As a supplement to the output of the Megapack factory in California, Tesla Inc (TSLA.O) is opening a factory in Shanghai that can produce 10,000 Megapack energy products annually, the company announced in a tweet on Sunday. Chinese state-run news agency Xinhua broke the story first.
Xinhua reported from a signing ceremony in Shanghai that Elon Musk’s automaker will break ground on the plant in the third quarter and begin production in the second quarter of 2024. The new factory, which will initially produce 10,000 Megapack units annually, or roughly 40 gigawatt hours of energy storage, to be sold globally, will supplement a sizable existing electric vehicle manufacturing facility in Shanghai, according to Xinhua.
Tesla will increase production and reduce costs of its Megapack lithium-ion battery units at its new plant in Shanghai to meet the growing demand for energy storage as the world transitions to using more renewable energy sources.
The majority of Tesla’s revenue comes from its electric vehicle division, but Musk has promised to roughly double the size of its solar and battery businesses.
The Chinese battery giant CATL (300750.SZ), whose Chairman Robin Zeng anticipated that energy storage batteries would have a larger market than batteries for electric vehicles, has also been strengthening its partnerships with customers like Tesla (EV). Currently, Tesla can produce 10,000 Megapacks annually in its Megafactory in Lathrop, California.
The company started making Model 3 vehicles in Shanghai in 2019 and can now produce 22,000 vehicles per week. It was reported in May of last year that Tesla intended to increase the annual capacity of the Gigafactory Shanghai, its most productive auto manufacturing facility, by 450,000 units.
However, as demand began to wane in the third quarter, the American company struggled with rising inventory in Shanghai, which prompted drastic price cuts in its key international markets in January. The world’s largest auto market, China, saw EV sales growth slow to 20.8% in the first two months of 2023 from 150% in the same period in 2018.
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