Tesla to open battery factory in Shanghai as China seeks foreign investment

Tesla will open a factory in Shanghai to produce its Megapack large-scale batteries, cementing another foothold for the U.S. company in China even as political and economic tensions between Washington and Beijing swirl.

Tesla said in a brief tweet on Sunday that its “Megafactory” in Shanghai will be capable of producing 10,000 Megapacks annually, an output equivalent to its other Megafactory in Lathrop, Calif., about 70 miles east of San Francisco. The company, which disbanded its public relations department, did not provide further details. Elon Musk, Tesla’s chief executive, said in a tweet that the factory in Shanghai would “supplement” the production in California.

The Chinese factory will be built in Lingang, a suburban area of Shanghai where Tesla’s vehicle factory is also located, according to Chinese media. Lu Yu, an official in Lingang, told local media that production could start as soon as the second quarter of 2024.

The investment in China by Tesla comes after the coronavirus pandemic brought some supply chains to a halt as factories in China shut down amid strict “zero covid” protocols. With those setbacks still fresh in many executives’ minds — and amid concerns over alleged human rights violations and chilly relations between Washington and Beijing — China has struggled to attract foreign investment since the pandemic.

The Megapacks differ from most of Tesla’s consumer-focused offerings, like the electric vehicles it is widely known for, in that they are more a piece of energy infrastructure than a consumer product. The batteries are intended to store energy from renewable sources such as wind and solar, allowing energy to be drawn even when the sun isn’t shining and the wind isn’t blowing.

Batteries like the Megapack are not yet widely implemented in the United States and purchases of the technology have mostly been kept under wraps. But the Megapack has been bought for Apple’s renewable energy storage project in California, according to the Verge, and for a storage project outside Houston, Bloomberg first reported.

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