Tesla Abandons Plan for Calif. Plant

Electric car maker will look for a new site after failing to secure loan.

Tesla has scrapped plans to build an electric car plant in Silicon Valley, saying Jan. 31 that it will opt for an abandoned factory elsewhere in order to win a low-cost federal loan.

Tesla announced in October that the dismal economy had effectively slammed the door on its hope of getting $100 million in venture capital money to build a Model S sedan plant in San Jose.

Construction of the factory, about 20 minutes from Tesla's headquarters in San Carlos, Calif. was scheduled to begin in mid-2009.

Tesla had picked an 89-acre lot on which to build a 500,000-square-foot plant to pump out four-door, all-electric sedans.

It would have been the first time the vacant lot was used for heavy industry.

Tesla is competing with other car makers for low-interest loan money the U.S. Department of Energy has available to fund development of "brownfield" sites, factories or plants no longer in use.

Tesla wants a $250 million loan to build a sedan plant.

"We cannot do anything that may jeopardize securing the federal loan," said Tesla senior communications manager Rachel Konrad. "That's one of the reasons we are now planning to develop on a brownfield site instead of the greenfield site in San Jose."

Tesla is in "late-stage" negotiations with another site for its Model S sedan plant and expects to begin production in 2011 as originally planned, according to Konrad.

Tesla says that in March it will unveil a Model S car its Hawthorne, Calif., design studio.

The Model S car is a five-passenger sedan run by a lithium-ion battery pack that is expected to power the car for about 240 miles per charge. The car has an estimated price of $60,000.

Copyright, Agence France-Presse

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