Tesla Inc. will build a factory in Shanghai to manufacture the energy storage product mega packChinese state media Xinhua reported on Sunday.
Elon Musk’s automaker will break ground for the plant in the third quarter and start production in the second quarter of 2024, Xinhua reported from a signing ceremony in Shanghai.
The new factory, which will serve as a complement to an existing huge plant in Shanghai that assembles electric vehicles, will initially produce 10,000 Megapack units a year, equivalent to about 40 gigawatt hours of energy storage, to be sold worldwide, Xinhua said. .
With the new Shanghai plant, Tesla will take advantage of China’s battery supply chain to increase production and reduce the costs of its battery units Megapack lithium ion batteriesin order to meet the growing demand for energy storage around the world as the world moves towards the use of more renewable energy.
Tesla gets most of its revenue from its electric car business, but Musk has vowed to grow his solar and battery business to roughly the same size.
Chinese battery giant CATL has also deepened its collaborations with customers such as Tesla to supply energy storage batteries, which its chairman Robin Zeng hopes will have a larger market than the batteries that power electric vehicles (EVs).
Tesla currently has a megafactory in Lathrop, California, capable of producing 10,000 Megapacks per year.
The company began to produce cars model 3 in Shanghai in 2019 and is now capable of producing 22,000 units of cars per week.
Tesla planned to expand the shanghai gigafactoryits most productive auto plant, to add an annual capacity of 450,000 units, Reuters reported in May.
The US company, however, had grappled with rising inventory in Shanghai as demand began to weaken in the third quarter, leading to aggressive price cuts in its major markets globally in January.
Growth in electric vehicle sales in China, the world’s largest auto market, has slowed to 20.8% in the first two months of 2023, from 150% in the same period a year ago.
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