Note 7 – Property, Plant and Equipment, Net

Our property, plant and equipment, net, consisted of the following (in millions):

Construction in progress is primarily comprised of equipment and tooling related to the manufacturing of our products and Gigafactory Shanghai expansion. Completed assets are transferred to their respective asset classes, and depreciation begins when an asset is ready for its intended use. Interest on outstanding debt is capitalized during periods of significant capital asset construction and amortized over the useful lives of the related assets. During the three months ended March 31, 2020 and 2019, we capitalized $10 million and $8 million, respectively, of interest.

Depreciation expense during the three months ended March 31, 2020 and 2019 was $371 million and $299 million, respectively. Gross property plant and equipment under finance leases as of March 31, 2020 and December 31, 2019 was $2.10 billion and $2.08 billion, respectively, with accumulated depreciation of $557 million and $483 million, respectively.

Panasonic has partnered with us on Gigafactory Nevada with investments in the production equipment that it uses to manufacture and supply us with battery cells. Under our arrangement with Panasonic, we plan to purchase the full output from their production equipment at negotiated prices. As the terms of the arrangement convey a finance lease under ASC 842, Leases, we account for their production equipment as leased assets when production commences. This results in us recording the cost of their production equipment within property, plant and equipment, net, on the consolidated balance sheets with a corresponding liability recorded to debt and finance leases. As of March 31, 2020 and December 31, 2019, we had cumulatively capitalized costs of $1.75 billion and $1.73 billion, respectively, on the consolidated balance sheets in relation to the production equipment under our Panasonic arrangement.