Elon Musk Says Tesla Will Build Shanghai Battery Factory (2024)

Elon Musk, the chief executive of Tesla, announced on Twitter on Sunday that his company would build a factory in Shanghai with the aim to assemble 10,000 giant batteries annually for electric producers and distributors.

The batteries, which Tesla calls Megapacks, are designed to store large amounts of electricity — a single Megapack can power 3,600 homes for one hour, according to Tesla. The batteries, which are roughly the length and height of an international shipping container, can discharge the electricity to run factories or homes when demand from the local power grid is high, or during a blackout.

The capacity to store electricity when it isn’t in demand is critical as electric utilities move toward wind and solar energy to replace power generated by fossil fuels. In China, demand for grid-storage batteries is especially strong. Many provinces now require new solar and wind farms to have enough batteries to hold 10 to 20 percent of the electricity they generate.

China has also been liberalizing its power markets in response to waves of blackouts in the autumn of 2021, when demand overwhelmed the country’s power suppliers. Many factories were closed for days, and some office towers had to be evacuated before their elevators lost power. Part of a chemical factory blew up, injuring dozens of workers, when it suddenly lost the electricity necessary to maintain the mix of temperature, pressure and other variables needed for its processes.

China has responded by allowing electricity prices to vary much more throughout the day in hopes of encouraging smoother use of power. Electricity becomes inexpensive when the sun is shining brightly, or the wind is blowing strongly, generating so much renewable energy that factories and homes may not be able to use it all immediately.

Variable electricity pricing aims to encourage electricity users to turn off power-hungry devices when demand is high, reducing the risk of blackouts. The combination of China’s shift in pricing and the regulations for new renewable energy installations to store electricity has created a fast-growing demand for batteries.