Tesla Ramps Up Battery Production at Nevada Gigafactory

Tesla Motors Inc. and partner Panasonic Corp. officially launched mass production today of lithium-ion battery cells at their “gigafactory” plant near Reno, Nev.

The facility began pilot production last March. In the short term, the complex will use its output to make Tesla’s Powerwall 2 home battery backup system. The Powerwall system, which was unveiled more than a year ago, was supposed to go on sale last summer. Tesla says it will begin shipping the modules at the end of January.

The factory is building cylindrical "2170" cells co-designed by Tesla and Panasonic. The companies claim the batteries provide the best performance at the lowest production cost for EVs and energy products.

Production of cells for Tesla's $35,000 Model 3 electric sedan is due to start in the second quarter. By 2018, the gigafactory is expected to produce 35 GWh per year of lithium-ion battery cells, which Tesla says is nearly as much as the current combined output of the rest of the world.

Tesla is counting on high-volume output to drive battery prices down about 30%. Cheaper batteries will be crucial in enabling the company to earn a profit on the Model 3.

The multi-level plant currently has 4.9 million sq ft of operational space, which Tesla plans to eventually expand to about three times that amount. The company claims the $5 billion facility will be the world's largest building when it is completed. Panasonic plans to eventually invest $1.6 billion in the project.

More than 2,900 people currently work at the facility. By 2018, the Gigafactory will be staffed by 6,500 full-time employees, according to Tesla. The hiring plan would put the facility two years ahead of its original schedule. The companies initially had promised to provide full-time jobs to 4,000 local residents by 2019 and 6,500 jobs by 2020.