Tesla plans to unveil the proposed project next week, which would produce the vehicle's high-capacity electric battery at a still-undisclosed location.
Craig Irwin, analyst with Wedbush Securities, told CNNMoney the plant would be "the future of the company."
"They need to cut the cost of the battery in half in order to make a half-million cars," Irwin said. "This is how they are going to do it."
Tesla currently sources its lithium batteries from Panasonic. Tesla founder Elon Musk last year said the proposed plant would match the output of Panasonic and all other lithium-battery producers combined, CNNMoney said.
The cost and location of the plant have not been disclosed, but it is believed the site is somewhere in the southwestern United States.