US electric car maker Tesla announced over the weekend that it will build a “mega-factory” in Shanghai. The new facility in China will manufacture the company’s Megapack energy storage product. This was first reported by the official Chinese news agency Xinhua on Sunday.
Megapack batteries are designed to store large amounts of electricity – one Megapack According to Tesla Supplying 3,600 homes with electricity for one hour. The batteries, which are about the size of an international shipping container, can store electricity for power plants or homes at peak times when demand from the local grid is high, or during power outages. So they are more of a part of the energy infrastructure than a consumer product. Megapacks aim to store energy from renewable sources such as wind and sun and each can store more than three megawatt hours.
groundbreaking later this year
The new plant will complement the existing Shanghai electric vehicle assembly plant and, just like that, will be located in the Lingang Free Trade Zone near Shanghai. Tesla said at the project signing ceremony in Shanghai that the foundation stone for the new factory is expected to be laid in the third quarter of this year and production to begin in the second quarter of 2024. Xinhua reports.
Accordingly, Tesla will use the Chinese battery supply chain to increase the production of massive lithium-ion battery units and reduce costs. The plant will initially produce 10,000 Megapacks annually, which equates to about 40 gigawatt hours (GWh) of energy storage capacity. For comparison: this figure corresponds to one-eighth of Mexico’s annual electricity production. According to Xinhua, the mega-packages manufactured in Shanghai will be sold all over the world.
Tesla is expanding
In January 2019, Tesla began building its first Gigafactory in Shanghai, becoming the first company to benefit from China’s new industrial policy that allows foreign automakers to set up wholly-owned subsidiaries in China. The Shanghai plant was Tesla’s first large-scale factory outside the United States. Last year, the plant delivered 710,000 vehicles.
Just a few weeks ago, Tesla boss Elon Musk announced the construction of another massive factory in Mexico. The new assembly plant is scheduled to be built in Santa Catarina on the outskirts of the northern Mexican city of Monterrey, a few hundred kilometers from Austin, where Tesla will open its latest megafactory in April 2022.
In addition to the aforementioned factories in Shanghai and Austin, the group currently has a massive battery plant in Lathrop, California, that can produce 10,000 mega-packs annually, according to the company’s website, and another plant in Grunheide near Berlin. In a tweet on Sunday, Tesla CEO Musk said the Chinese factory will complete production from the California factory.
Tensions between the United States and China
Tesla generates most of its revenue from its electric car business, but Elon Musk has promised to grow its solar and battery businesses to about the same size.
The new factory in Shanghai is a step in this direction. However, at the same time, the American group is establishing another foothold in China at a time when the technological conflict between the United States and China is expanding. Washington wants to isolate the People’s Republic technically and isolate it from the latest generation of semiconductors. The United States regards competition with China in the field of computer chips as a matter of national security.
Last year, US President Joe Biden signed the Chip Act, which aims to encourage investment in domestic semiconductor production in order to strengthen supply chains and counter China. China, in turn, has warned about the US chip law and its consequences.
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