The city of Tucson recently submitted a formal proposal to become the headquarters for the 10 million-square-foot plant, the Arizona Daily Star reported (http://bit.ly/1n9qIEq).
Mayor Jonathan Rothschild said the proposal highlights land within the city that has access to the Union Pacific mainline and the major interstates.
"We are the home to the Mars exploratory mission at the University of Arizona and known nationally as the Solar City," Rothschild said. "I think Tesla will feel right at home in Tucson."
The city is also offering tax incentives on top of any offered by the Arizona Commerce Authority.
Mesa Mayor Scott Smith, a Republican running for governor, said he extended an invitation to Tesla CEO Elon Musk to come visit Arizona.
In an email from his campaign, Smith said the move would complement the state's "aggressive push" to make manufacturing a growing part of the economy.
The company, based in Palo Alto, Calif., is also considering sites in Nevada, New Mexico and Texas.
The proposal marks the first time officials in Arizona have spoken about being in the running.
The factory would supply lithium-ion batteries to Tesla's Fremont, Calif., assembly plant.
Tesla says it will invest $2 billion in the 10 million square foot factory, which will cost between $4 billion and $5 billion. Its partners will invest the rest.
Japan's Panasonic Corp., expected to be among the investors, signed a deal last fall to supply Tesla with 2 billion battery cells over the next four years. But Tesla has fretted that current battery supplies won't meet its future demands.
The new factory will provide enough batteries to supply 500,000 vehicles by 2020, Tesla said. Tesla expects to produce 35,000 vehicles this year.
Tesla currently sells just one vehicle, the Model S sedan, which starts around $70,000. But it plans to begin making a crossover, the Model X, later this year, and wants to bring a lower cost, mass market vehicle to market in 2017. Tesla said the factory would help lower its battery costs by around 30 percent.