Elon Musk’s Tesla plans to build a new mega factory in China to manufacture thousands of large-scale batteries per year.
The new factory will be set in Shanghai and is targeted to manufacture 10,000 “Megapack” battery units per year, which amounts to approximately 40 gigawatt hours of energy storage, to be sold worldwide. This energy will be used to stabilize energy grids and prevent power outages.
“Tesla opening Megapack factory in Shanghai to supplement the output of Megapack factory in California,” Elon Musk said on Twitter.
Construction work for the new Megapack plant in China is expected to begin later this year, with battery production due to get underway by the summer of 2024, according to a report by the Chinese state news agency Xinhua.
Second Tesla Factory in China
This will be the second Tesla factory in China. The company opened its first factory outside the US in Shanghai, named the Gigafactory, in 2019 and it currently produces 22,000 vehicles a week. The facility was constructed in just 10 months at a cost of 65% of the Model 3 production plant in the US and quickly became the world’s largest EV production plant within a few years.
Vehicle sales drop
China, which is the world’s largest car market, has seen a sharp drop in vehicle sales this year as the economy slows. Last month, Tesla cut the prices on models made at its Shanghai plant as it faced a backlog of unsold vehicles and tough competition in the country.
Lesser reliance of American companies on China
The announcement came as the US government continued encouraging American companies to become less reliant on China amid rising tensions between the two countries.
Last year, US technology firms that receive federal funding were banned from building “advanced technology” facilities in China for 10 years as part of a $50bn (£40bn) plan aimed at building up the US semiconductor industry.
In August, President Joe Biden signed a law committing $280 billion to high-tech manufacturing and scientific research to prevent the US from losing its technological edge to China.
Tesla already has a Megapack plant in California, which also produces 10,000 units each year. The new Chinese plant will be in addition to Tesla’s US factory. Tesla also makes cars near Berlin in Germany and announced plans for another overseas plant in Monterrey, Mexico.