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Tesla's $5 Billion Gigafactory Just Hit a Major Milestone

Elon Musk, CEO of Tesla, with a Powerpack unit.

Tesla has started mass producing lithium-ion battery cells at its massive $5 billion factory in Nevada, marking a milestone for the company as it transitions from automaker to sustainable energy company.

Tesla announced in a blog post Wednesday that its 2170 cell, a cylindrical battery designed and engineered with Panasonic, is officially in production. The batteries produced over the next several months will be used in Tesla’s energy storage products, the Powerwall 2 and Powerpack. The Powerwall 2 is a battery for homes designed to store energy generated by solar panels.

In the second quarter, the so-called gigafactory will start making battery cells for its $35,000 Model 3 sedan. Production of the Model 3 is expected to begin in mid-2017.

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Tesla tsla claims by 2018 the factory will produce 35 gigawatt-hours a year of lithium-ion battery cells, almost as much as the rest of the world’s battery production combined.

That price decrease is essential for CEO Elon Musk to make a mass-market electric car 50% cheaper than its luxury Model S.

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