Tesla May Build Its Own Battery Factory

Tesla Motors Inc. CEO Elon Musk says he wants to erect the world's largest lithium-ion battery factory to ensure a supply of the cells for electric vehicle production.

Tight supply of battery cells has limited how aggressively the Palo Alto, Calif.-based EV maker can market its vehicles, Musk tells analysts. Tesla has had to limit deliveries of its Model S sedan in North America to meet demand in Europe, he says.

Tesla's primary battery supplier, Panasonic Corp., has agreed to triple its supply of lithium-ion cells to 1.8 billion during the next four years. Tesla last month was in talks with Samsung SDI Co. Ltd. as a possible second battery cell provider.

Musk says the new factory likely will be built in North America and may handle the entire production process from raw materials to fully assembled battery packs ready for installation.

Tesla says production of Models S sedans at its factory in California now averages 550 units per week. The company delivered more than 5,500 of the EVs in the third quarter, including 1,000 units in Europe. Deliveries in China are expected to begin in the first quarter of 2014.

Tesla forecasts sales of nearly 6,000 Model S vehicles in the fourth quarter, which would boost the company's full-year sales to 21,500 units worldwide.