SHANGHAI — Tesla is set to build a factory in Shanghai to produce its large-scale energy storage battery known as the Megapack, China’s state news agency Xinhua reported Sunday.
Tesla, which is owned by Elon Musk, will break ground on the plant in the third quarter of this year and begin production in the second quarter of 2024, Xinhua reported.
The new plant will complement Tesla’s existing factory in Shanghai, where it makes electric vehicles, and will initially produce 10,000 Megapacks per year, equivalent to about 40 gigawatt-hours of energy storage, to be sold worldwide, Xinhua said.
With the new factory, Tesla will take advantage of China’s dominant battery supply chain to increase the output of its Megapacks and reduce their costs, hoping to meet the rising global demand for energy storage as the world shifts to using more renewable energy .
Tesla gets most of its money from its electric car business, but Mr. Musk has committed to expanding his solar and battery business to about the same size as his auto business.
Chinese battery giant CATL has deepened its partnership with customers, including Tesla, on energy storage battery deliveries. CATL President Robin Zeng expects energy storage batteries to have a larger market than electric vehicle batteries.
Tesla already has a factory for its Megapacks in Lathrop, California, where it can produce 10,000 units annually.
The company started production of its Model 3 cars in Shanghai in 2019 and can now produce 22,000 cars a week there.
Tesla struggled with rising inventories in Shanghai as demand began to weaken in the third quarter of 2022, leading to aggressive price cuts in its key markets worldwide in January.
Electric vehicle sales growth in China, the world’s largest auto market, has slowed to about 20 percent in the first two months of 2023.
