For the past year, Tesla has been guiding “by the end of the year” for the start of battery cell production at the Gigafactory. The end of the year has come and gone, but Tesla didn’t confirm the start of production.

As it turns out, Tesla, and its battery partner Panasonic, started production of cells for qualification at the plant in December, but today, it confirmed the start of “mass production” of the new battery cell, which will enable several of Tesla’s new products, including the Model 3.

The new cell (pictured above) is called ‘2170’ because it’s 21mm by 70mm. It’s thicker and taller than the previous cell that Tesla developed with Panasonic, which was in an ‘18650’ cell format.

Tesla CEO Elon Musk has been boasting about the new cell over the past few month. He said that it’s the “highest energy density cell in the world and also the cheapest”.

The automaker confirmed the start of “mass production” with Panasonic in a new press release today. The announcement coincides with an event held for investors at the Gigafactory this morning. Tesla investors will be able to tour the plant and Musk, as well as other executives, will be present for remarks and a Q&A.

Interestingly, Tesla also elaborated on the timeline of the use of the new cells. Unsurprisingly, the first cells produced now will be used for Tesla’s Powerwall 2 and Powerpack 2 energy products, but the company also confirmed that production for “Model 3 cells” will start in Q2 2017 – ahead of the planned volume production of the vehicle.

The new cell is critical to the Model 3 since it is believed to be essential in achieving the promised $35,000 starting price by significantly reducing battery cost. The company explained how it can achieve that with the new cell at the Gigafactory:

With the Gigafactory online and ramping up production, our 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.

Other than that, Tesla didn’t offer much to back up Musk’s claim that the “highest energy density cell in the world and also the cheapest”.

As we recently reported, several other companies are claiming the same title, namely Faraday Future with LG Chem, and Lucid Motors with both Samsun SDI and LG Chem again.

We will be looking for more information about each cell from those companies in order to get a better idea of who is leading in the segment.

While energy density and cost are important factors, availability in volume is also very important for the mass production of EVs and Tesla seems to have a lead here with the Gigafactory.

In a press release about the start of battery cell production, Tesla reaffirmed its plan to ramp up battery production to 35 GWh by 2018 and it emphasized that it will create a lot of job in the US. “6,500 people and indirectly create between 20,000 to 30,000 additional jobs in the surrounding regions”, according to Tesla and Panasonic.

Here’s Tesla’s press release:

Battery Cell Production Begins at the Gigafactory 

Tesla’s mission is to accelerate the world’s transition to sustainable energy through increasingly affordable electric vehicles in addition to renewable energy generation and storage. At the heart of these products are batteries. Today at the Gigafactory, Tesla and Panasonic began 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 the best 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. Our phased approach also allows us to learn and continuously improve our construction and operational techniques as we continue to drive down the cost of energy storage. Already, the current structure has a footprint of 1.9M 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, we expect the Gigafactory to be the biggest building in the world.

With the Gigafactory online and ramping up production, our 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. By bringing down the cost of batteries, we can make our products available to more and more people, allowing us to make the biggest possible impact on transitioning the world to sustainable energy. 

Finally, bringing cell production to the U.S. allows us to create thousands of American jobs. In 2017 alone, Tesla and Panasonic will hire several thousand local employees and at peak production, the Gigafactory will directly employ 6,500 people and indirectly create between 20,000 to 30,000 additional jobs in the surrounding regions.

Featured Image: 2170 cell by Jude Burger at Gigafactory event – July 2016

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