Tesla and the Shanghai Free-Trade Zone authorities have signed an agreement to build a "super factory" for the production of Megapack high-capacity commercial energy batteries, the company reported on Twitter.
According to media reports, the initially planned annual production volume is up to 10,000 batteries, which would be equivalent to 40 gigawatt-hours of energy storage.
The plant's construction is scheduled to start in the third quarter of 2023, and the factory is expected to be commissioned by the end of the second quarter of 2024.
This is also Tesla's first project to create a "superfactory" to manufacture energy storage units outside the United States.
Tesla’s announcement came as the US government has been pressing American companies to become less dependent on China in the midst of mounting tension between Beijing and Washington.
In 2022, US President Joe Biden signed an executive order to implement the $280 billion CHIPS and Science Act of 2022, which includes more than $52 billion in subsidies for US semiconductor manufacturers in an effort to counter China's growing technological clout.
Moreover, the Biden administration expanded control on the export of US semiconductor technology to 28 Chinese companies to restrict Beijing's ability to make certain high-end microchips used in military applications.