Tesla Motors Inc (NASDAQ:TSLA) confirmed that it will build electric motors and transmissions for its mass-market Model 3 sedan at the Gigafactory in Nevada.

On Tuesday night, Gov. Brian Sandoval said that the automaker will spend $350 million to make the electric motors and gearbox components at the factory, where it is currently producing lithium-ion batteries, Fortune reported.

The investment will create 550 new jobs at the factory, Sandoval said during his State of the State speech. The governor thanked Tesla for “doubling down” on its commitment in Nevada, and added that the carmaker had already provided economic growth in the area.

Tesla agreed to produce 6,500 jobs at the factory as part of a nearly $1.4 billion tax incentives package it received from the state.

Right now, the electric car maker has about 1,000 full-time workers at the factory. There are an additional 2,000 construction workers at the site.

Tesla will start producing the Model 3 later this year. The company will use its facility in Fremont California, to assemble the car.

Tesla Gigafactory

Located in Tahoe-Reno Industrial Center, the $5-billion Gigafactory is a joint venture between Tesla and Panasonic.

Early January, the carmaker started mass-producing lithium-ion battery cells at the factory. It will start producing battery cells for its $35,000 Model 3 sedan in the second quarter of 2017, The Verge reported.

When completed, the Gigafactory will be as large as 107 NFL football fields, offering more than 10 million square feet of operational space.

Talking about the Gigafactory, Musk last July said that “we consider [the factory] to be a product. The factory itself is the machine that builds the machine. It actually deserves more attention from creative problem solving engineers than the product that it makes.”

Tesla intends to build 500,000 cars a year by 2018. Last year, the automaker was unable to achieve its target of 80,000. It shipped 6,230 cars in 2016.