Tesla, the electric car company led by Elon Musk, has announced plans to build a new factory in Shanghai, China, dedicated to producing large-scale batteries known as “Megapacks”. The factory is expected to have an annual production capacity of 10,000 Megapack units, which are used for energy storage to stabilize grids and prevent power outages.
This new Chinese plant will be in addition to Tesla’s existing factory in the United States, according to Mr. Musk’s tweet. Construction on the Megapack plant in China is set to begin later this year, with battery production targeted to commence by the summer of 2024, as reported by Chinese state media outlet Xinhua. Tesla has not yet responded to BBC’s request for comment.
China is the world’s largest producer of batteries, and Tesla’s decision to expand its battery production in the country is seen as a strategic move to tap into the local supply chain and lower production costs. This announcement comes at a time when the US government is urging American companies to reduce their reliance on China due to escalating tensions between the two countries.
In 2019, Tesla opened its first factory outside the US in Shanghai, which currently produces 22,000 vehicles per week. The new battery factory in Shanghai is part of Tesla’s continued expansion plans, which also include a factory near Berlin in Germany and a planned plant in Monterrey, Mexico.
China’s automotive market has experienced a decline in vehicle sales this year due to a slowing economy, and Tesla recently lowered prices on its models produced at its Shanghai plant to address a backlog of unsold vehicles and intensifying competition in the Chinese market. The new battery factory in Shanghai is expected to strengthen Tesla’s position in China and enhance its battery production capabilities for the local market and beyond.