Tesla began constructing its Gigafactory in 2014, and says that to reach its end-of-2018 goal, it would require the factory's output to equal what is produced worldwide today. That's a lot of batteries and a big bet on the future of cars.

According to Ben Kallo, an analyst at Baird, the Gigafactory bet is paying off though, and Tesla's battery-producing Gigafactory is "on track" to hit its production targets for the year.

The Gigafactory is in the process of ramping up its production to meet the huge demand for Tesla's Model 3. Right now, the factory is only 30-35% complete, according to Kallo's estimates. The company hopes to produce 50 gigawatt hours worth of batteries in 2018, which would be the rough equivalent of 1 million 50 kilowatt hour batteries which power the entry-level Model 3.

"Activity at the Gigafactory has increased since our tour in January, and we believe cost reduction and capacity expansion efforts are on track," Kallo said in a note to clients. "Tesla will continue to have a battery cost advantage over competitors given its scale of production [of the Gigafactory] in Nevada."

By the end of the year, Tesla has said it hopes to be producing 20,000 vehicles a month and has backorders of around 500,000 for the Model 3. Ordering a Model 3 today comes with an expected delivery date well into 2018.

The company recently set a date for the launch of its new semi-truck. The vehicle is expected to be more suitable for regional trucking and is expected to have a range of about 200-300 miles, though details about the battery are unknown.

Tesla is trading 1.80% higher after Kallo's note, at about $386.39. Kallo calls Tesla a buy with a price target of $411.

Tesla is up 80.06% this year.

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