Thirty months after the first shovel hit the Nevada dirt, Tesla’s massive Nevada Gigafactory is churning out batteries, the company said in a blog post. The carmaker, along with its main battery production partner Panasonic, are building custom-developed “2170” battery cells (named after the dimensions of each battery) that will be installed in battery packs for all Tesla’s products, including the Model S, Model X, and upcoming Model 3.

Initially, cells produced at the Gigafactory will be used in Tesla’s new stationary energy storage products, the Powerwall 2 and Powerpack 2, with production of Model 3 cells beginning later this year. Tesla says that in 2018, the facility will produce 35 gigawatt hours per year of lithium-ion battery cells, enough to build batteries for 500,000 Model 3s. Eventually the plan is to build 150 GWh worth of batteries, enough for 1.5 million cars.

The factory is being built in phases, and has nearly doubled in size since we took a tour back in July. It will continue to grow, with the company aggressively building out the structure. The facility totals 4.9 million square feet of operational space across several floors currently, and it’s only 30 percent complete.

The biggest benefit of the gigafactory is taking advantage of mass production to reduce the price of batteries. Once complete, Tesla says the factory will produce something close to the total battery production of the entire battery industry in 2013 every year. Automated processes and optimization, combined with Tesla’s massive economies of scale should drive down the cost of each individual cell significantly. Without these optimizations, it might not be possible for Tesla to sell its Model 3 starting at $35,000. Tesla will also saving on shipping costs because the batteries will be built in America, near Tesla’s California factory, rather than in Asia.

The plant will also create American manufacturing jobs, a hot political topic these days. Tesla says the Gigafactory will eventually directly employ 6,500 people and create 20,000 to 30,000 jobs in the surrounding area.