Tesla has signed on Friday a 4 billion yuan ($556.4 million) agreement with the Shanghai local government, to launch its first grid-scale battery storage project in China.
According to local media outlet Yicai, Tesla will install and operate a Megapack-based energy storage facility in the country.
The move expands Tesla’s role in China from producing energy storage products to directly supplying energy services.
A year ago, the U.S. company received a permit to build a Megapack energy storage battery plant near its Shanghai Gigafactory.
According to Yicai, the plant is set to produce 10,000 Megapacks a year — about 40 gigawatt hours of energy storage. It was also the company’s first Megapack project outside of the United States.
The Shanghai Megafactory manufactures the Megapack, Tesla‘s largest commercial energy storage battery. It is intented for distribution around the world.
The plant started production in February — just nine months after construction began — and the company expects it to reach mass production in the first quarter of 2026.
In mid-March, the company announced that it had exported its first Shanghai-made Megapacks.
“The first batch of Shanghai-made Tesla Megapacks, Tesla’s ultra-large commercial electrochemical energy storage systems, set sail today,” it said in a Weibo post.
Tesla offers a range of energy storage products, including the Powerwall for homes, the Powerpack for businesses, and the Megapack for utility-scale projects.
Last month, the U.S. brand shared on X that its home energy storage system, the Powerwall, provided over 6,000 hours of backup power during the widespread blackout in Spain and Portugal in late April.
Megapacks use renewable energy to supplement and ensure local electricity supply — currently present in many areas of North America, Asia-Pacific, and Europe.
Late last month, as Trump’s “big, beautiful bill” was approved by the U.S. House of Representatives, the company urged the Senate to wind down on energy tax cuts.
The tax breaks — introduced by the Biden Administration in 2022 to stimulate energy-efficient homes and the adoption of EVs — would be brought to an end on December 31.
According to Tesla, “abruptly ending the energy tax credits would threaten America’s energy independence and the reliability of our grid.”
