Tesla’s Plans for San Jose Electric Vehicle Factory Appear Doomed

Hopes for a new Tesla Motors plant in an 89-acre vacant lot in San Jose, California are fading by the day as the electric vehicle manufacturer reconsiders the site “for environmental and financial reasons”. Tesla had planned to begin construction on a factory that would employ 500 people and produce the Model S, an all-electric 4-wheel sedan, this spring.

Here’s Tesla spokeswoman Rachel Conrad’s statement to Autopia:

Tesla announced in September the intention to build a 500,000-square-foot assembly plant to manufacture our four-door, five-passenger, all-electric sedan. The site was an 89-acre vacant lot in San Jose, which is known as a “greenfield” site because there has never been heavy industry on it.

However, we reconsidered the San Jose site for a variety of environmental and financial reasons. The primary reason was that the US Department of Energy is awarding low-interest loans to automakers who develop “brownfield” sites (in other words, sites that used to be factories or plants but have been abandoned, mothballed or shut down).

Tesla is applying for a roughly $250 million federal low-interest loan that would finance a 500,000-square-foot assembly plant to build the sedan. Tesla does not want to jeopardize our low-interest loan application, and we believe that building from scratch on a greenfield site would put us at a competitive disadvantage against other automakers and suppliers competing for the $25 billion in low-interest federal loans.

We are in late-stage negotiations with another site to build our sedan, known as the Model S. We will likely have an announcement about the site soon. Tesla is still on track to begin production of the Model S in 2011. We plan to unveil the car to the media and public in March in Hawthorne, Calif., where Tesla’s design studio is located.

This is sad news for the city of San Jose, which had hoped to create 25,000 new green tech jobs.  San Jose had offered Tesla a 40-year lease with the first 10 years free of charge to entice the automaker to build there. It does make sense, though, to build on the lot of a previously abandoned factory.

It’s great to know that production of the Model S will move forward as planned. Of course, like all Teslas, the Model S is costly (expected price tag will be around $60K) so it’s out of reach for most Americans – but green techies and those with deep pockets are hotly anticipating its release all the same.

Link [Autopia]

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