Tesla, Inc. TSLA will reportedly have a second plant in China.
What Happened: Tesla will build a new mega factory in Shanghai that will manufacture Megapack, Tesla's energy storage product, the U.S. electric vehicle maker announced at the signing ceremony of the project in China's largest city, Chinese state media outlet Xinhua reported.
Construction of the new plant is expected to start in the third quarter, with production set to begin in the second half of 2024.
According to Xinhua, the annual capacity of the proposed plant will be 10,000 Megapack units, or equivalent to about 40 gigawatt-hour of energy storage. Tesla expects to sell these Megapacks worldwide, the publication further noted.
See Also: Everything You Need To Know About Tesla Stock
Why It’s Important: Tesla’s current Giga Shanghai plant manufactures both Model Y and 3 vehicles and accounts for a little over half of the company’s global output.
Rumors of a new plant adjacent to the existing one floated around in early 2022, with Reuters reporting that the plan had been confirmed by Tesla CEO Elon Musk in a letter to local officials. At the time, the company purportedly had plans to use the new plant to boost its vehicle production capacity in China.
According to Tesla, the company's Megapack is "a powerful battery that provides energy storage and support [to help] stabilize the grid and prevent outages." Each unit can store 3 megawatt-hours of energy, enough to power an average of 3,600 homes for an hour, the EV manufacturer noted.
The report of the Megapack plant comes close on the heels of the news that Musk is set to visit China Saturday, alongside Tom Zhu, the Tesla China executive who was recently named senior vice president of automotive operations. Musk will reportedly stop by the Giga Shanghai plant and meet with local Shanghai authorities.
Tesla closed Thursday's session down 0.25% at $185.06, according to Benzinga Pro data.
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