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Tesla Motors (TSLA) Gigafactory Begins Building Batteries for Model 3 and Energy Storage

Tesla Model 3 (TSLA)

Tesla Motors Inc (NASDAQ:TSLA) has started battery cell production at its Nevada Gigafactory. The solar firm announced in a blog post on Wednesday that it has started mass production of lithium-ion battery cells at its gigafactory. Tesla will be working with Panasonic Corp on the production efforts.

Tesla Gigafactory Starts Battery Cell Production

By 2018, Tesla will have produced 35 gigawatt-hours per year of lithium-ion battery cells. It all begins on Wednesday.

Tesla will start creating cylindrical 2170 cells. These will be used to power Tesla’s energy storage products and the brand new Model 3 sedan, which have been designed by both Tesla and Panasonic. The Japanese electronics company has been a dedicated battery partner with Tesla.

“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,” Tesla wrote. “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 gigafactory in Nevada will at first manufacture battery cells for its Powerwall 2 and Powerpack 2 energy products. In the second quarter of 2017, the production of cells for the solar company’s first mass-market vehicle will start. Reports suggest that the $35,000 Model 3 will be the most American-made car in the world today, which is something that will certainly please U.S. President-Elect Donald Trump.

“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,” the company explained in a statement.

This is big news not only for the solar market but for also Nevada. It is estimated that the gigafactory will employ 6,500 workers at peak production. It is believed that Tesla will create between 20,000 and 30,000 jobs in the surrounding regions.

Tesla Motors Inc Misses Deliveries Forecast

Tesla made headlines Wednesday not for its battery cell production, but rather missing its deliveries forecast.

Elon Musk, Tesla CEO, said that deliveries missed its initial forecast because of production delays. Ostensibly, the delays in production are harming the growth of Tesla, and provides its first massive hiccup of 2017.

Tesla Motors Inc (TSLA) Gigafactory Model S Battery Pack

The Palo Alto, California-based firm delivered roughly 22,200 cars in the fourth quarter. This falls below the projections of 25,000. The full-year total shows Tesla delivered 76,230 vehicles, which is below the guidance of a minimum of 80,000 units.

“They flipped every switch to get every vehicle delivered in the third quarter,” said Kevin Tynan, an auto analyst with Bloomberg Intelligence. “The fourth quarter is the payback. It feels like the Model 3 can’t get here fast enough because demand for the Model S is softening as it gets deeper into its life cycle.”

The news has some experts questioning if Tesla can come through on its pledge to make 500,000 cars per year by 2018.

Tesla shares tumbled around two percent when the announcement was made on Tuesday. The company’s stock has since recovered as it has surged more than four percent on Wednesday.

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