Tesla Inc. will construct a brand new battery manufacturing facility in Shanghai, growing funding in China at a time of brewing tensions between Beijing and Washington.

Tesla will manufacture Megapack large-scale energy-storage models within the new facility, which provides to its manufacturing facility for electrical cars in Shanghai. Tesla made the announcement at a signing ceremony for the undertaking in Shanghai. Tom Zhu, Tesla’s senior vice chairman of automotive, and Shanghai authorities officers together with vice mayor Wu Qing attended, with Tesla Vice President Tao Lin signing the contract.

Tesla CEO Elon Musk was additionally reportedly in China on the time.

Tesla is leveraging China’s world main battery provide chain to ramp up output and decrease prices of Megapack lithium ion battery models to fulfill rising demand of power storage globally because the world shifts to make use of extra renewable power.

Building is scheduled to start within the third quarter of this yr and the plant will start manufacturing within the second quarter of 2024, the corporate mentioned in an announcement.

Tesla already operates a Megafactory in Lathrop, Calif., able to manufacturing 10,000 Megapacks per yr.

Tesla’s deepening China funding comes shortly after France’s Airbus SE introduced plans to double its manufacturing capability within the nation for certainly one of its top-selling jets. The European planemaker will add a second remaining meeting line for A320 narrow-bodies at a manufacturing facility in Tianjin, underneath a deal signed by CEO Guillaume Faury in Beijing on Thursday.

The brand new manufacturing tasks give a lift for Chinese language business as different companies like Apple Inc. rethink manufacturing within the nation amid heightened tensions with the U.S. over every thing from an alleged Chinese language spy balloon being shot down over American skies to Beijing’s partnership with Russian President Vladimir Putin.

The Megapack is meant as a large battery to assist stabilize power grids, with the corporate saying every unit can retailer sufficient power to energy a median of three,600 properties for one hour. The brand new manufacturing facility will initially produce 10,000 Megapacks yearly, equal to round 40 GWh of power storage, and the merchandise will probably be bought worldwide.

China, dwelling to rising international electrical car maker BYD Co., is an especially necessary marketplace for Tesla. Its current automobile manufacturing facility on the outskirts of Shanghai, which the U.S. firm owns outright, produced nearly 711,000 EVs final yr, or 52 p.c of its worldwide output — even with manufacturing being disrupted by China’s now-abandoned COVID Zero coverage.

Authorities rolled out the purple carpet to assist Tesla arrange its first plant outdoors the U.S. in early 2019, and Shanghai authorities officers assisted the corporate with resuming manufacturing in a well timed method after pandemic-related disruptions.

Musk’s time working in China hasn’t been completely clean, nevertheless. An growth of the Shanghai EV plant was delayed over knowledge issues about Tesla’s connections to Musk’s internet-from-space initiative Starlink, individuals acquainted with the matter mentioned earlier this yr, days after offended Tesla house owners swarmed showrooms in China to complain about lacking out on one other spherical of worth cuts.

Tesla automobiles additionally had been banned from Chinese language army complexes and housing compounds in early 2021 over issues about delicate knowledge being collected by cameras constructed into the automobiles.

Musk mentioned on an earnings name in January that China is probably the most aggressive auto market. He’s made comparable feedback earlier than, together with throughout an internet discussion board in September 2021, when he mentioned he had “a substantial amount of respect for the numerous Chinese language automakers.”