Recently, the Lingang New Area Management Committee of the Shanghai Pilot Free Trade Zone officially announced that the construction permit for Tesla's Shanghai Energy Storage Super Factory project has been issued.
According to public information, Tesla's Shanghai energy storage plant covers a total area of approximately 200000 square meters and has a total investment of approximately 1.45 billion yuan. The factory is located near Tesla's Shanghai super factory, which is also Tesla's first energy storage super factory project outside of the United States.
Regarding why the construction project of the energy storage super factory has landed in Shanghai, a reporter from the Daily Economic News contacted Tesla China, but the company has not responded to this at the moment.
Lin Boqiang, Dean of the China Energy Policy Research Institute at Xiamen University, believes that the landing of the project in Shanghai is partly due to Shanghai, as an important development center for new energy vehicles and energy storage technology in China, having a complete industrial chain, abundant technological resources, and a friendly business environment. On the other hand, Tesla's super factory is also located in Shanghai, and it is natural to build another energy storage factory.
According to Tesla's official announcement in April, the Shanghai Energy Storage Super Factory plans to start construction in May this year and achieve mass production in the first quarter of 2025.
Focusing on the production of ultra large commercial energy storage batteries
At present, Tesla's energy storage products include Powerwall, Powerpack, and Megapack. The Shanghai Energy Storage Super Factory mainly produces mega packs of ultra large commercial energy storage batteries, supplying the global market. Initially, it planned to produce 10000 commercial energy storage batteries annually, with a storage capacity of nearly 4010 gigawatt hours (GWh). "Although the numbers are astonishing, compared to the current energy storage pattern in the entire Chinese market, it is still relatively small," Lin Boqiang said.
Specifically, Megapack is an energy storage solution launched by Tesla for large businesses. It is not just a battery, but a complete and integrated energy storage system. Each Megapack unit can store over 3 megawatt hours (MWh) of electricity, which is sufficient to meet the hourly electricity demand of 3600 households, and can be placed independently outdoors without the need for complex climate control systems.
In addition, Megapack integrates batteries, temperature control systems, and power conversion equipment together to form a simple and efficient energy solution, simplifying installation and operation processes while reducing system costs. Meanwhile, Tesla's management software can monitor the status of Megapack in real-time and optimize charging and discharging strategies through intelligent algorithms, further improving energy efficiency.
In addition, Megapack's modular design also means that energy storage capacity can be flexibly expanded to meet the needs of projects of different scales. In application scenarios, Megapack can provide various power grid services including frequency regulation, emergency backup power, peak shaving, etc. It can also seamlessly cooperate with renewable energy generation facilities to achieve 24-hour uninterrupted clean power supply.
Simply put, Megapack is like equipping the power grid with a huge, renewable "power bank" that can store energy when solar and wind energy are abundant and release electricity when needed.
At present, Megapack has used renewable energy to supplement and ensure local electricity supply in many regions such as North America, Asia Pacific, and Europe. These projects include but are not limited to the Elton Battery Energy Storage Project in California and the Victoria Battery Project in Australia. Tesla's entire energy storage products have spread to over 65 countries and regions worldwide, with over 1500 operational sites and headquarters deployment exceeding 10 gigawatt hours (GWh). In the first quarter of this year, the installed capacity reached a record high of 4.1 GWh.
Energy storage projects feed back into automotive business
When Tesla released its Master Plan 3 in March last year, CEO Musk stated, "Tesla's overall plan is built around a sustainable energy economy." In its 2024 first quarter report, Tesla used this phrase to describe the entire ecosystem - "More Than Just Vehicles.".
Overall, Tesla's energy storage layout is aimed at building a comprehensive and sustainable energy ecosystem that integrates new energy vehicles, solar products, and energy storage equipment. This ecosystem aims to drive global progress towards zero carbon emissions by seamlessly integrating the generation, storage, and use of renewable energy.
This time, the Shanghai energy storage factory will mainly produce ultra large energy storage batteries (Megapacks). As an important part of the ecosystem, Megapack not only strengthens Tesla's leading position in energy storage technology, but also provides strong support for its electric vehicle business.
Jiang Han, Senior Researcher at Pangu Think Tank, stated that the Megapack project at the Shanghai Energy Storage Plant will help enhance Tesla's competitiveness in the energy storage field and further consolidate its leading position in the global new energy vehicle market.
Secondly, increasing production capacity will help Tesla better meet the energy storage needs of the Chinese market and provide better energy replenishment services for Tesla's electric vehicle business. This will help enhance Tesla's brand influence and market share in the Chinese market, further accelerating the development of Tesla's automotive business in China.
Some argue that the deployment of Megapack will enable Tesla to participate in the electricity market, conduct energy transactions, create new sources of revenue for the company, and provide additional financial support for the automotive business.
In fact, Tesla's energy storage business has also been reflected in its financial reports. In the 2024 Q1 financial report released, although Tesla's overall revenue fell by 9%, its energy generation and storage business revenue reached a historic high of 1.635 billion yuan, a year-on-year increase of 7%.
"With the continuous expansion of the new energy vehicle market and the rapid increase in installed capacity of renewable energy, the role of energy storage technology is becoming increasingly prominent. Energy storage super factories will significantly improve the production speed and scale of energy storage products, meeting the market's demand for energy storage products." Jiang Han said.