The Megafactory is planned to initially produce up to 10,000 units of commercial energy storage batteries per year, with an energy storage scale of nearly 40 GWh, and the product will be available to the global markets.

(Image credit: Shanghai Lingang special area administration)

(NASDAQ: TSLA) is bringing its other major business, energy storage, to China after its electric vehicle (EV) business saw great success here.

The US EV maker signed a deal with Shanghai's Lingang authorities on the afternoon of April 9 to build a new Megafactory in the area, which will be dedicated to producing Tesla's energy storage product Megapack, according to an announcement from the Lingang special area administration.

The Megafactory will be Tesla's first energy storage system factory outside of its US home market, with an initial planned annual production of up to 10,000 commercial energy storage batteries and an energy storage scale of nearly 40 GWh, with products to be supplied to the global markets.

Construction of the plant is scheduled to begin in the third quarter of this year, with production starting in the second quarter of 2024.

The signing ceremony was attended by senior officials from the Shanghai municipal government, Tom Zhu, who just became Tesla's senior vice president of automotive business, and Grace Tao, Tesla's vice president of external affairs.

Lingang area in Shanghai's Pudong new area is home to Tesla's Gigafactory for EV production in China, which began operations in late 2019 and is now Tesla's largest EV production site globally.

Notably, Tesla has been hiring for a Megapack project manager position in Shanghai since last month.

"You will interface with design engineering, manufacturing engineering, compliance, system test, reliability, supply chain and operations to define and drive development of new product programs while also managing change on existing programs," the job description reads.

A Megapack currently starts at $1,879,840 in the US, a reduction of nearly $30,000 from its initial price, with expected delivery in the first quarter of 2025.

(Image from Tesla US website)

Tesla's business landscape consists primarily of EVs and renewable energy, with the latter divided into solar and energy storage devices, currently available in Powerwall, Powerpack and Megapack.

Megapack is a powerful battery that stores and supplies energy, helping to stabilize the grid and prevent power outages.

Each Megapack unit can store more than 3 MWh of energy, enough to power 3,600 homes for one hour, according to Tesla's website.

Tesla's move comes after its EV business has seen great success in China and hopes to capitalize on the "Shanghai Speed" again for commercial success.

Five years ago, Tesla's Giga Shanghai project created global attention as "Shanghai Service, Lingang Speed", helping Shanghai become a new high ground for the development of the new energy vehicle industry, said Zhuang Mudi, deputy secretary general of the Shanghai municipal government.

"Today, we are witnessing the signing of the Tesla Megafactory project, which will be an important force in promoting the development of Shanghai's new energy storage industry and green low-carbon transformation," Zhuang said.

Including exports, Tesla sold 88,869 China-made vehicles in March, according to data released by the China Passenger Car Association (CPCA) on April 4.

This is the second-highest China-made vehicle sales in Tesla's history, behind only 100,291 units in November of last year.

In the first quarter, Tesla's China-made vehicle sales were 229,322, up 25.88 percent from 182,174 in the same period last year.

Of Tesla's global deliveries in the first quarter, 54 percent were made at its Shanghai plant, considering it delivered 422,875 vehicles worldwide in the first quarter.

Tesla sells 88,869 China-made vehicles in Mar, CPCA data show