News Update

Tesla to open Megapack factory in Shanghai

• ByStartupStory     |    April 10, 2023

Tesla Inc (TSLA.O) has announced the opening of a factory in Shanghai, which will have the capacity to manufacture ten thousand Megapack energy products per year. The factory will supplement the output of the Megapack factory in California, according to a tweet by the company on Sunday. The news was first reported by Xinhua, a Chinese state media outlet. As per the report from the signing ceremony in Shanghai, Elon Musk’s automaker will begin construction on the factory in the third quarter and commence production in the second quarter of 2024.

According to Xinhua, the new Tesla factory in Shanghai, which will initially manufacture 10,000 Megapack units annually, equivalent to approximately 40 gigawatt hours of energy storage, will complement the company’s existing electric vehicle plant in the city. The Megapack units will be sold globally. Tesla plans to capitalize on China’s leading battery supply chain with the new plant to increase production and decrease costs of its Megapack lithium-ion battery units to meet growing global demand for energy storage as the world shifts towards renewable energy sources.

While Tesla’s main source of revenue is its electric car business, CEO Elon Musk is focused on expanding the company’s solar energy and battery division to match the size of its car business. China’s battery manufacturer CATL is also partnering with Tesla and other clients to supply energy storage batteries, which the company’s chairman Robin Zeng believes will have a larger market than batteries for electric vehicles. Tesla’s current Megafactory in Lathrop, California, has the capacity to produce 10,000 Megapacks annually.

Tesla started producing Model 3 cars in Shanghai in 2019 and can now manufacture 22,000 cars per week. In May 2022, Tesla announced its plan to expand its most productive automaking plant, the Gigafactory Shanghai, to increase annual capacity to 450,000 units, as reported by Reuters. However, the company has faced rising inventory in Shanghai and declining demand in the third quarter, which led to aggressive price cuts in major markets globally in January. According to reports, sales growth of electric vehicles (EV) in China, the world’s largest auto market, slowed to 20.8% in the first two months of 2023, down from 150% in the same period last year.

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