The Tesla Battery Factory will be Located in Shanghai

by Wall Street Rebel - Michael London | 04/10/2023 11:41 AM
The Tesla Battery Factory will be Located in Shanghai

Tesla will produce its Megapack in the new China facility, a large-scale energy-storage unit. This will add to the company's Gigafactory for electric cars, which is also located in Shanghai, and will further the company's investment in China.


On Sunday, CEO Elon Musk tweeted that Tesla will establish a facility in Shanghai to produce 10,000 large batteries per year for electric manufacturers and distributors.

Tesla's Megapack batteries are intended to store massive quantities of energy; the company claims that a single Megapack can provide electricity to 3,600 houses for an hour. When demand on the local power system is strong or during a blackout, the batteries, which are about the length and height of an international shipping container, may discharge the energy to operate companies or residences.

The ability to store electricity for use at a later time is becoming more important as electric utilities transition away from power supplied by fossil fuels and toward renewable sources of energy such as wind and solar. Batteries capable of storing 10 to 20 percent of the power generated by solar and wind farms are now required in several provinces' new renewable energy facilities regulations. A particularly robust market for grid-storage batteries may be found in China.

In addition, China has been liberalizing its power markets as a reaction to the waves of blackouts that occurred in the fall of 2021 due to demand exceeding the capacity of the country's power providers. When a portion of a chemical plant suddenly lost the power essential to maintain the proper mixture of temperature, pressure, and other factors for its operations, it resulted in an explosion that injured dozens of employees and caused property damage. A great number of industries had to be shut down for many days, and some office buildings had to be evacuated in advance of the power going out in their elevators.

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In response, China has allowed far wider price swings for energy at different times of the day to promote more consistent power use. When the sun is shining, or the wind is blowing vigorously, renewable energy sources like solar and wind generate so much electricity that they may be in excess of the immediate needs of businesses and households.

The goal of changing prices for electricity is to reduce the likelihood of power outages by encouraging consumers to switch off energy-hungry appliances when the electricity demand is high. A combination of factors, including China's change in price and rules requiring new renewable energy installations to have the capacity to store power, has resulted in a rapid increase in the demand for batteries.

Tesla is also involved in developing renewable energy sources; the company is a significant solar panel producer in the United States.

Large batteries provide power producers, power consumers, and even speculators the ability to purchase energy when the price is low and sell it when the price is high. Speculators may profit from the price swings in both directions.

In a tweet, Mr. Musk said that the intention behind the new plant was "to supplement the output of the Megapack factory in California." Companies have been under pressure from both President Joe Biden's administration and the government of China to make significant investments in new and developing technology.

The $370 billion Inflation Reduction Act, which was signed into law by President Biden in the previous year, offers incentives for the manufacturing of rechargeable battery packs in the United States so that they may serve the market in that country.

The municipal authority of Shanghai did not immediately respond to a request for comment about Tesla's statement.

The Tesla plant in Shanghai is the company's single biggest facility for producing electric vehicles. Not only does the factory supply the local vehicle market in China, but it also ships a significant number of automobiles to Europe. Tesla has discovered that it is more difficult to construct factories in Europe as rapidly as it is in Shanghai.

China is the leader in the chemical processing that is necessary to make the components of rechargeable batteries and produces the majority of the world's rechargeable batteries. The Tesla factory in Shanghai that will be responsible for the production of Megapacks will be located in close proximity to the companies that produce practically all of the lithium-iron-phosphate compounds used in the production of batteries worldwide.

One of those materials was cobalt. These compounds can be produced at a lower cost than the materials previously used in rechargeable batteries. Concerns have been made by campaigners for human rights over the working conditions in cobalt mines in Africa, which is the primary supplier of the material on a global scale.

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Tesla's plan to wean the globe off of carbon dioxide-producing fossil fuels includes batteries and renewable power production as two of the core components of the approach. In the blog post titled "Master Plan 3," which was published this past week, the corporation detailed its plans for the future of renewable energy.

Carbon dioxide is the primary gas that is being blamed for the shift in the global climate.

According to estimates from the Chinese state-run Xinhua News Agency and state television, construction of the facility may begin around the third quarter of 2023, with the start of production anticipated to occur during the second quarter of 2024.

In 2022, Tesla's non-automotive sales and gross profit, which includes storage, were around $10 billion and $500 million, respectively. Storage was included in this figure. The amount of battery storage capacity installed by Tesla in 2022 was around 6.5 gigawatt-hours, representing a 64% increase over 2021.


                       US carmaker Tesla to build battery plant in Shanghai, capable of producing 10,000 Megapacks per year

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