Tesla Inc. has announced plans to build a new battery factory in Shanghai, further investing in China despite brewing tensions between the US and Beijing. The company, led by Elon Musk, will produce its Megapack large-scale energy-storage unit in the new facility, supplementing its existing electric vehicle factory in Shanghai. The announcement was made during a signing ceremony for the project in Shanghai, attended by Tom Zhu, Tesla’s senior vice president of automotive, and Shanghai government officials, including vice mayor Wu Qing. The plant is scheduled to begin construction in Q3 of this year, with production commencing in Q2 of 2024.
Tesla’s increased investment in China comes as other companies, such as Airbus SE, are also announcing plans to deepen their production capacity in the country. French aeroplane manufacturer, Airbus SE, has signed a deal to add a second final assembly line for A320 narrow-bodies at its existing factory in Tianjin.
The Megapack is a massive battery designed to stabilize energy grids. Tesla states that each unit can store enough energy to power 3,600 homes for one hour. Initially, the new factory will produce 10,000 megapacks yearly, equivalent to around 40 GWh of energy storage, and the products will be sold globally.
Tesla’s existing car factory in Shanghai produced almost 711,000 cars last year, 52% of its worldwide output. China is an essential market for Tesla, particularly as the home of the rising global electric vehicle star BYD Co. The company received assistance from Shanghai government officials to resume production promptly following pandemic-related disruptions.
The Megapack battery factory will begin construction during heightened tensions between the US and China. Concerns have been raised over Tesla’s connections to Musk’s internet-from-space initiative, Starlink, and sensitive data collected by cameras built into Tesla vehicles. Nonetheless, Musk has previously stated that China is the most competitive auto market concerning Chinese automakers.