Dive Brief:

• Tesla has kicked off the new year by announcing mass production of battery cells at its Nevada Gigafactory, a milestone for the long-heralded production center and a necessary achievement for the company's planned transformation, the Los Angeles Times reports. 
• Production began yesterday on cells that will be used in Tesla’s Powerwall 2 and Powerpack 2 energy products, and the company said cells for its Model 3 cars will begin production in the second quarter.
• By next year, the Gigafactory plans to produce 35 GWh/year of lithium-ion battery cells. According to Tesla, that's almost as much as the rest of the entire world’s battery production combined.

Dive Insight:

Production on some battery cells began last year, but Tesla's announcement that the Gigafactory is in mass production is a milestone for the company.  The facility is still years from being fully completed, however, as it is being constructed in stages.

But beginning mass production on batteries is expected to help Tesla reduce the price of its products.

"With the Gigafactory online and ramping up production, our cost of battery cells will significantly decline due to increasing automation and process design," the company said in a blog post. Additionally, higher production and lower capital investment per watt-hour of production will result from "the simple optimization of locating most manufacturing processes under one roof, and economies of scale."

When fully complete, Tesla said the Gigafactory could be the biggest building in the world. It is now about 30% complete, with a footprint of 1.9 million square feet. This year, the factory will directly employ about 6,500.

In September, a storage deal with Southern California Edison pushed Tesla to ramp up production at its partially-completed Gigafactory, to provide a 20 MW (80 MWh) battery storage system for an SCE substation.

Tesla is using its battery production capabilities to rollout new and cheaper electric cars and energy systems as well. Last year, the company acquired the largest solar installer in the United States, SolarCity, in a $2.6 billion deal. The expanded company will be able to offer an integrated solar roof and battery system to residential customers.