EV maker Tesla announces plans to open a new factory in Shanghai
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Tesla, the leading maker of electric vehicles, is opening a factory in Shanghai. The factory will have the capacity to produce ten thousand Megapack energy products annually. The production in this new Shanghai factory will supplement the output that the company sees in its Megapack factory based in California.
Tesla to open a Shanghai factory for Megapack batteries
Tesla revealed the expected developments on its Shanghai factory in a tweet that was published on Sunday. The development was also confirmed by Xinhua, a Chinese state media platform.
Tesla will be breaking ground for its new plant in China during the third quarter of this year. The EV maker has also scheduled to begin production during the second quarter of 2024. The signing ceremony for this development was done in Shanghai.
The new factory will complete one of the largest existing Shanghai plants that manufacture electric vehicles. In its initial days, this factory will manufacture 10,000 Megapack units annually. These units are equal to around 40 gigawatt hours of energy storage, which will be sold worldwide.
The new plant based in Shanghai will unlock some unique benefits for Tesla. Tesla will benefit immensely from the top battery supply chain in China. The battery supply chain will amplify the automaker’s output and reduce the costs associated with its Megapack lithium-ion battery units.
The lowered costs will enable Tesla to meet the ballooning demand for energy storage globally. The global economy is shifting towards renewable energy, and companies are looking to promote sustainability, and EV makers are positioning themselves at the forefront of this market.
Tesla is looking to expand its revenue base
The majority of revenues at Tesla are derived from the company’s electric car business. However, Musk has said that he is committed to supporting the growth of the company’s solar energy and battery business so that it matches Tesla’s EV operations.
CATL, a Chinese battery giant, has been deepening its ties with clients in the EV manufacturing industry including Tesla. These partnerships are focused on the company’s energy storage battery supplies. CATL’s chairman, Robin Zeng, expects to have a bigger market for its products and not just to create the batteries that power electric vehicles.
Tesla currently operates a mega factory in Lathrop, California. This factory has the ability to manufacture 10,000 Megapacks annually. On the other hand, Tesla has been steadily growing its operations in China. The company started producing Model 3 cars in Shanghai in 209, and it can now manufacture 22,000 units of these models each week.
Tesla also unveiled plans to support the growth of the Gigafactory Shanghai, which is a plant that has the highest level of production. The expansion will increase the annual capacity to 450,000 units. However, the company started struggling with the increased inventory in Shanghai amid weakening demand in Q3 2023.
China has seen weakening demand for EVs. China is the largest market for EVs, but the demand slowed to 20.8% during the first two months of 2023. The Chinese market had reported a 150% growth in its EV sales during the same period last year.
