Tesla Motors and Panasonic have signed a deal to build a "Gigafactory," a large plant in the U.S. 

A location for the factory has not been announced yet, but Tesla is currently looking for sites in places like Arizona, Nevada, California, and Texas.

The factory will provide advanced batteries for mass-market electric vehicles, including the 2017 Tesla Model 3, according to the automaker.

The Gigafactory will produce modules, packs, and cells for Tesla's electric vehicles.

"Not only does the Gigafactory enable capacity needed for the Model 3 but it sets the path for a dramatic reduction in the cost of energy storage across a broad range of applications," said JB Straubel, Tesla chief technical officer and co-founder of Tesla Motors, in a statement on July 31.

The Tesla Model 3 will be based on the company's third-generation platform. It is expected to sell for around $35,000, or half the current price of the Tesla Model S.

The Model 3 is expected to compete with the BMW 3 Series.

"The Gigafactory is being created to enable a continuous reduction in the cost of long-range battery packs in parallel with manufacturing at the volumes required to enable Tesla to meet its goal of advancing mass-market electric vehicles," the two companies said in a joint statement.

Tesla expects to hire 6,500 people by 2020 for its Gigafactory.

The plant could cost the automaker as much as $5 billion to build.

Shoppers should be excited about the news since the factory will provide cheaper alternatives and more choices.

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