Tesla expands in China with new battery factory in Shanghai, says Elon Musk

(image credit: bbc.com)

Tesla, Elon Musk's electric car company, is set to expand its production of large-scale batteries with the construction of a new factory in Shanghai. The plant will be capable of producing 10,000 of Tesla's "Megapack" energy storage units each year, according to the company. The Megapack is a sizable battery that can stabilize energy grids and prevent power outages. Tesla already has a Megapack plant in California that produces the same number of units. 

Our next Megafactory will be in Shanghai 🇨🇳—capable of producing 10k Megapacks per year pic.twitter.com/KlVGq5gYOg

— Tesla (@Tesla) April 9, 2023

The new Chinese factory will complement Tesla's US factory, according to Musk's announcement on Twitter. Construction is expected to begin later this year, with battery production scheduled to commence by the summer of 2024, as reported by Chinese state media outlet Xinhua. Tesla did not immediately respond to a BBC request for comment.

China, the world's largest car market, is also the largest producer of batteries. By tapping into China's battery production, Tesla can increase production and reduce costs. The announcement came amid rising tensions between Beijing and Washington, with the US government urging American companies to become less reliant on China. Last year, the Biden administration banned US technology firms that receive federal funding from building "advanced technology" facilities in China for ten years, as part of a $50bn (£40bn) plan to strengthen the US semiconductor industry. In August, President Biden signed a law pledging $280bn to high-tech manufacturing and scientific research to prevent the US from losing its technological edge to China.

In 2019, Tesla opened its first factory outside the US in Shanghai, producing 22,000 vehicles per week. The company also produces cars near Berlin in Germany and plans to build another factory in Monterrey, Mexico. However, China's economic slowdown has led to a decline in vehicle sales, with Tesla recently cutting prices on models made in its Shanghai plant due to tough competition and unsold vehicles.