Tesla To Establish A Megapack Battery Facility In Shanghai; What You Need To Know

At a time when more companies seek to shift production away from China, Tesla is building a new megafactory in Shanghai. The company says it will have the capacity to manufacture up to 10,000 Megapack units annually.

Megapacks are Tesla's lithium-ion batteries used for battery-storage power stations. The upcoming factory will supplement its existing EV plant in Shanghai.

Construction for the new plant will commence in the third quarter of the year and the production is set to begin in Q2 of 2024, reported Bloomberg.

Tesla has a megafactory in Lathrop, California, with a production capacity of 10,000 megapack units annually. In a recent tweet, Tesla CEO Elon Musk said the China factory would complement the existing production in the California plant.

The company already has a dominant presence in Shanghai with its electric vehicle manufacturing facility, Tesla Gigafactory. The facility, established in 2019, is the carmaker's largest gigafactory outside the U.S.

Although the Shanghai plant experienced supply chain limitations, it managed to produce a remarkable 710,000 vehicles last year, a significant 48% growth from the previous year. However, towards the end of the year, the factory encountered a setback due to a surge in COVID-19 cases.

The company's upcoming factory will reportedly manufacture approximately 10,000 Megapack units annually, possessing a capacity of nearly 40 GWh of energy storage, which will be available for global distribution.

China constitutes Tesla's second-largest market in the world, after the U.S. It is anticipated that Musk will make his first visit to China since the outbreak of the COVID-19 pandemic this month. It will also be his first meeting with Xi Jinping after the latter was re-elected as the country's president for a third time.

The visit is particularly significant as Beijing is currently seeking to restructure its economy, which was hit hard by the restrictive COVID-19 measures imposed in the past three years. Furthermore, Apple is contemplating relocating its production facilities away from China. Therefore, Musk's investment in building a new factory in the country may serve as a message that the Chinese government can use to appeal to potential investors.