The Tesla unit has seen the energy storage sector lift

Shanghai luminaries expressed hope that Tesla’s Shanghai Megapack energy storage plant, which the US electric carmaker broke ground on Thursday in the Lin-gang Special Area, will serve as an icon for enterprises in the region and help develop an industrial cluster centered around energy storage.

Tesla’s Megapack factory will be the first of its kind outside the United States, requiring an investment of 1.45 billion yuan ($200 million).

The new approximately 200,000-square-meter energy storage project is expected to enter mass production in the first quarter of 2025. It will complement Tesla’s Megapack factory in California, which has an annual production capacity of 10,000 units.

The Lin-gang plant is expected to produce 10,000 units of Megapack each year – advanced battery systems designed for large-scale energy projects, which translates into almost 40 gigawatt-hours of energy storage capacity.

Each Megapack can hold over 3 megawatt hours. Annual production can provide necessary energy storage and grid support. Tesla energy storage products are currently used in over 60 countries and regions.

The new plant received a building permit on May 13. From negotiations to reaching an agreement between Tesla and Lingang, the entire process took only a month, said Wu Xiaohua, deputy secretary of the party’s working committee in the Lingang special area, at the groundbreaking ceremony. ceremony.

“We hope that Tesla’s new mega factory will become an icon, helping Lin-gang grow into a center of the world’s leading companies, an internationally influential highland of industrial innovation, and a demonstration zone of green transformation and low-carbon development,” Wu said.

Praising China’s efforts to develop the new energy industry, including the energy storage sector, Tesla vice president Tao Lin said the country boasts complete industrial chains, huge market potential and a production and business environment crucial for the development of various enterprises.

Tesla’s Gigafactory in Lin-gang, which began operations in late 2019, required an initial investment of more than 50 billion yuan. Currently, the plant is capable of producing over 950,000 electric vehicles per year.

State-owned commercial conglomerate Lingang Group reached an agreement with Tesla on Thursday to use its Megapack system, which will be the first batch of ultra-large electrochemical commercial energy storage systems to be rolled out in China.

Gong Wei, vice president of Lingang Group, said the megapacks will be used to store energy in a data center in the Lingang Special Area, which was included in the China (Shanghai) Pilot Free Trade Zone in 2019. The purchase of Megapack units will help Lin-gang achieve its net zero goals, he said.

“With Tesla’s exemplary design, we anticipate that an industrial cluster around energy storage will quickly emerge over the next three to five years. This will help enhance the resilience and stability of the local industry,” said Lu Yu, high-level director of the technical department of the Lin-gang Special Area Administration.

Driven by increasing demand and expanded application scenarios, the global energy storage market size is estimated at USD 51.1 billion in 2024 and is expected to reach USD 99.72 billion by 2029, representing a compound annual growth of 14.31 percent over the forecast period. Mordor Intelligence market consulting.

Data from market tracker Wind Info showed that more than 80 percent of A-share energy storage companies achieved profitability in the first quarter of this year, exceeding the average profitability of 75.85 percent in the A-share market during the same period.