Tesla constructs a massive battery plant in Shanghai amidst escalating trade disputes.
A new factory dedicated to the production of large-scale batteries, known as Megapacks, is set to open in the first quarter of 2025. The factory, announced in April 2023, will be managed by Lingang Group, a government-owned developer based in China. Located near Tesla's Shanghai Gigafactory, it will have the capacity to manufacture 10,000 Megapacks annually. These batteries are used to store vast amounts of electricity and are aimed at helping to stabilize energy grids. Each Megapack has the ability to power around 3,600 homes for one hour.
Tesla, which has its largest plant outside the United States in Shanghai, has promised to invest $200 million in the new facility. The project coincides with rising tensions between China and the US, further highlighting Tesla's commitment to the Chinese market.
Despite increasing difficulties for Western businesses in China, Tesla has had a relatively straightforward experience. Shanghai finished negotiations and completed the deal to build the factory in just one month, and construction is expected to be completed this year. During a visit to China in March, Tesla's senior vice president, Tom Zhu, described the factory as a significant milestone for the company.
China is making an effort to boost electric vehicle (EV) production as part of a strategy to combat a slowing economy and promote a low carbon economy. With domestic demand decreasing, the government is now encouraging manufacturers to focus on expanding their international presence. This has placed the EV industry at the forefront of trade tensions between China, the US, and Europe.
In contrast to other Western carmakers, Tesla's experience in China has been relatively seamless. In just one month, Shanghai negotiated and finalized an agreement for the construction of the new factory, similar to the speed at which the Gigafactory was built in 2019. Commenting on the rapid progress, Wu Xiaohua, a Shanghai government official, confirmed that the city would assist Tesla in completing the construction and starting operations this year.
In February, Tesla CEO Elon Musk met with Chinese premier Li Qiang. Li praised Tesla as a successful example of US-China cooperation. Following the meeting, Musk expressed support for low tariffs while adding that Tesla would be able to compete well in the Chinese market without tariffs or government support.
In 2024, during a tech conference in Paris, Musk reiterated his opposition to trade barriers, indicating that his company had been able to operate effectively in China without any interference. Tesla's impending arrival in the European market, where it is already a significant player, could signal its intention to take on traditional car manufacturers in the region.
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Source: edition.cnn.com
