Updated: Tesla revvs up: battery & drive train to Bay Area

Tesla secures $465 million in federal loans and plans to open a manufacturing plant for batteries and drive trains in the Bay Area.

"It was either live or die," said Jim Hossack, an analyst with the AutoPacific consultancy in Tustin who called Tuesday's announcement "a turning point for the industry, just as big or bigger than Tesla's deal with Daimler. That gave them credibility and technical resources, and this government support is vital to them as well."

In fact, Tesla's strategic partnership with Daimler was a key factor in the Energy Department's decision to lend it money. In a statement, Energy Secretary Steven Chu applauded Tesla's focus on accelerating "production of fuel-efficient vehicles in America. These investments will come back to our country many times over, by creating new jobs, reducing our dependence on oil, and reducing our greenhouse gas emissions."

Having the batteries in the Bay Area is the coup. San Jose may have lost the manufacturing plant for the Model S but the batteries are the most critical innovation by Tesla. Not only are they likely to power Daimler's but it seems very possible that they will proliferate beyond. It may well end up that Tesla will ultimately become known more for their batteries than their cars.

Update: and as a sign of the times, Tesla's market capitalization puts it at half GM's value. Not bad for a company that's only sold about 1,000 cars.