Feb. 27 - The electric vehicle maker says its new plant dubbed ''Gigafactory'' could produce more batteries in one year than the industry made last year. Fred Katayama reports.
Tesla's big bet could be a game changer. The electric vehicle maker plans to build a $5 billion battery plant powered by wind and solar farms so it can produce a low-priced car within three years. Lithium is one of the priciest parts of an electric car. Tesla says its new plant called "Gigafactory" will help it cut costs faster and produce more batteries in one year than the worldwide industry made last year. It'll invest $2 billion and have partners supply the rest. Goldman Sachs analyst Patrick Archambault says the debt that Tesla will issue will dilute earnings by 15 percent over the next three years. But he hiked his price target, saying: "The increased liquidity improves Tesla's risk profile allowing it to make the necessary component investments to support its growth outlook." Tesla's stock rose at the start of trade. Tesla wouldn't name partners, but some investors are betting on Samsung SDI and Panasonic. Robert W. Baird analyst Ben Kallo predicts Panasonic will get a contract because it's Tesla's largest battery supplier and has a long relationship. And of the four states that are finalists for the plant, Kallo says New Mexico and Nevada have the lead. New Mexico, he points out, has favorable taxes and lots of sun. Sunny Nevada boasts wind to boot and houses the largest operating lithium mine in the U.S. The winner gets 6,500 jobs and the bragging rights to pumping out batteries for as many as half a million vehicles a year - 14 times what Tesla will produce this year.