Electric car maker Tesla Motors Inc (TSLA.O) has started mass production of lithium-ion battery cells at its gigafactory in Nevada along with Japan's Panasonic Corp, the company said on Wednesday.

The cylindrical "2170 cells", which will be used to power Tesla's energy storage products and the new Model 3 sedan, have been jointly designed by Tesla and Panasonic, its longstanding battery partner.

The gigafactory will initially produce battery cells for the company's Powerwall 2 and Powerpack 2 energy products, Tesla said.

The production of cells for Tesla's first mass-market car, the Model 3, is expected to begin in the second quarter.

The company said the gigafactory will produce 35 gigawatt-hours per year of lithium-ion battery cells by 2018.

At peak production, the gigafactory is expected to employ 6,500 workers and create between 20,000 and 30,000 additional jobs in the surrounding regions, Tesla said.