Tesla has announced a plan to build a Megafactory in Shanghai to produce its energy storage battery products, Megapacks. The project is expected to facilitate the formation of a local industry cluster. At the same time, a US Representative has raised his concern about Tesla's dependence on China.
Tesla announced the factory on April 9, saying it aims to make 10,000 Megapacks per year initially. Megafactory Shanghai will be the company's first energy storage project outside the US.
According to China-based Securities Daily, the 10,000 Megapacks are expected to offer a capacity of 40GWh. Tesla plans to start construction of the plant in the third quarter of this year and begin production in the second quarter of 2024.
As wind and solar energy adoption increase worldwide, demand for energy storage has grown rapidly in recent years. According to Tesla's financial report, it achieved 6.5GWh in energy storage system installation last year, a 64% growth from 2021. The installation hit a record of 2462MWh in the fourth quarter of 2022, increasing by 152% from the previous year. Tesla's energy storage systems have been available in the US, UK, and Australia.
Megafactory Shanghai will be located in the Lin-gang Special Area of the pilot free trade zone, the same as Tesla's Gigafactory Shanghai. Securities Daily reported that local officials said the new plant will likely attract more investment in the energy storage industry to the area, establishing another cluster with a value of CNY100 billion (US$14.5 billion).
The newly announced project has drawn US Congressman Mike Gallagher's attention. According to Reuters, Gallagher said on April 10 that he has concerns about Tesla's dependency on China. He chairs the House of Representatives' select committee on China's Communist Party.
Gallagher said Tesla seems entirely dependent on the federal government's support through tax breaks and access to the China market, Reuters reported. He added that he would be curious to know how Tesla CEO Elon Musk balances government support and the company's operation in China.
It was not the first time Tesla has faced similar criticism. After announcing the Megafactory on April 9, Musk tweeted that Tesla is also increasing production rapidly in Texas, California, and Nevada. He said Tesla's competitive position would improve if all subsidies ended.
