Tesla, the electric car company founded by Elon Musk, is expanding its presence in China with the construction of a new factory in Shanghai.
According to the company, the new plant will produce up to 10,000 of its “Megapack” energy storage units per year. Megapacks are large batteries designed to help stabilize energy grids and prevent power outages.
Tesla already has a Megapack plant in California that also produces 10,000 units per year. The new factory in China will be in addition to Tesla’s US factory.
Construction on the Chinese plant is scheduled to begin later this year, with battery production expected to start in the summer of 2024. At the time of writing, Tesla had not responded to a request for comment from the BBC.
Tesla will be able to benefit from China’s position as the largest battery producer in the world, which could help the company boost production and reduce costs.
The announcement coincides with the US government’s push for American companies to decrease their reliance on China amidst growing tensions between the two nations.
In 2020, the Biden administration imposed a ban on US tech companies that receive federal funding from constructing “advanced technology” facilities in China for a decade, as part of a $50bn (£40bn) initiative to strengthen the US semiconductor industry.
Last August, President Biden signed a law allocating $280 billion for high-tech manufacturing and scientific research, citing concerns about the US losing its technological dominance to China.
Tesla established its first factory outside the US in Shanghai in 2019, where it currently produces 22,000 cars per week. The company also has a factory in Germany and has announced plans for a new plant in Monterrey, Mexico.
China, which is the world’s largest automobile market, has experienced a significant drop in vehicle sales this year due to a slowing economy.
In response to a backlog of unsold vehicles and intense competition in the country, Tesla recently reduced the prices of its Shanghai-produced models.