Tesla Energy has announced plans for a new Shanghai factory, complementing its existing California facility. The groundbreaking is scheduled for Q3 2023, with production starting in Q2 2024. The Shanghai factory aims to leverage China’s leading battery supply chain, increasing output and reducing costs. This move comes as Tesla focuses on meeting the rising global demand for energy storage amidst a shift towards renewable energy. Tesla Energy is the clean energy subsidiary of Tesla, Inc in which the former SolarCity company is absorbed.
Complementing California’s Megapack output
The new factory in Shanghai is expected to produce 10,000 Megapack energy storage units per year, matching the output of Tesla’s existing California facility. According to Chinese state media outlet Xinhua, the Shanghai factory will initially produce 10,000 Megapack units annually, equating to approximately 40 gigawatt hours of energy storage. These units are intended to be sold globally.
Tesla’s Megapack lithium-ion battery units are designed to stabilise energy grids and prevent power outages. The company began producing Model 3 cars in Shanghai in 2019, and the factory is currently capable of producing 22,000 units of cars per week. Tesla has plans to expand its Gigafactory Shanghai, aiming to add an annual capacity of 450,000 units.
China’s battery supply chain
China is currently the world’s largest battery producer, making it a strategic choice for Tesla to increase production and reduce costs of its Megapack batteries. The Shanghai factory will allow Tesla to take advantage of this world-leading battery supply chain, which is essential in meeting the growing global demand for energy storage as countries transition to renewable energy sources.
Chinese battery giant CATL has also been deepening its collaborations with Tesla in energy storage battery supplies. CATL’s Chairman, Robin Zeng, expects the energy storage battery market to surpass that of batteries powering electric vehicles (EVs).
A strategic move amidst global challenges
The announcement of the new Megapack factory in Shanghai comes amidst the US government’s urging for companies to reduce their reliance on China. The decision to build the factory in China might be seen as a strategic move by Tesla to maintain a strong presence in the country, while also benefiting from its vast battery supply chain.
However, Tesla has faced challenges in the Chinese market, with electric vehicle (EV) sales growth slowing to 20.8% in the first two months of 2023, compared to 150% in the same period a year ago. The company has also struggled with rising inventory in Shanghai, leading to aggressive price cuts in its major markets globally in January.
Expanding tesla’s clean energy vision
While Tesla generates most of its revenue from its electric car business, CEO Elon Musk has committed to growing its solar energy and battery business to roughly the same size. The construction of the new Shanghai factory, set to begin in Q3 2023, demonstrates Tesla’s dedication to expanding its clean energy efforts and meeting the increasing global demand for energy storage solutions.
Related Posts
