Tesla Motors will lease an approximately 350,000-square-foot building on a 23-acre parcel in Palo Alto. The facility will supply all-electric powertrain systems to Tesla Motors’ vehicles and other automakers, “greatly accelerating the availability of mass-market [electric vehicles],” according to the company.

The company added that it will move its corporate headquarters from San Carlos to the Palo Alto site later this year. Approximately 350 employees will work in Palo Alto initially, with space for up to 650 people at the facility, the company said.

“Tesla’s lease of this facility is a creative, adaptive reuse and modernization of a manufacturing facility formerly occupied by Hewlett-Packard and Agilent Technologies,” the company said. “The three-building complex is minutes away from Stanford’s main campus and from the garage in Palo Alto where Bill Hewlett and Dave Packard built their original audio oscillator.”

Tesla CEO and Product Architect Elon Musk noted that “Silicon Valley and the Stanford Research Park are synonymous with innovation and entrepreneurship.”

“It’s an ideal place for a new car company trying to rethink many aspects of the traditional automotive business,” Musk said.

Tesla said it will renovate the facility “to the highest environmental standards, incorporating sustainable building practices certified by the Leadership in Energy and Environmental Design program.” Construction is expected to begin in early fall.

Financing will come in part from loans from the U.S. Department of Energy. Last month, Tesla received approval for nearly $465 million in low-interest loans to accelerate the production of affordable, fuel-efficient electric vehicles. The loans are part of the Advanced Technology Vehicle Manufacturing Program, which provides incentives to new and established automakers to build more fuel-efficient vehicles.

“Tesla is rapidly recruiting new employees, and this fabulous working environment and proximity to Stanford University will give us excellent access to top engineering talent,” said JB Straubel, Tesla’s chief technology officer and leader of the powertrain group. Straubel received a bachelor’s degree in energy systems engineering and a master’s in energy engineering, both from Stanford.

Tesla noted it is in site negotiations for an assembly plant for the all-electric Model S. The sedan will be produced at a separate assembly plant in California, not at the Palo Alto site, according to the company.

Tesla, which achieved overall corporate profitability last month, has delivered nearly 700 Roadsters to customers so far.