Tesla Motors to build electric sedan in California

When Tesla Motors Inc. began taking orders last year for its all-electric sports car, celebrities lined up to purchase the sleek zero-emission vehicle with the six-digit sticker price.

But with plans in the works for a new headquarters and factory, the Silicon Valley startup hopes it's taking the first step toward making electric cars a presence in the driveways of average Americans.

Tesla expected final approval Tuesday of a deal with the city of San Jose to lease nearly 90 acres of city-owned land for a plant to build the Model S, an all-electric sedan.

According to Tesla's chief executive, the planned $250 million facility shows Tesla aims to do more than simply produce eco-friendly status symbols for wealthy drivers.

"It is our intention to service the entire market," CEO Ze'ev Drori said in an interview with The Associated Press. "We are not a niche player."

While its $60,000 price tag still clearly marks the Model S as a luxury vehicle, the five-seater will cost at least 45 percent less than the Tesla Roadster, which starts at $109,000.

The San Jose factory will also produce many more cars than the Roadster's planned run of 1,500 for the 2009 model year. The company wants to roll the first Model S off the San Jose assembly line during the fourth quarter of 2010 and expects to build 15,000 during its first year of production, Drori said.

In the future, Tesla aspires to make electric vehicles that a much broader base of consumers can afford.

"We are going to work down the road on cars which will be substantially less expensive again," Drori said.

Tesla's cars run on a huge lithium-ion battery pack that can be recharged by plugging an adapter cord into a wall socket. The company estimates the Roadster can travel 225 miles on a single 3.5-hour charge and expects similar results from the Model S.

Tesla had planned to build the Model S factory in New Mexico but announced in June that the plant would stay in California after Gov. Arnold Schwarzenegger and state Treasurer Bill Lockyer worked out a tax break for the company. Schwarzenegger is one of several celebrities, along with actors George Clooney and Kelsey Grammer, who the company says have all ordered Roadsters.

According to the company, the new factory and corporate headquarters will create about 1,000 jobs.

San Jose Mayor Chuck Reed said Tesla's move will bolster the city's goal of creating 25,000 jobs in the growing "clean technology" sector over the next 15 years. As part of the agreement to bring Tesla to San Jose, the company won't have to pay to lease the land for the first 10 years, he said.

"We want to be a world-class center of clean-tech innovation, and this fits into our strategy to do that," Reed said. "We hope to be the home of the electric car like Detroit was for the internal-combustion car."

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Associated Press writer Terence Chea contributed to this report.