Tesla eyes Arizona for new factory

Tesla's grand expansion plans will be funded in part by raising $1.6 billion through a convertible note offer that the automaker announced Wednesday.

The money will be used to build what its founder Elon Musk has dubbed the "Gigafactory" and for production of a more affordable, new mass market vehicle.

The massive factory is expected to produce more lithium ion batteries annually by 2020 than were produced worldwide in 2013. Those batteries, and the reduction in their cost, are vital to Tesla's ability to produce a cheaper car in numbers that could catapult the company into the ranks of the major automakers.

The electric car maker's current model, the Tesla S, has a starting price of $69,000 and can go more than 200 miles between charges.

The new factory could be located in either Arizona, Nevada, New Mexico or Texas, the company said Wednesday. It could take up between 500 and 1,000 acres, employ about 6,500 people, and produce about 500,000 cars per year, Tesla said.

Tesla's offering comes after the company reported much stronger-than-expected earnings and strong sales guidance last week. Shares hit an all-time high of $265 Wednesday.

Half of the notes will be converted to common stock in 2019, while the other half will mature in 2021.

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