Elon Musk, has announced plans to expand Tesla in China with the construction of a new factory dedicated to producing large-scale batteries. The factory, located in Shanghai, will have the capacity to produce 10,000 “Megapack” energy storage units per year, which are used to stabilize energy grids and prevent power outages.
This new Chinese factory will be in addition to Tesla’s existing Megapack plant in California, which also produces 10,000 units annually. Construction of the Megapack plant in China is expected to commence later this year, with battery production slated to begin by the summer of 2024, as reported by Chinese state media outlet Xinhua.
China, being the world’s largest producer of batteries, offers Tesla the opportunity to tap into local resources and increase production while lowering costs. This expansion comes at a time when the US government has been urging American companies to reduce their reliance on China due to rising tensions between the two countries.
Last year, US technology firms receiving federal funding were prohibited by the Biden administration from building “advanced technology” facilities in China for a decade, as part of a $50 billion plan to boost the US semiconductor industry. In August, President Biden signed a law allocating $280 billion for high-tech manufacturing and scientific research, amidst concerns about the US losing its technological edge to China.
Tesla established its first factory outside the US in Shanghai in 2019, which currently produces 22,000 vehicles per week. The company also has plans for a factory near Berlin, Germany, and another overseas plant in Monterrey, Mexico. In response to a slowdown in vehicle sales in China’s economy, Tesla recently reduced prices on models produced at its Shanghai plant due to unsold vehicle inventory and intense competition in the country.