While we already knew that Tesla was installing drive unit production lines at the Gigafactory, which was originally only supposed to produce battery packs, after the company’s Vice-President of Engineering for Drive Systems got involved in the manufacturing at the plant and posted new jobs for the effort, Tesla officially confirmed last night that Model 3 drive unit production will happen in Nevada and revealed a few new details.

The news was actually announced by Nevada Governor Brian Sandoval during the State of the State Address last night and Tesla confirmed it later.

Gov Sandoval praised the Gigafactory project for the economic growth it created in the state before announcing that he had more economic news about the project.

He said that Model 3 production “has filled” the Fremont factory in California and therefore, the automaker decided to move the drive unit production for the upcoming new vehicle at the Gigafactory in Nevada:

Tonight, I’m pleased to announce that Tesla will expand its investment in Nevada by producing the electric motors and gear boxes for the Model 3 at the Gigafactory.

It represents an additional $350 million investment and 550 more jobs.

Tesla CTO JB Straubel was present at the address and received a standing ovation after Gov Sandoval made the announcement.

The news follows the announcement that Tesla and Panasonic started battery cell production at the Gigafactory earlier this month. The company will now be manufacturing both the third generation battery pack and the drive unit of the Model 3 at the plant in Nevada before shipping them to Fremont, California, to be installed in the vehicle’s chassis.

Tesla is also currently ramping up the production of the second generation of Tesla Energy products, Powerwall 2 and Powerpack 2, at the Gigafactory.

The 550 new jobs will add to the already 1,000 full-time workers at the factory (without accounting for Panasonic employees and construction workers) and will add toward Tesla’s requirement of 6,500 employees at the plant – though it could be closer to 10,000 based on the company’s latest estimates following a planned increase in capacity from 50 GWh to 150 GWh to support its anticipated grow through 2020.

Model 3 battery pack production is expected to start during the second quarter at the Gigafactory and Tesla aims for overal production to start during the second half of the year in Fremont, California.

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