Tesla to Build Gigafactory in Nevada

Tesla Model S

The $5 billion factory, which could create 6,500 jobs, was the focus of intense lobbying and incentives from California, where Tesla's Model S is a Hollywood status symbol

Nevada has won Tesla's coveted gigafactory.

The Fremont, Calif.-based electric-car maker, whose Model S is the default status vehicle in Hollywood, will build the $5 billion lithium-ion battery factory in Nevada despite intense lobbying from California, according to a report first published by CNBC. The incentives offered by Gov. Jerry Brown included relaxing environmental requirements and tax breaks worth as much as $500 million, the Los Angeles Times reported.

The gigafactory, to be built in partnership with Panasonic, is crucial to Tesla CEO Elon Musk's plan to bring electric cars into the automotive mainstream.

Currently, Tesla builds only the Model S, a $69,000 luxury sedan that is driven by Hollywood players ranging from DreamWorks Animation CEO Jeffrey Katzenberg to director James Cameron. Last year, the Model S was the third-most-popular luxury vehicle, gas or electric, sold in California.

But Tesla has struggled to keep up with demand for the Model S as the carmaker expands into foreign markets, particularly China, and next year plans to unveil its highly anticipated Model X crossover SUV and a high-volume moderately priced sedan, the Model 3, in 2017.

The gigafactory is meant to ensure a steady supply of batteries for Tesla's expansion while lowering production costs, particularly for the Model 3, which Musk envisions selling for around $40,000.

Nevada Governor Brian Sandoval is expected to announce details of the factory Thursday afternoon in Carson City, the state's capital.