Tesla Motors will build a $250 million factory to build its electric sedan, the Model S, in San Jose, Calif., the company said Wednesday.
The startup also plans to relocate its headquarters and its more than 250 employees to San Jose from its current home base less than 20 miles north in San Carlos.
Tesla said in June that it would build a factory to make the Model S in California, but hadn't settled on a specific location. Gov. Arnold Schwarzenegger joined Tesla executives at the time to announce about $10 million worth of tax and other incentives to keep the company in the state (see Tesla: We Will Build Electric Sedans in California and Green Light post).
Tesla had previously considered building the factory in New Mexico.
Tesla CEO Ze'ev Drori told the Wall Street Journal on Wednesday that he is lining up the financing for the new assembly plant by securing a round of private capital, led by Goldman Sachs Group Inc., and a loan guarantee from the U.S. Department of Energy.
In February, after closing a $40 million bridge loan, Tesla said it hopes to raise a fifth equity round of roughly $75 million to $100 million in the "late summer" and target an IPO early next year if market conditions improve (see Tesla to Big Three: Let's Be Friends).
The company plans to break ground on the new factory on 89 acres next summer and to roll out the Model S in late 2010.
The Model S, priced at $60,000, is the company's bid to broaden its appeal to consumers. The five-passenger car will rely on a lithium-ion battery pack for power and is expected to travel about 240 miles per charge, the company said.
Founded in 2003, Tesla began delivering its first-ever model, the $100,000 Roadster, to customers earlier this year. The company is now making 10 Roadsters per week, up from four per week earlier this summer. It has delivered about 30 Roadsters so far.
Tesla plans to continue to build the two-seat Roadster at a Group Lotus PLC factory in Hethel, the United Kingdom.
The company plans to launch a $30,000 model for the mass market within four years.
The company recently hired a former Chrysler veteran, Mike Donoughe, to help it beef up its manufacturing, which has suffered delays in the past. Donoughe is in charge of the Model S and Roadster programs.
The company also recently hired Deepak Ahuja as its chief financial officer and Franz von Holzhausen as its chief designer, who is working on Model S (see Tesla Hires Chrysler Vet and Tesla Hires Two More Auto Execs).
Tesla intends to seek gold certification from the U.S. Green Building Council Leadership in Energy and Environmental Design for its new assembly plant.