San Jose managed to strike a deal with electric car maker Tesla, which is going to build its new factory in the area, creating more than 1,000 new jobs for the city's population. The total amount of money involved in the partnership is $250 million and in order to win such a contract, the city's officials had to convince Tesla's representatives that they are better than all the other contenders.

"This is a big step toward being the centre of world cleantech innovation," said San Jose Mayor Chuck Reed. "This is the next step in transportation. Shifting from petroleum to electric vehicles will make a huge change to how the world moves and we are excited to be part of that happening," he added.

The new factory will produce a new all-electric luxury sedan, named Model S, which will retail for $60,000. What makes this car special is its capacity to travel close to 240 miles (390 km) on a single battery charge. Tesla’s boss Ze'ev Drori, who is also the co-founder of PayPal, stated that the time has come for the electric car, as the high gas prices have accelerated the demand for such a vehicle, which will put an end to the dependency on foreign oil.

Mr. Drori explained that his initial plan was to keep the manufacturing process in California, which is the place where the company has been based since its debut in 2003.

Even though California forwarded a $100 million financing package, San Jose's offer included the land for the factory, making it impossible to pass on. The 90-acre plot has been leased for a period of 40 years, with the first 10 free of charge. Mayor Reed explained that if they decided to demand the costs for the land, it would have brought an additional gain of about $50 million, but this was the only way that they could have been certain of the negotiation's success and as an additional explanation, the land was not used anyway.

The city's officials hope that the partnership will be regarded as a vote of confidence in San Jose and over the years it will lead to many more investments from many other companies. The city is looking to attract all sorts of new businesses, offering locations, its expertise for certain tests and studies that must be made before the actual build and also the much needed man-power.

The car maker's officials expressed their hopes that the first cars will be available by 2010, with an initial production plan of 15,000 vehicles, half of which will be sent to the European market.

Some believe that its rather steep price tag will disarm the general public, which has an alternative with GM's new Volt that sells for $35,000. It is very likely to come across various new such offers over the next few years as the gas prices keep rising and people become more and more aware of the global environmental issues.

Tesla’s activities are backed up by many, including Jeff Skoll, eBay Inc.’s former president and the co-founders of Google Inc.

Earlier this month, Tesla Motors has selected BorgWarner Inc. for the production of a single-speed gearbox for the Tesla Roadster and is initiating a ramped-up production rate. So far, 27 customers have taken delivery of Roadsters.

Tesla engineers developed the specifications for the new gearbox and provided them to BorgWarner. The new gearbox is an integral part of an enhanced powertrain with significant performance and efficiency improvements. The new powertrain delivers about 30% higher motor torque on a single gear ratio, and it achieves a 10% higher EPA combined range.

Tesla Motors starts production of 10 new Roadsters each week. Customers typically take delivery four to six weeks after production begins. The company expects production starts to ramp up to at least 20 vehicles per week within a few months and 40 per week by early 2009.