Tesla Motors has begun mass producing lithium ion batteries at its $5 billion factory in Nevada, company officials said Wednesday.
The Gigafactory will initially produce battery cells for Tesla’s Powerwall 2 and Powerpack 2 products, Tesla officials said. The cells will be used to power Tesla’s electricity storage products and its Model 3.
It is expected to employ more than 6,500 workers and create between 20,000 and 30,000 additional jobs in the surrounding regions, according to the company. Tesla received $1.4 billion in taxpayer support from Nevada in 2014 to build the factory.
Panasonic is also forking over $1.6 billion to cover the cost of the Gigafactory. The company’s CEO Joe Taylor told reporters in August that he is concerned the company won’t be able to scrounge up enough well-qualified workers to produce the highly voluble lithium batteries.
The building’s skeletal structure is less than one-sixth the size of what the final building is expected to occupy. Most of the building’s exterior walls are temporary. Though the factory is set to house 1.9 million square feet of floor space, the company has a long way to go to meet demand for the much-talked about Model 3.
Lithium ion battery production is crucial if Tesla plans on achieving its goal of selling 500,000 Model 3s by 2018. Current market prices are too high for the $35,000 car to be profitable, putting added pressure on the company to begin mass producing batteries.
The Gigafactory project was introduced to help drive down costs, and demand would arrive just in time to keep it all afloat.
There are signs that Tesla could be feeling the heat, though, as the company’s deliveries fell to about 22,200 vehicles in the fourth quarter from 24,500 vehicles in the preceding quarter. There were 76,230 deliveries in 2016, falling short of the company’s projected 80,000 to 90,000.
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