Tesla has started mass production of lithium-ion battery cells at its new Gigafactory. The company is running the production facility in collaboration with Panasonic Corp. The cells would be used in various Tesla energy storage products. The announcement was made on Wednesday through a blog post.

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Tesla said that its new cells are cylindrical in share and are high performance. The company said that its custom built 2170 cells will later be used for the Model 3 as well. This application is expected to begin in the second quarter of this year.

The electric vehicle company noted that "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." Tesla expects the factory to ultimately produce 150 GWh worth of batteries. This quantity will be able to power nearly 1.5 million cars.

The company is taking a graduated approach to the production at the factory. This will allow Tesla to learn and modify its techniques accordingly.

Tesla is striving to keep up the production level while trying to lower the cost of storing energy. The company's latest factory is spread over 1.9 million square feet. Its operational area of nearly 4.9 million square feet is spread over several floors.

The company said that the facility is only 30 percent complete. Once completed, it is expected to be the biggest building in the world. Tesla is looking to achieve economies of scale with its new production unit as the company will be able to use automated and optimized processes to manufacture the batteries.

Tesla said that it would also save on shipping costs by building batteries in the US instead of Asia. The plant is expected to generate 6,500 new jobs directly. It may also create up to 20,000 to 30,000 jobs in the nearby areas.