New Delhi: Tesla Inc. announced on Sunday that it will open a new factory in Shanghai, which will produce 10,000 Megapack energy products annually to supplement the production of its California Megapack factory.
According to Xinhua, the Chinese state media outlet, Tesla will start production in the second quarter of 2024 after breaking ground on the plant in the third quarter. The new factory will be located in Shanghai and will initially manufacture 10,000 Megapack units a year, equal to roughly 40 gigawatt-hours of energy storage, for global sale.
The new Shanghai plant will take advantage of China’s leading battery supply chain to increase productivity and reduce the costs of Megapack lithium-ion battery units. This will meet the growing demand for energy storage globally as the world shifts to using more renewable energy. Tesla’s electric car business generates most of its revenue, but CEO Elon Musk has committed to growing its solar energy and battery business to the same size.
In energy storage battery supplies, Chinese battery giant CATL has also been strengthening its collaborations with clients such as Tesla, which its Chairman Robin Zeng expects to have a larger market than batteries powering electric vehicles (EV). Currently, Tesla has a Megafactory in Lathrop, California, capable of producing 10,000 Megapacks annually.
Tesla began producing Model 3 cars in Shanghai in 2019 and now has the capacity to produce 22,000 units of cars per week. Tesla plans to expand its Gigafactory Shanghai, its most productive automaking plant, to add an annual capacity of 450,000 units, according to reports.
Despite Tesla’s expansion plans, the company has been struggling with rising inventory in Shanghai as demand began to weaken in the third quarter. As a result, Tesla had to implement aggressive price cuts in its major markets globally in January. In China, the world’s largest auto market, EV sales growth has slowed to 20.8% in the first two months of 2023, from 150% in the same period a year ago.
In conclusion, the new Shanghai plant will enable Tesla to increase its production of Megapack energy products to meet the growing demand for energy storage. The expansion will also take advantage of China’s leading battery supply chain, helping Tesla reduce costs and increase output. Despite challenges in the Chinese market, Tesla remains committed to expanding its battery and solar energy business.
