Tesla to Build Shanghai Factory to Make Megapack Batteries – Tesla Inc will open a factory in Shanghai that is capable of producing ten thousand Megapack energy products per year to supplement the output of the Megapack factory in California, the company announced in a Sunday tweet.
The news was first reported by Xinhua, the official Chinese news agency. A signing ceremony in Shanghai revealed that Elon Musk’s automaker will break ground on the plant in the third quarter and begin production in the second quarter of 2024, as reported by Xinhua.
Xinhua reported that the new factory will initially produce 10,000 Megapack units per year, equivalent to approximately 40 gigawatt-hours of energy storage, which will be sold worldwide. The new factory will complement a massive existing Shanghai facility that manufactures electric vehicles.
Tesla will use its new Shanghai plant to take advantage of China’s world-leading battery supply chain in order to increase production and reduce the cost of its Megapack lithium-ion battery units in order to meet the rising global demand for energy storage as the world transitions to using more renewable energy.
Musk has pledged to grow Tesla’s solar energy and battery business to roughly the same scale as its electric car business. Tesla’s main source of revenue is its electric car business. The Chinese battery behemoth CATL has also expanded its energy storage battery supply partnerships with clients, including Tesla.
Which its Chairman Robin Zeng anticipated to have a larger market than electric vehicle batteries (EV). Tesla’s Megafactory in Lathrop, California is presently capable of producing 10,000 Megapacks per year. In 2019, the company began producing Model 3 cars in Shanghai and is now capable of producing 22,000 cars per week. Reuters reported in May 2017 that Tesla intended to increase the Gigafactory Shanghai, its most productive automobile manufacturing facility, by an additional 450,000 units per year.
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However, the U.S. company struggled with rising inventories in Shanghai as demand began to weaken in the third quarter, resulting in aggressive price cuts in its main global markets in January. In the first two months of 2023, the growth of EV sales in China, the world’s largest auto market, slowed to 20.8% from 150% in the same period a year prior.