The in-house designed '2170' cells will be used in the Model 3 and Tesla's standalone energy storage systems.

Tesla's massive Gigafactory has finally begun building batteries in volume quantities.The company co-developed a new cylindrical battery via a collaboration with Panasonic. The '2170' cell will serve the same purpose as the versatile '18650' batteries that can be found in the Model S and Model X. Each cell is slightly longer and with a larger diameter, helping achieve a higher energy density and lower production costs.

The 2170 batteries will initially be used to build Tesla's standalone energy storage systems, including the Powerwall 2 and Powerpack 2, before the company begins producing the Model 3 sedan.

The company hopes to build around 35 GWh of cells annually by 2018, representing "nearly as much as the rest of the entire world's battery production combined."

The factory floor is still under construction, finishing sections in phases to refine and streamline operational techniques as both partners attempt to further reduce production costs. The current structure has a footprint of 1.9 million square feet, with 4.9 million square feet of operational space stacked on multiple floors.

"And we are still less than 30 percent done," Tesla said in a statement. "Once complete, we expect the Gigafactory to be the biggest building in the world."

The Gigafactory is expected to eventually employ 6,500 people and indirectly create up to 30,000 additional jobs in surrounding regions.