Tesla, the electric car company led by Elon Musk, is expanding its presence in China by constructing a new factory dedicated to manufacturing large-scale batteries.
According to the company, the facility in Shanghai will have the capacity to manufacture 10,000 units of its “Megapack” energy storage per year.
The Megapack is a high-capacity battery designed to aid in grid stabilization and mitigate power disruptions.
Tesla’s existing Megapack plant in California is already producing 10,000 units annually.
In a tweet, Mr. Musk announced that the new Chinese plant will be an additional facility alongside Tesla’s existing factory in the United States.
According to Xinhua, the state media outlet in China, construction of the new Megapack plant is anticipated to commence later this year, with battery production scheduled to commence by the summer of 2024.
Tesla did not provide an immediate response to the BBC’s request for comment.
With China being the largest battery producer, Tesla will be able to leverage this advantage to boost production and reduce costs.
The announcement coincided with the US government’s ongoing efforts to reduce American companies’ dependence on China, as tensions between Beijing and Washington continue to escalate.
In a move by the Biden administration last year, US technology companies receiving federal funding were prohibited from constructing “advanced technology” facilities in China for a period of 10 years.
These guidelines were implemented as part of a $50 billion (£40 billion) initiative with the objective of bolstering the US semiconductor industry.
In August, President Biden enacted legislation allocating $280 billion to advanced technology manufacturing and scientific research, driven by concerns that the US is losing its technological advantage to China.
In 2019, Tesla inaugurated its inaugural factory outside the United States in Shanghai. Presently, the facility manufactures 22,000 vehicles per week.
Additionally, Tesla operates a car production site near Berlin, Germany, and has revealed intentions to establish another overseas plant in Monterrey, Mexico.
This year, China, the largest car market globally, experienced a significant decline in vehicle sales due to a slowing economy.
In response to a backlog of unsold vehicles and intense competition in the country, Tesla reduced prices on models manufactured at its Shanghai plant just last month.
Source : bbc.com