Tesla Motors Inc. plans to build one of the world's largest factories of any kind in the U.S. But it wouldn't build its electric cars there—it would make the batteries to power them.

The plant, slated for completion by 2020 at a cost of as much as $5 billion, would be able to turn out more lithium-ion batteries than all the battery factories in the world today. Tesla plans to break ground in June, though the site is still uncertain, and expects to start producing batteries at the plant by 2017. It says the scale will help...