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The
news was first reported by Chinese state media outlet Xinhua.
Elon Musk's automaker will break ground on the plant in the
third quarter and start production in the second quarter of
2024, Xinhua reported from a signing ceremony in Shanghai.
Complementing a huge existing Shanghai plant making electric
vehicles, the new factory will initially produce 10,000 Megapack
units a year, equal to around 40 gigawatt hours of energy
storage, to be sold globally, Xinhua said.
With the new Shanghai plant, Tesla will take advantage of
China's world leading battery supply chain to ramp up output and
lower costs of its Megapack lithium-ion battery units to meet
rising demand of energy storage globally as the world shifts to
use more renewable energy.
Tesla generates most of its money from its electric car
business, but Musk has committed to grow its solar energy and
battery business to roughly the same size.
Chinese battery giant CATL has also been deepening its
collaborations with clients including Tesla in energy storage
battery supplies, which its Chairman Robin Zeng expected to have
a larger market than batteries powering electric vehicles (EV).
Tesla currently has a Megafactory in Lathrop, California,
capable of manufacturing 10,000 Megapacks per year.
The company began producing Model 3 cars in Shanghai in 2019 and
now is capable of producing 22,000 units of cars per week.
Tesla planned to expand the Gigafactory Shanghai, its most
productive automaking plant, to add an annual capacity of
450,000 units, Reuters reported last May.
The U.S. company, however, had grappled with rising inventory in
Shanghai as demand started weakening in the third quarter,
leading to aggressive price cuts in its major markets globally
in January.
EV sales growth in China, the world's largest auto market, has
slowed to 20.8% in the first two months of 2023, from 150% in
the same period a year ago.
(Reporting by Josh Horwitz, Zhang Yan, and Lavanya Ahire;
Editing by William Mallard, Toby Chopra and Diane Craft)
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