Tesla and Panasonic have started mass production of lithium-ion battery cells at their Gigafactory being built in the Nevada desert, with the initial output to be used in Tesla’s second-generation Powerwall and Powerpack battery devices.

The Gigafactory, set to become the world’s largest building, is on track to be turning out battery cells for Tesla’s upcoming Model 3 electric vehicle (EV) by the second quarter of 2017, Tesla confirmed Wednesday. By next year the plant is expected to be kicking out 35GWh of battery cells each year, nearly as much as the rest of the world’s battery factories put together.

A successful ramp-up at the Gigafactory over the next 18 months is critical both to Tesla’s ability to meet its stretching targets for EV deliveries as well as its expanding ambitions as an clean energy company—ambitions that took a giant leap forward through its late-2016 acquisition of US rooftop installer SolarCity for $2.1bn.

Earlier this week Tesla confirmed it delivered around 76,000 EVs in 2016, slightly below its 80,000 guidance, and the company is targeting 500,000 EV deliveries in 2018. Analysts believe Tesla must stay more or less on track with its EV production schedule, or risk a heavy share sell-off.

Tesla shares rose more than 4% on Wednesday’s Gigafacotry announcement, and are up more than 20% since shareholders overwhelmingly approved its SolarCity acquisition in November.

Helmed by clean-tech impresario Elon Musk, Tesla launched into the stationary storage business in 2015 with its Powerwall and Powerpack systems, aimed at the behind-the-meter and grid-scale storage markets respectively. In late 2016 Tesla unveiled the second generation of its battery devices, which can be charged through an on-site solar system or simply by drawing power from the grid.

By buying SolarCity, and then unveiling its groundbreaking solar roof tiles in late 2016, Tesla is looking to disrupt the power industry by assembling product ecosystem encompassing EVs, rooftop solar and on-site batteries, all to be sold at the same retail stores and installed by the same teams, and each to fuel demand for the others.

Tesla has partnered with Japan’s Panasonic at the Gigafactory, and recently announced that Panasonic will effectively take control of SolarCity’s under-construction “solar Gigafactory” in upstate New York, where it will manufacture standard solar panels as well as its solar roof tiles. The New York factory will blend high-efficiency PV technologies owned by SolarCity and Panasonic.

SolarCity installed around 900MW of distributed PV in 2016, and like Tesla has been expanding its presence in the grid-scale power market. SolarCity is active in the US and Mexico today, and Tesla intends to take its renewables products and services global.

Tesla and Panasonic say they will hire “several thousand” people at the Gigafactory in 2017, reaching 6,500 direct employees when the plant hits full output.

Following Tesla’s recent purchase of German automation company Grohmann Engineering, Musk revealed the company intends to build a second Gigafactory for batteries in Europe in the coming years.

Solar

Tesla begins turning out battery cells at Gigafactory