Tesla's Shanghai Megafactory is expected to go into production in the first quarter of 2025, with Megapack production of up to 10,000 units per year and nearly 40 GWh of energy storage, Tom Zhu said.

Tesla (NASDAQ: TSLA) has begun construction of an energy storage plant in Shanghai, a project that received a construction permit from regulatory authorities last week.

Tesla's Shanghai Megafactory began construction on May 23, and it's the company's first such project for energy storage outside the US, the electric vehicle (EV) maker announced in a statement today.

Shanghai Lingang Economic Development Group became the first customer for the plant's product Megapack in China and signed a contract with Tesla for the first order at the ceremony.

Local media outlet Jiemian first reported the development earlier today, saying the factory is located in Shanghai's Lingang area in Pudong, covering a total area of about 200,000 square meters.

Lingang is home to Tesla's EV factory in China, which produces the Model 3 and Model Y. The Megafactory is close to Tesla's Shanghai Gigafactory, Jiemian's report noted.

The Shanghai Megafactory is Tesla's first energy storage factory outside of the US and is another major investment in China after the company's Giga Shanghai in the ten years since it entered the country, said Tesla senior vice president Tom Zhu, according to Jiemian.

The factory represents an important step in Tesla's global layout in energy storage and a testament to its key role in the global energy transition tide, Zhu said.

Tesla's energy storage products include Powerwall, Powerpack and Megapack. The Shanghai Megafactory mainly produces Megapack, a large commercial energy storage battery, to supply the global market, Jiemian's report noted.

Tesla's Shanghai Megafactory is expected to go into production in the first quarter of 2025, and will produce up to 10,000 Megapacks per year, with nearly 40 GWh of energy storage, Zhu said.

40 GWh is enough power to power 50,000 homes in Shanghai for a year, Zhu said.

The Megapack is a powerful battery that stores energy and supplies it, helping to stabilize the grid and prevent power outages, according to Tesla's website.

Each Megapack unit can store more than 3 MWh of energy, enough to power 3,600 homes for an hour, according to Tesla's website.

On April 9, 2023, Tesla signed a deal with Shanghai's Lingang authorities to build the new Megafactory in the district for Megapack production.

The Megafactory is initially planned to produce up to 10,000 commercial energy storage batteries per year, with nearly 40 GWh of energy storage, and the products will be available to the global market, according to an announcement last April.

The factory was originally scheduled to begin construction in the third quarter of 2023 and go into production in the second quarter of 2024.

On April 17, local media outlet The Paper cited Tesla China as saying the Megafactory was scheduled to start construction in May and begin mass production in the first quarter of 2025.

On May 16, authorities in Shanghai's Pudong New Area said in a statement that the Megafactory project had received a construction permit, signaling an imminent start to construction.

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