Tesla has announced plans to open a new Megapack battery factory in Shanghai, according to a tweet from the company’s CEO, Elon Musk. The factory will be able to produce 10,000 Megapacks per year, and will supplement the output of Tesla’s existing Megapack factory in California. Each Megapack can store enough energy to power an average of 3,600 homes for one hour, and is designed for utilities and large-scale commercial projects.
The announcement comes as tensions rise between Beijing and Washington, but it also follows the recent unveiling of plans by Airbus for a second final-assembly line in China’s north. The Chinese government has been keen to attract foreign investment, and officials have publicly welcomed foreign investors.
The Shanghai factory will have the same level of production capacity as Tesla’s Megafactory in Lathrop, California, which is equivalent to 40 gigawatt-hours of energy storage. The Megafactory will be located in Lingang, an enormous free trade zone on the outskirts of Shanghai, where Tesla’s electric-vehicle Gigafactory broke ground in 2019.
“We believe this announcement is a potential game changer for Tesla on the battery front,” said Daniel Ives, an analyst at Wedbush Securities. “In this EV [electric vehicle] arms race Tesla is further building its lead in battery technology with the new Megapack factory in China another flex the muscle moment for Musk.”
Last month, Apple CEO Tim Cook visited Beijing to show his support for the country as a market and manufacturing base, amid escalating political rhetoric between the United States and China.
Tesla is also making inroads among Chinese drivers, with the China Passenger Car Association (CPCA) reporting that the company sold 88,869 units of Shanghai-made EVs in March, a 35% increase from the same period last year. The company is the second largest EV maker in China behind market leader BYD.
In January, Tesla slashed prices in China for the second time in less than three months, in an effort to boost sales amid slowing demand in the world’s largest car market. The cuts came days after Beijing ended a 13-year-long subsidy for electric vehicle purchases, a move that is expected to put further pressure on car demand.
