Today at the Gigafactory, Tesla and Panasonic begin mass production of lithium-ion battery cells, which will be used in Tesla’s energy storage products and Model 3.

The high performance cylindrical "2170 cell" was jointly designed and engineered by Tesla and Panasonic to offer performance at the lowest production cost in an optimal form factor for both electric vehicles and energy products.

Production of 2170 cells for qualification started in December and today, production begins on cells that will be used in Tesla’s Powerwall 2 and Powerpack 2 energy products. Model 3 cell production will follow in Q2 and by 2018, the Gigafactory will produce 35 GWh/year of lithium-ion battery cells, nearly as much as the rest of the entire world’s battery production combined.

The Gigafactory is being built in phases so that Tesla, Panasonic, and other partners can begin manufacturing immediately inside the finished sections and continue to expand thereafter. Already, the current structure has a footprint of 1.9 million square feet, which houses 4.9 million square feet of operational space across several floors. And we are still less than 30 percent done. Once complete, Tesla expects the Gigafactory to be the biggest building in the world.

With the Gigafactory online and ramping up production, the cost of battery cells will significantly decline due to increasing automation and process design to enhance yield, lowered capital investment per Wh of production, the simple optimization of locating most manufacturing processes under one roof, and economies of scale.