Tesla plans to build new Megapack battery factory in China

Tesla CEO Elon Musk. Picture: Patrick Pleul/Pool via AP, File

Tesla will build a new battery factory in Shanghai, increasing investment in China at a time of brewing tensions between Beijing and Washington.

Tesla, which is led by eccentric entrepreneur Elon Musk, will manufacture its Megapack large-scale energy-storage unit in the new facility, which adds to its factory for electric vehicles in Shanghai.

Construction is scheduled to begin in the third quarter of this year and the plant will commence production in the second quarter of 2024, the company said in a statement.

Tesla’s deepening China investment comes shortly after France’s Airbus announced plans to double its production capacity in the country for one of its top-selling jets. The European planemaker will add a second final assembly line for A320 narrow-bodies at its existing factory in Tianjin, under a deal signed by CEO Guillaume Faury in Beijing on Thursday.

The new manufacturing projects give a boost for Chinese industry as other firms like Apple rethink production in the nation amid heightened tensions with the US over everything from an alleged Chinese spy balloon being shot down over American skies to Beijing’s partnership with Russian president Vladimir Putin.

The Megapack is intended as a massive battery to help stabilise energy grids, with the company saying each unit can store enough energy to power an average of 3,600 homes for one hour.

Tesla currently has a factory in Lathrop, California, capable of manufacturing 10,000 Megapacks per year.

The new factory will initially produce 10,000 Megapacks every year, equal to around 40 GWh of energy storage, and the products will be sold worldwide.

China, home to rising global electric vehicle star BYD, is an extremely important market for Tesla. 

Its existing car factory on the outskirts of Shanghai, which the US firm owns outright, produced almost 711,000 cars last year, or 52% of its worldwide output, even with production being disrupted by China’s now-abandoned zero-covid policy.

EV sales growth in China slowed to 20.8% in the first two months of 2023, from 150% in the same period a year ago.

Bloomberg, with additional reporting by Reuters