Tesla, the electric vehicle company founded by Elon Musk, is expanding in China by building a new factory to produce its large-scale batteries.
The Shanghai facility will be capable of producing 10,000 “Megapack” energy storage units per year, according to the company.
A Megapack is an extremely large battery that can be used to stabilize energy infrastructures and prevent blackouts.
Tesla already has a Megapack plant in California, where 10,000 units are produced annually.
Mr. Musk stated on Twitter that the new Chinese plant will complement Tesla’s U.S. facility.
According to the Chinese state media outlet Xinhua, construction on the new Megapack plant in China is expected to commence later this year, with battery production beginning in the summer of 2024.
China is the largest producer of batteries, and Tesla will be able to take advantage of this fact to increase production and reduce costs.
Also the US administration has been urging American corporations to reduce their dependence on China amid rising tensions with Beijing.
Ten years ago, the Biden administration prohibited federally-funded US technology firms from constructing “advanced technology” facilities in China.
The regulations were part of a $50 billion (£40 billion) proposal to expand the US semiconductor industry.
In August, Vice President Biden also signed a law allocating $280 billion to high-tech manufacturing and scientific research in response to fears that the United States is losing its technological advantage to China.
In 2019, Tesla launched its first overseas manufacturing facility in Shanghai. Currently, the facility produces 22,000 vehicles per week.
Tesla also manufactures automobiles near Berlin, Germany, and has announced intentions for a second international plant in Monterrey, Mexico.
Due to the faltering economy, China, the world’s largest auto market, saw vehicle sales drop significantly this year.
Last month, Tesla cut prices on Shanghai-produced models due to a backlog of unsold vehicles and tough competition in China.
