Tesla Expands in China with New Battery Factory in Shanghai

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Tesla, the electric car company run by Elon Musk, has announced plans to build a new factory in China to manufacture its large-scale batteries. The plant, to be located in Shanghai, will produce 10,000 Megapack energy storage units each year. Megapacks are huge batteries that can stabilise energy grids and prevent power outages. Building work on the new plant is set to begin later this year, with battery production starting by the summer of 2024, according to Chinese state media outlet Xinhua. Tesla’s decision to expand in China will enable the company to tap into the country’s battery production, the world’s largest, and increase production while reducing costs.

Tesla’s decision to build a new battery factory in China comes amid rising tensions between Beijing and Washington, with the US government pressing American companies to become less reliant on China. Last year, US technology firms that receive federal funding were banned by the Biden administration from building “advanced technology” facilities in China for a decade. The guidelines were part of a $50bn plan aimed at building up the US semiconductor industry. In August, President Biden signed a law committing $280bn to high-tech manufacturing and scientific research. In 2019, Tesla opened its first factory outside the US in Shanghai, which currently produces 22,000 vehicles each week.

China is the largest car market globally and has seen a sharp drop in vehicle sales this year as the country’s economy slows. Last month, Tesla reduced the prices of models made at its Shanghai plant due to a backlog of unsold vehicles and tough competition in the country. Tesla’s decision to expand production in China will enable it to capitalise on the country’s battery production and boost production while cutting costs.

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