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SAN JOSE, CA-In favor of a quicker way to market and federal funding that gives priority to reuse projects, Electric car maker Tesla Motors’ is setting aside previously announced plans to lease 89 acres of city- and county-owned land for a brand new headquarters, R&D and manufacturing campus. Instead, the San Carlos, CA-based company is close to securing an existing Silicon Valley location for its R&D and drive-train assembly operations and another existing facility, likely in another California market, for the manufacture of its new Model S, a zero-emission, five-passenger luxury sedan powered by a lithium-ion battery pack.

The company is within a few weeks of selecting a site for both its combined R&D and power train assembly facility, for which it has been looking for roughly 250,000 square feet, and for the Model S plant, for which it is seeking roughly 500,000 square feet, Tesla spokeswoman Rachel Konrad tells GlobeSt.com. The company’s corporate offices likely will remain in San Carlos until after the other facilities are up and running, she said.

“We are absolutely committed to getting the Model S started in 2011,” Tesla spokeswoman Rachel Konrad tells GlobeSt.com. “We determined that trying to do that on the Zanker Road site would not have been the most cost effective and expedient was of meeting that goal.”

Tesla isn’t yet willing to identify the sites it is considering for its operations, though she says the company is “very close” to announcing new sites. Given that Tesla is not looking to pump out 300,000 cars a year like a General Motors, it may be able to repurpose an existing aerospace or another mothballed facility for its Model S plant. As for its drive train assembly operation, which would need an even smaller facility, a former wafer chip plant may fit the bill.

News reports have speculated that the change of plans was prompted by the company not obtaining the $150-million funding round they previously sought to help pay for the new-build campus. Konrad says that in truth they abandoned plans for the larger funding round after determining they could still obtain federal money and get to market more quickly by using existing facilities.

“We closed a $40-million round late last year that should take us to this summer, by which time we expect to be cash-flow positive on our current revenue streams, the Roadster and power train sales to other companies,” Konrad says. “To really expand and get to the Model S we need that federal loan and thus will do nothing that jeopardizes our competitive advantage.”

Tesla executives said in September that they chose San Jose because the company was born in the Silicon Valley and its current headquarters is just 20 miles away, which meant its engineers and executives reside in the general area as well as the rest of the company’s 250 employees. In addition, the company said the location would keep it surrounded by a skilled high-tech work force and the kind of people that would want to purchase its luxury all-electric vehicle. Those factors remain true, Konrad says.

“We only have about 300 employees currently but a disproportionate number of them are engineers, and Silicon Valley remains an amazing talent pool in that regard,” she says, explaining why the company plans to keep the R&D and power train assembly in the San Jose area. “The Model S assembly plant will have a different workforce; it will need people who actually assemble the car so we are definitely looking outside of the Silicon Valley for existing facilities for the Models S assembly plant.”

Tesla’s first production vehicle is the Roadster, a zero-emission, all-electric, two-seat sports car. On sale now in the United States and Europe for a base price of $109,000, the Roadster is assembled, and will continue to be assembled at a Group Lotus PLC factory in Hethel, UK. The Roadster gets 244 miles per charge, according to the US Environmental Protection Agency. Next up is the aforementioned Model S, which is expected to have a base price of $57,400. The first sedans are slated to roll off the assembly line in 2011. Tesla is planning to produce about 20,000 vehicles in its first year of full production..

The city- and county-owned property upon which it originally planned a brand new campus sits adjacent to a water-treatment plant near Zanker Road and Highway 237 in North San Jose. As of mid-September a long-term lease and development agreement were under negotiation, with construction expected to begin this summer. The parties were working on a 40-year lease agreement that included no rent for the first 10 years and $1.5 million per year for the second 10 years, with 2% annual bumps after that.

To finance the project Tesla was planning to use a $150-million loan guarantee from the US Dept. of Energy and a $150-million private capital round led by Goldman Sachs. In addition, the state of California was essentially going to waive the sales tax on $100 million worth of equipment for Tesla. In return, Tesla was to construct the campus with LEED-Gold certification as its goal. Construction of the campus was expected to generate 600 jobs and $40 million in wages. Permanent jobs at the campus were expected to total 1,000 and have an annual payroll in excess of $100 million.

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