GM [GM] may have stolen the future-car spotlight this week by unveiling the final production version of its Volt hybrid vehicle, but in the background, luxury electric car maker Tesla was scaling up. The company announced yesterday that it will construct a major factory in San Jose, a city which has been lately trying to reposition itself as a home for green businesses. The factory will cost $250 million and employ 1,000 local employees.

The Tesla Roadster, which sells for $109,000, will still be made in England, but the company plans on producing more practical and economical sedan models that will be built domestically. The Roadster was designed by Tesla in California, but is based on a Lotus frame.

Tesla reportedly had serious incentive to move to San Jose, thanks to an extensive courtship on the behalf of Mayor Chuck Reed, who gave Tesla almost 90 acres of city land rent-free for a decade. After that ten-year period, the rent will be $1.5 million per annum. The factory will reportedly bring about $2 billion of business to San Jose's economy.