Tesla is building a Megapack factory in Shanghai

Tesla is building a new battery factory in Shanghai. On Sunday, the automaker announced it would start construction on a new Megapack facility later this year. Once the plant is complete sometime before the second half of 2024, it will be capable of producing 10,000 Megapacks annually. Each container-sized battery can store enough energy to power about 3,600 homes for one hour. Tesla told Bloomberg it plans to sell the Megapacks it makes in China globally. The company has built Megapack installations in a few locations around the world, including Texas and South Australia.

Sunday’s announcement sees Tesla increasing its reliance on China at a time when the US is using economic policy to push automakers and other manufacturers to produce more of their products domestically. At the end of last month, the Treasury Department issued updated guidance detailing what electric vehicles qualify for the Inflation Reduction Act’s $7,500 EV tax credit. Under the updated rules, the department states companies must source the minerals in their car batteries from the US and other approved trading partners for the vehicles to qualify for the incentive. Separately, the Biden administration recently said CHIPS Act funding recipients would need to sign agreements promising they won’t expand production capacity in China.