Tesla's new Shanghai Megafactory starts production

US electric vehicle maker Tesla's continued expansion in China has reflected multinational companies' confidence in the Chinese market, which can be attributed to the rapid development of the country's green economy and the government's efforts to further improve the business environment, said officials and industry experts.

Their comments came on Tuesday, when Tesla's new Mega-factory in Shanghai's Lin-gang Special Area went into operation, with the factory's first Megapack battery system rolling off the production line.

The Megapack, an advanced battery system designed for large-scale energy projects, can store more than 3,900 kilowatt-hours of electricity in a single unit, enough capacity to power a Tesla Model 3 rear-wheel drive version for 39,000 kilometers.

Covering about 200,000 square meters, the new energy storage project involved a total investment of 1.45 billion yuan ($200 million). Up to 10,000 Megapack storage units are scheduled to be produced there annually.

Michael Snyder, Tesla's vice-president of energy and charging, said at the commissioning ceremony on Tuesday that the new project is aimed to coordinate the development of EVs and energy products. This is to serve the company's vision of accelerating the world's transition toward renewable energy.

The energy storage project in Lin-gang will ramp up its production capacity this quarter to help Tesla tap into more markets, said Snyder.

According to Chen Haisheng, chairman of the China Energy Storage Alliance, the targeted output of new-type energy storage, such as electrochemical energy storage and hydrogen storage, will top over 3 trillion yuan by the end of 2025. The cumulative installed capacity of new energy storage is estimated to reach 100 million kilowatts by the end of this year.

New-type energy storage has become new economic drivers in many places in China, as demonstrated by local governments' industrial planning not only for this year but also for 2027 and even 2030, said Chen.

As Tesla's first energy storage Megafactory outside the United States, the new Lin-gang plant only took nine months from groundbreaking, which took place in May 2024, to its official operation. This was three months faster than when Tesla's EV gigafactory in Lin-gang became operational in January 2020.

Tesla's gigafactory for EV production in Lin-gang, which is also the first plant of its kind that the US EV maker has built overseas, was the largest foreign-invested manufacturing project in Shanghai, with a total investment of 50 billion yuan.

Tesla announced on Jan 7 that the Lin-gang gigafactory has turned out over 3 million EVs over the past five years, among which 1 million were sold to overseas markets. Up to 916,000 EVs were produced in the Lin-gang factory last year, accounting for half of the cars that Tesla delivered across the world.

"Tesla's energy storage project marks the second cooperation with Lin-gang, showing the company's recognition of Lin-gang's business environment," said Lu Yu, head of high-tech industry and innovation department of the Lin-gang Special Area Administration.

Lin-gang Special Area, which is part of the China (Shanghai) Pilot Free Trade Zone, has actively participated in the development of Tesla's energy storage project, including helping with the construction plans and assisting in various steps, including obtaining land use and construction permits. This made it possible for the plant to become operational in just nine months, said Lu.

High-level opening-up is the core competitiveness of Lin-gang, Chen Jinshan, director of the Lin-gang Special Area Administration, said during a business environment improvement conference on Friday.

Lin-gang will conduct greater stress tests in terms of further opening-up, so that government services can be more efficient, the market mechanism can be further completed and the system of international rules can be more deeply rooted. All of this will serve companies' more rapid development, he said.

Lin-gang's moves reflect the continued efforts of Shanghai. While releasing the business environment improvement action plan 8.0 on Feb 5, the municipal government stressed that more foreign-invested projects should be introduced to the city at a faster pace.

A plan to stabilize foreign investment was released during a State Council executive meeting on Monday. China will fully implement its commitment to remove all market access restrictions for foreign investors in the manufacturing sector and expand the list of sectors encouraging foreign investment, according to the plan.

A total of 59,080 new foreign-invested companies were established across China last year, an increase of 9.9 percent year-on-year, according to the Ministry of Commerce.

shijing@chinadaily.com.cn