Tesla Won't Be Building Cars at Planned $5B Factory

Electric car maker hopes to employ 6,500 people for the manufacturing of batteries.
3:00 | 02/27/14

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Transcript for Tesla Won't Be Building Cars at Planned $5B Factory
That's the motors planning to invest in America they're looking to open a factory in Nevada Arizona. New Mexico Texas. And put about 6500. People to work what do we know about this luxury model S electric car which is the reason in fact they're looking to expand construction America. This is interesting because -- does not want to build this factory to build cars. But to build batteries. And this in batteries are -- -- the sticking point for electric vehicles at the moment. Even though we've got a fair number of hybrids in a few. It's very hard to -- even for -- it's very hard to make money selling electric car even that 70000 dollars or more which is where has -- prices start. It is because the batteries are so expensive and -- and the technology is still fairly new. What -- is trying to do is increase the scale -- which it produces these batteries. To get the costs down and they they are I think Cortez was aiming for is a kind of a moon shot here at perhaps some technology breakthroughs. And cut the cost of those batteries in half or even buy more. And if they do that what might happen is we will see those types of batteries adopted in more vehicles in and lots of other things -- so I think this is in a way up play -- -- -- to corner the electric battery market if you will. And not just the electric car market so. -- if there's a lot of risk involved here -- it's a new technology other technologies could come along -- -- -- and semi but it's a really. Interesting and bold move by this company that has really already shaken up by the -- Tree yet and and if in fact that does go -- and it'll be -- in to see if in fact they farm out some of those batters of those technologies some of the other auto companies that might either be struggling with try to. To figure it out -- it to define that that golden formula. To make these cars runs on batteries alone. Yeah that's that's why this is really interesting because it has -- making a play. In the components here and it would be quite -- -- you know at the a lot of auto makers are some big ones Toyota Mercedes they have already. I got a little bit involve which has led invested in the company sent some of their staffers -- to see how Tesla does business. So Tuttle has already gotten the attention of the big boys in their business if you -- after being swat it away. For years and you know if electric cars do you turn out to be. I sort of dominant mode of transportation -- the big question mark a lot of things still need to happen. But it tells us making a play to be -- you know not just. Not just the sort of style leader -- -- interest -- boutique carmaker but to be perhaps the mass market leader in some of this technology. And even think it out even further me right now either went -- about 70000 dollars. That's what what would have based model as -- and although they do I know that you have plans to do sort of crossover. Going about 40000 for a price point but it would be interesting though if in fact they do build this manufacturing facility and they start. Selling these batteries to other companies -- it would even cannibalize their own. Their own brand for perhaps. Well what we're seeing -- try to do is go from being a small. Bit Laramie for all the attention they've -- their sales are still way below 1% of the US market. So they're trying to go from a small boutique manufacturer into a mass market manufacturer and they're basically trying to come in the side door by. Doing it through and a new technology that they think. Can be there. Their basic basically their their -- competitive advantage if you will. It it's very hard -- and I mean lots of other you know the big car companies General Motors Toyota Honda. Ford they all are making big investments in this technology to India and other investments -- mean some people think cars powered by hydrogen. Could end up being a better deal in the future than cars powered by electricity -- this is really interesting because you know not that much has changed about the way cars have been powered. Over the last 100 years and we're really at the very beginning of a potential revolution in the -- in what. Moves cars the the source of energy for cars -- -- we're just seeing the very beginning -- itself for president the creation here if you will. Something new in the auto industry and it will still have to -- see how that will play out.

This transcript has been automatically generated and may not be 100% accurate.

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