Tesla’s new long-range plan could double size of Fremont factory

Tesla Motors’ bustling Fremont factory could roughly double in size under a long-range plan filed with city officials, as the upstart automaker seeks to dramatically expand production of its luxury electric cars.

New buildings could be added near the plant’s paint shop, in its parking lot and on open land next to the facility’s test track along Mission Boulevard. Tesla also has purchased a 25-acre lot just north of the factory from the Lennar development company.

The changes detailed in Tesla’s new master plan for the site would transform an auto factory that for a half century has been a Bay Area landmark and a major source of jobs.

Formerly run by a joint venture between General Motors and Toyota, the plant now employs 6,200 people building Tesla’s popular Model S sedan and Model X SUV. And with Tesla planning to release its next car, the $35,000 Model 3, late next year, the company needs room to expand.

“We are pleased to work with the City of Fremont on a plan that reaffirms our commitment to California and to eventually maximize the potential of our Fremont factory site,” a Tesla spokeswoman said in an emailed statement. “California continues to be the epicenter of Tesla’s manufacturing capabilities, and we are proud to be the state’s largest manufacturing employer.”

The new master plan does not offer in-depth detail on specific buildings that Tesla may place on the property or give an estimate of how much those buildings would cost. Nor does it lock the company into building everything shown in the plan.

Instead, it illustrates how Tesla could add as much as 4.6 million square feet to a facility that now measures 4.5 million square feet.

The Fremont Planning Commission is scheduled to discuss the master plan Thursday. If it is approved by both the commission and the City Council, Tesla would then submit permit applications for specific building projects on the site.

Tesla CEO Elon Musk has often said that the fast-growing company will eventually need new factories — perhaps in North America, Asia and Europe — as its worldwide sales expand.

He has set a goal of building 1 million cars per year by the end of 2020, even though the company last year built just 50,500. And Musk said this spring that Tesla might be able to reach its million-car goal by fully utilizing its Fremont factory, its massive battery Gigafactory near Reno and a collection of other properties Tesla has amassed in Northern California.

Although the new master plan does not preclude Tesla from building elsewhere, or snapping up other buildings in the Bay Area, it strongly suggests that Fremont will remain central to the company’s manufacturing operations for years to come.

“We’re delighted that the site offers them opportunities for growth,” said Kelly Kline, Fremont’s economic development director. “We’ve seen other growth happening in Fremont because of their activities — which is great. Dozens of businesses have located here to do business with Tesla.”

The master plan does not discuss how many people would eventually work in the expanded facility. But a Fremont Planning Division assessment, posted Friday on the division’s website, estimated the expansion could eventually add 3,100 jobs.

Last year, California officials gave Tesla a $15 million tax credit to help hire 4,400 employees over five years. Those new jobs will be based in multiple locations, including Fremont and the company’s Palo Alto headquarters.

Brook Taylor, deputy director of the state office that awarded Tesla its tax credit, said California has made an effort to attract automotive jobs, from upstarts like Tesla and Faraday Future to established automakers setting up labs in Silicon Valley.

“The facts are that because of California’s forward-thinking environmental and development policies, the Golden State is becoming the epicenter of the auto industry,” said Taylor, with the Governor’s Office of Business and Economic Development, also known as Go-Biz.

“What we’re seeing is the cars of tomorrow will be designed and in many cases built here in California,” he said.

First opened by General Motors in 1963, Tesla’s factory has had a turbulent history.

GM closed the plant in 1982, as competition from foreign automakers took its toll. It reopened under New United Motor Manufacturing Inc., a joint venture between Toyota and GM, only to close again in 2010 during the depths of the global financial crisis.

Tesla at that time was looking to open its first factory. Initially, the young company, founded in 2003, considered the shuttered NUMMI plant much too big. But Tesla was able to buy the facility for the fire-sale price of $42 million, plus $17 million for some of the equipment. The company started building its Model S there in 2012.

The portion of Fremont immediately surrounding the factory is already poised for major change.

This fall, BART plans to open its Warm Springs Station, which lies just across a railroad track from the Tesla factory. City officials have already approved the master plans for three adjacent development projects, which will add commercial space and thousands of housing units.

The BART station, in fact, plays an important role in Tesla’s plans.

Most of Tesla’s factory site has already been built out, and the property is hemmed in by a rail line, the Nimitz Freeway and several broad, busy streets. As a result, two of the buildings Tesla could add under the master plan would be placed in the already maxed-out parking lot in front of the plant.

“The location of the factory offers unique opportunities to leverage mass transit to ferry our workforce,” the Tesla spokeswoman said. “Tesla’s factory is the only major automotive assembly facility in the United States that is located adjacent to a metropolitan rapid transit rail line.”

Already building out its Gigafactory, Tesla has drawn criticism from some stock analysts for burning through cash without generating a profit. But Ben Kallo, a senior analyst with Robert W. Baird & Co., said expanding the Fremont facility made sense and would show investors that the company has a plan in place to reach its lofty production goals.

“It’s a good step,” Kallo said. “Obviously, expanding their manufacturing in California, people will automatically think you can’t get that done because of the not-in-my-backyard attitude. But keeping production here, particularly in the early part of their growth, helps manage it effectively.”