Tesla Motors Inc (NASDAQ:TSLA) has received yet another proposal. The City of Tucson confirmed Sunday that they have made a formal proposal for Tesla Motors to consider the city for its massive $5 billion gigafactory. The plant would require about 1,000 acres of land, and it is expected to create 6,500 new jobs. The plant will be producing lithium-ion batteries for electric vehicles.

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Will Arizona be the home to Tesla gigafactory?

According to the Arizona Daily Star, Jonathan Rothschild, mayor of Tucson, told Tesla Motors Inc (NASDAQ:TSLA) that he has identified land within the city that will have access to major interstates and the Union Pacific main line. Rothschild said Tucson is the home to Mars exploratory mission, and is known as the Solar City. He believes the Elon Musk-led company will feel at home in the city. Moreover, Rothschild said the city of Tucson will also be offering tax incentives to add to whatever incentives are offered by the Arizona Commerce Authority.

Last week, Mesa Mayor Scott Smith invited Tesla Motors Inc (NASDAQ:TSLA) founder Elon Musk to personally visit Arizona to see the promising business environment Arizona offers. Smith highlighted the state’s business-friendly tax structure, skilled workforce and quality education. The Palo Alto, California-based company is also considering New Mexico, Nevada and Texas for its gigafactory. Experts believe that Nevada may win the race because of its proximity to Fremont, where Tesla manufactures its cars.

Tesla’s gigafactory to start operations in 2017

Tesla Motors Inc (NASDAQ:TSLA) recently raised $2 billion in a convertible notes offering that it will invest directly in the new plant. The remaining $2-$3 billion will come from its partners. The new factory is estimated to start production in 2017, and will produce enough lithium-ion batteries to power 500K cars per year. Last year, the company signed a deal with Japan’s Panasonic Corporation (NYSE:PC) (TYO:6752) to supply two billion battery cells over the next four years. But the current level of battery supply won’t meet its future demands.

Tesla Motors Inc (NASDAQ:TSLA) shares fell 3.71% to $237.21 at 9:58 AM EST.