Tesla Chooses China for its Second Megapack Factory

Tesla has chosen China as the site for its second ‘Megapack’ battery plant as it seeks to scale-up its energy storage business.

The BBC reports that the automaker claims its plant in Shanghai will be able to produce 10,000 of its large energy storage units annually. These large Megapacks of batteries can be used to help stabilize energy grids and prevent power outages. The company’s existing plant in California currently produces 10,000 of the units each year.

According to Chinese state media outlet Xinhua, building work on the new plant is expected to begin later this year, with battery production due to get underway by the summer of 2024. Naturally, with China as the world’s biggest producer of batteries, Tesla is hoping to benefit from increased production with lower costs.

However, the decision comes at a time of heightened tensions between the US and China and also at a time the US government is trying to persuade on-shoring of technology production within the automotive industry with the stick-and-carrot effect of its Inflation Reduction Act.

China, the world’s largest car market, has seen a sharp drop in vehicle sales this year as the economy slows forcing Tesla to cut the prices on models made at its Shanghai plant to get reduce its backlog of unsold vehicles. The automaker appears to be gambling on a resurgence of the Chinese automotive market now that pandemic restrictions have all but been lifted in the country.

— Paul Myles is a seasoned automotive journalist based in Europe. Follow him on Twitter @Paulmyles_

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