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Tesla’s new MegaPack factory in Shanghai will consolidate China’s energy storage leadership

Tesla Inc. announced at the end of last week, will build a new large battery factory in Shanghai. U.S. media pointed out that the new factory will further consolidate China’s position at the top of the global energy storage supply chain.

Tesla’s Shanghai battery factory plan

Tesla will produce its Megapack commercial battery for ultra-large energy storage at the new plant, which is another Tesla production facility in addition to the Shanghai electric vehicle assembly plant. Tesla made the announcement at a project signing ceremony in Shanghai on Sunday, and the company’s CEO Elon Musk reportedly visited China this past weekend. The signing ceremony was attended by Tesla’s senior vice president of automotive business Zhu Xiaotong, Shanghai Vice Mayor Wu Qing and other government officials, and Tesla Vice President Tao Lin signed the contract.

Elon Musk said in a tweet that the new Shanghai plant is a complement to the capacity of Tesla’s Megapack, California, facility. Tesla said construction of the new plant will start in the third quarter of this year and production will begin in the second quarter of next year.
China No. 1 in Energy Storage in the World

China already has more than 1,400 gigawatt-hours of battery manufacturing capacity, with another 6,000 gigawatt-hours under construction or already announced. The U.S. is second with about 1,000 GWh of installed capacity, but the vast majority of that has yet to be built.

Unlike most battery production, which goes primarily to the electric vehicle market, the Megapack facility will produce batteries for grid-scale energy storage, a much smaller segment. According to the International Energy Agency, by the end of 2020, there will be about 19.3 GWh of installed stationary energy storage battery capacity. By 2026, that number could grow to more than 150 gigawatt-hours.

Elon Musk says new plant is a complement to U.S. capacity

However, Elon Musk’s vision for the energy storage industry is much bigger. He wants to combine energy storage with renewable energy to play a big role in decarbonizing electricity and the greening industry. Tesla’s “secret ambition” plan forecasts that some 46,200 gigawatt-hours of stationary energy storage batteries will need to be installed over the next 20 years.

Megapack’s goal is to act as a giant battery to help stabilize the energy network. Tesla says each Megapack unit can store 3MWh of energy, enough to power an average of 3,600 homes for one hour. The new Shanghai plant will initially produce 10,000 Megapack cells per year, equivalent to about 40 gigawatt-hours of energy storage, which will be sold globally.

News of Tesla’s new battery plant in China appears to have had little impact on Ningde Times, the world’s largest electric car battery maker and a supplier to Tesla. In morning trading on the stock market on Monday, Ningde Times’ share price fluctuated very little.
China’s Importance to Tesla

For Tesla, China is an extremely important market. At the same time, China is also home to BYD, another global electric car giant. Tesla has built a wholly-owned car factory on the outskirts of Shanghai and produced nearly 711,000 vehicles last year, accounting for 52 percent of its global production.

In early 2019, Tesla built its first factory outside the United States in Shanghai with the assistance of Chinese authorities. The Shanghai government helped Tesla resume production in time during the New Crown outbreak. However, Tesla’s growth in China has not been smooth, as the company’s price cuts in China have sparked dissatisfaction among owners. Moreover, the expansion of Tesla’s Shanghai factory has been delayed.

Elon Musk said during an earnings call in January that China is the most competitive car market. He has made similar comments before, including in an online forum in September 2021. He said at the time that he had “great respect for many of the automakers in China.

In addition to Tesla, other international brands are doubling down on their bets in China. France’s Airbus recently announced plans to double production capacity in China for one of its best-selling models. Under an agreement signed last week in Beijing by Airbus CEO Guillaume Faury, the European aircraft maker will add a second A320 narrowbody assembly line to its existing plant in Tianjin.

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Stephen Cruise
Stephen Cruisehttps://www.techgoing.com
Stephen Cruise is a senior editor covering latest smartphones, EVs, PC gaming, console, and tech with 11 years of experience.

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