The latest move underscores Tesla's commitment to investing in the world's second-largest economy, defying the rhetoric of "decoupling" and "de-risking" from China ratcheted up by some U.S. politicians.
The new plant spans an area of approximately 200,000 square meters, with a total investment of around 1.45 billion yuan (about 203.94 million U.S. dollars), according to the administration of Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone.
The mega factory is the first of its kind built by Tesla outside the United States and the company's second plant in Shanghai, following the inauguration of its gigafactory in 2019 which involved an initial investment of over 50 billion yuan.
"I believe the new plant is a milestone for both Shanghai and Tesla," the company's vice president Tao Lin told Xinhua in an exclusive interview.
"In a more open environment, we can create a new Tesla speed at the Megapack factory, and supply the global market with large-scale energy-storage batteries manufactured in China," she added.
At Thursday's ground breaking ceremony in Shanghai, Tesla representatives and local government officials formally initiated the construction of the Megapack factory, which is expected to begin mass production in the first quarter of 2025, with an initial capacity of 10,000 Megapack units a year.
"With Tesla's benchmark project, we anticipate that within the next three to five years, an industrial cluster centered around energy storage will rapidly emerge," said Lu Yu, an official from the Lin-gang Special Area Administration.
After the ceremony, Tesla signed a deal with Shanghai Lingang Economic Development (Group) Co., Ltd., securing the first batch of orders for its Megapacks in China.
Gong Wei, vice president of Lingang Group, said the Megapacks would be used for energy storage in a data center in the Lin-gang Special Area, as part of its efforts to achieve carbon peaking and carbon neutrality.
Tesla's deep involvement in the energy storage industry now rivals its electric vehicles in importance, Tao said, adding that its energy storage products are currently applied in over 65 countries and regions.
The U.S. company already has a factory for its Megapacks in California, which has an annual capacity of 10,000 units.
Each Megapack unit can store over 3.9 megawatt-hours of energy, sufficient to power approximately 3,600 households for one hour.
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