Tesla Faces Lawsuit Over Aborted New Mexico Plant

California EV-maker Tesla Motors is being sued by a developer for failing to follow through on its plan to build a Model S factory in New Mexico.

The developer is suing Tesla for fraud, breach of contract, negligence, and negotiating in bad faith, according to GreenCarReports.com.

Rio Real Estate Investment Opportunities claims it entered an agreement with Tesla in 2007 to build a brand new factory in New Mexico. According to the developer, Tesla would then lease the building for $1.35 million a year for ten years, plus a 2 percent annual price increase. In early 2008, the deal was introduced to the public when New Mexico Governor Bill Richardson announced that the state would be the host to manufacturing of the electric Model S.

But just months later, Tesla decided to manufacture the Model S in its home state of California. The Fremont, Calif. factory, formerly the NUMMI auto plant, was named the new site due to many advantages it presents. The fully-completed factory, which also came with all the necessary machinery, was sold to Tesla at a bargain price of $59 million.

Rio Real Estate, however, says that Tesla’s change of heart caused financial damage to its company. The developer group claims it spent money on obtaining government permits, conducting environmental reports, and creating designs for the site after signing the contract with Tesla in 2007.

Tesla, as of yet, has no comment on the matter. The initial hearing will be held Sept. 18 in Albuquerque, New Mexico.

Take a look at the Tesla Roadster or find more information about the new Model S.

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