U.S. carmaker Tesla, on May 23, started building a new factory in Shanghai to produce its Megapack energy storage batteries, a project which is expected to start mass production in early 2025.
According to Tesla, the new Shanghai factory will produce 10,000 Megapack units annually, equivalent to nearly 40 gigawatt-hours of energy storage.
The plant covers about 200,000 square meters and represents a total investment of around 1.45 billion yuan ($204 million).
Tesla’s first Megapack factory outside US
It is Tesla’s first Megapack factory outside the US and its second factory in Shanghai, following the opening of its Gigafactory in 2019, which initially required over 50 billion yuan in investment.
Tesla’s Megapack is a powerful battery designed to store and supply energy, helping to stabilize the power grid and prevent outages.
The company already operates a Megapack factory in California with an annual capacity of 10,000 units. Each Megapack can store over 3.9 megawatt-hours of energy, enough to power around 3,600 households for one hour.
Tesla’s Shanghai Gigafactory delivered 947,000 vehicles in 2023, marking a 33 percent increase from the previous year. The Gigafactory has become Tesla’s main vehicle export hub, with over half of Tesla’s global deliveries originating from there last year.
Tesla’s vice president, Tao Lin, highlighted the significance of the new plant for both Shanghai and Tesla.
“In a more open environment, we can create a new Tesla speed at the Megapack factory and supply the global market with large-scale energy storage batteries manufactured in China,” he said.
Lu Yu, an official from the Lin-gang Special Area Administration, expressed optimism about the future.
“With Tesla’s benchmark project, we anticipate that within the next three to five years, an industrial cluster centered around energy storage will rapidly emerge,” he stated.
Tesla signs first Megapack deal in China
Following the groundbreaking ceremony, Tesla signed an agreement with Shanghai Lingang Economic Development (Group) Co., Ltd. The deal secured the first orders for Megapacks in China, which will be used for energy storage in a data center in the Lin-gang Special Area.
Gong Wei, vice president of Lingang Group, mentioned that this move is part of efforts to achieve carbon peaking and neutrality.
Elon Musk’s China visit
The groundbreaking ceremony for the Megapack plant took place less than a month after Tesla CEO Elon Musk visited China, expressing the company’s intention to deepen cooperation with the country.
Tesla’s decision to build a Megapack factory in Shanghai, announced last April, strengthend its presence in China. The land acquisition deal was signed in December, and the project received its construction permit earlier this month.
China, a global leader in renewable energy, represents a major market for energy storage. Last year, China’s installed renewable energy capacity surpassed thermal power for the first time.