Elon Musk's Tesla To Build 3rd Megafactory In Texas After Kicking Off Production In Shanghai: Report

EV giant Tesla Inc. TSLA is reportedly looking to put up a third megafactory in Texas after starting production at its Shanghai facility in February.

What Happened: Tesla will operate the facility out of two buildings at the Empire West Industrial Park near Houston, Bloomberg reported, citing a tax abatement agreement.

A megafactory is a Tesla facility dedicated to the production of Megapacks.

Megapack is a powerful battery manufactured by the company for large-scale energy storage. Each unit can store over 3.9 Megawatt-hours of energy, which is enough to power an average of 3,600 homes for an hour.

Production at the Shanghai megafactory, the company's first factory dedicated to the production of energy storage products outside the U.S., started in February. Currently, Tesla has only one other factory dedicated to manufacturing megapacks, located in Lathrop, California. The Lathrop facility has the capability of producing 40 GWh of energy storage products every year.

The company’s gigafactory in Nevada can also manufacture energy storage products, in addition to vehicle powertrains and batteries.

Why It Matters: Tesla reported revenue of over $3 billion from its energy generation and storage segment in the fourth quarter of 2024, or more than double the $1.44 billion reported in the corresponding quarter of 2023, upon deploying a record 11.0 GWh of energy storage products.

Revenue from the energy segment accounted for about 12% of the company's total revenue in the quarter, while the automotive segment accounted for 77%. The company reported quarterly total revenue of $25.71 billion, missing a street consensus estimate of $27.26 billion, owing to an 8% drop in automotive revenue.

Tesla continues to be hopeful for its energy segment for it said in January that it expects energy storage deployment to grow at least 50% year-over-year in 2025. Both the powerwall and megapack continue to be supply-constrained as it opens to new markets, the company added.

Tesla CEO Elon Musk said during the company’s fourth-quarter earnings call that the company is putting up a third megapack facility. The CEO, however, did not reveal the location of the factory then.

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