on increases, Tesla said on Sunday that it would establish a Megapack battery production in Shanghai.

Officials openly rolled out the welcome mat for international investors just days before Airbus unveiled plans for a second final-assembly plant in the nation’s north when the news was announced.

As political friction between Beijing and Washington increases, Tesla said on Sunday that it would establish a Megapack battery production in Shanghai.

Officials openly rolled out the welcome mat for international investors just days before Airbus unveiled plans for a second final-assembly plant in the nation’s north when the news was announced.

According to a tweet from Tesla, the company’s plant will be able to build 10,000 Megapacks, which are very massive batteries used to store enormous amounts of electricity. With an image of a signing ceremony in China, it announced the opening of the new factory.

The electric automaker will break ground in the third quarter of this year and start production in the second quarter of 2024, according to the official Chinese state media agency Xinhua, which broke the story first.

The Shanghai facility would feature 40 gigawatt-hours of energy storage, which is the same amount of production capability as Tesla’s Megafactory in Lathrop, California.

Wedbush Securities analyst Daniel Ives stated, “We believe this announcement is a potential game changer for Tesla on the battery front.” With the opening of the new Megapack facility in China, Tesla is extending its lead in battery technology in the EV (electric vehicle) arms race. This is another chance for Musk to show off his strength.

Tim Cook, CEO of Apple (AAPL), visited Beijing last month as a sign of support for China as a market and manufacturing hub despite heated political rhetoric between the US and China.

Second factory in Shanghai
The Tesla Gigafactory for electric vehicles broke ground in Lingang, a sizable free trade zone outside of Shanghai, where the Megafactory will be situated.

At 65% of the price of the Model 3 production plant in the United States, the facility was constructed in just ten months. It quickly grew to be the world’s largest EV manufacturing facility. Tesla’s primary export base, the Shanghai factory, supplies automobiles to the majority of international markets.

Additionally, Tesla is growing among Chinese motorists. The China Passenger Car Association (CPCA) said last week that the company sold 88,869 units of electric vehicles built in Shanghai in March. That figure was 35% greater than it was a year earlier, according to Reuters.

Behind market leader BYD (BYDDF), which sold 206,089 units last month, Tesla is the second-largest EV manufacturer in the nation.

In an effort to increase sales amid weakening demand in the largest auto market in the world, Tesla cut pricing in China for the second time in less than three months in January.

The reductions come days after Beijing discontinued a 13-year-long subsidy for the purchase of electric vehicles, a decision that is anticipated to further pressure the market for cars.

The Chinese government prolonged its expensive EV subsidy program during the epidemic in order to avoid a severe economic slowdown, which it had originally planned to phase out by the end of 2020.

According to the official China Securities Journal, the CPCA expects sales of “new energy cars,” the majority of which are EVs, to reach 8.5 million units in 2023, or 36% of all auto sales.

According to the association, China’s total passenger car sales reached 20.5 million units in 2022, an increase of just 1.9% from the previous year as the nation faced with the effects of tight Zero-covid rules that weren’t loosened until the end of the year.

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