The San Jose (Calif.) City Council has unanimously approved Tesla Motors’ new electric car manufacturing plant. The plant will produce the $60,000 electric sedan that the 5-year-old company currently has in development.

Tesla plans to move the company’s headquarters to the new site as well, which will ultimately employ about 1,000 people when it opens in 2010.

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Last month, we learned that San Jose had been selected for the much sought after new plant, but the company still needed final approval from the San Jose City Council; a mere formality considering how hard city officials lobbied for it. Mayor Reed personally appealed to Tesla officials to locate their proposed $129 million, 600,000-square-foot manufacturing plant in his city.The city has set a goal of adding 25,000 green tech jobs in 15 years.

“It’s a road map for us becoming the center for clean-tech innovation,” Mayor Chuck Reed said in the San Jose Mercury News. “Although we’re a long way from the end of the road in this incremental plan, we’re making solid progress,” added Reed.

Under the sweetheart deal, Tesla would build the plant on public land by the city’s water pollution control plant. The company would pay no rent for the first 10 years, then pay $1.5 million annually for the following 10 years, with a 2 percent to 3 percent cost-of-living increase triggering after twenty years.

The city estimates that the project will have a regional economic impact of $2 billion per year, coming from a combination of tax revenue and spending by Tesla employees.

Image credit: Robert Scoble via flickr under a Creative Commons License