the electric vehicle maker a hefty incentive package to settle in his state, has picked a 90-acre location in the heart of Silicon Valley for its new factory and headquarters campus.

The site, in the City of San Jose, will keep the company -- now headquartered in nearby San Carlos -- close to where its engineers and top executives live.

The San Jose Mercury News, which broke the story this morning, quoted San Jose's mayor as saying Tesla hadn't even been looking at his city until he and other officials put together a proposal and took it to the automaker.

Tesla has just begun production of its first car is its two-seat electric roadster (above). The company plans to add a four-door family sedan to its lineup after it completes its new factory -- as early as late 2010.

To lure Tesla, San Jose officials offered a 40-year lease on the city-owned property and said they'd provide the first 10 years rent-free, the Mercury News reported.

Tesla will pay $1.5 million in annual rent during the second 10 years of the lease, and will see its rent increase 2 percent a year for the final two decades.

The city also would seek ways, once tax revenue from the factory starts flowing in, to rebate the fees the company will pay to develop the property.

To lure Tesla away from its New Mexico plan, the governor's office struck a deal in which the state will purchase up to $100 million in factory equipment for the company, then lease it to Tesla in an arrangement that will save the company about $8 million in sales taxes.

California also will provide Tesla up to $1 million in state job-training funds.

The new auto assembly plant and headquarters complex is expected to provide more than 1,000 jobs to the city -- an annual payroll in excess of $100 million.

Tesla plans to pay for the plant from proceeds of a $150 million loan guaranteed by the U.S. Department of Energy plus $100 million it plans to raise in a new round of funding.

John O'Dell, Senior Editor