On May 23, 2024, it was a milestone day for China's new highland of opening up to the outside world, the Shanghai Free Trade Zone Lingang New Area, and the global electric vehicle giant Tesla.
Wu Xiaohua, Deputy Secretary of the Party Working Committee of Lingang New Area, stated at the opening ceremony of Tesla's Shanghai Energy Storage Super Factory on the same day that this is something that Lingang has been looking forward to for a long time and a milestone in its development history.
One of Tesla's "Big Four" executives and Senior Vice President, Zhu Xiaotong, not only mentioned the milestone significance, but also sighed on site. It was Shanghai and the Lingang New Area that helped Tesla's Shanghai super factory grow from scratch and rapidly, "becoming Tesla's global benchmark factory and major export center."
Compared to Tesla's first overseas super factory that started construction in Lingang in January 2019, the landing process of Tesla's Shanghai energy storage super factory this time can be said to be "effortless". Wu Xiaohua said that the negotiation and signing of the Shanghai Energy Storage Super Factory "took only one month to refresh the 'port speed' again." A person familiar with the matter told the surging news reporter, "The project is really fast from negotiation to landing. Other local governments have said in the original words that Tesla did not give us a chance to 'quote'."
Five years ago, as China's first foreign-owned vehicle manufacturing project, Tesla's first overseas super factory achieved Tesla's speed of "starting construction, completing construction, putting into operation, and going public in the same year" and Shanghai's speed. This factory not only rescued Musk and Tesla from the "production hell", but also became one of the most convincing business cards of the excellent business environment in Shanghai and the Lingang New Area.
Regarding the follow-up plan for the Shanghai Energy Storage Super Factory, Tesla has disclosed that the factory is expected to start production in the first quarter of 2025. After production, the Megapack production of super large energy storage batteries will reach 10000 units, with a storage capacity of nearly 40 gigawatt hours (1 gigawatt hour=1000 megawatt hours).
Wu Xiaohua said, "We will strive to start construction, start production, and deliver Tesla's Shanghai Energy Storage Super Factory this year." Of course, he also admitted on site that considering that it is approaching the end of May, this is very difficult, and "we will use higher quality services to help achieve it."
Five years later, choose Shanghai Lingang again to replicate the success of the whole vehicle factory?
This year marks Tesla's 10th anniversary of entering the Chinese market. On April 22, 2014, Tesla began its first delivery in China, and Musk flew specifically from the United States to hand over the keys to the first batch of Model S owners.
"Ten years ago today, we handed over the keys to the flagship coupe Model S to 15 consumers who are at the forefront of the times; ten years later today, we are serving over 1.7 million Tesla Chinese car owners." On the morning of April 22 this year, Tesla's official Weibo post wrote.
At the beginning of 2014, Musk stated in an interview with Chinese media that Tesla planned to build a production plant in China to supply Chinese demand. The complete prototype of this plan was announced to the public in 2018: in May 2018, Tesla (Shanghai) Co., Ltd. was approved for establishment with a registered capital of 100 million RMB, and the legal representative was Tesla China President Zhu Xiaotong at that time. This means that Tesla's strategy in China has taken a substantial step forward.
On July 10, 2018, Tesla's Shanghai Superfactory officially signed a contract and landed in Lingang. This is the first foreign investment project since the government lifted the restriction on foreign investment in new energy vehicle vehicles, and it is also the largest foreign-funded manufacturing project in Shanghai's history.
The Tesla effect is self-evident. It is not only a "catfish" for the Chinese electric vehicle market, but also of great significance for the newly added Lingang area.
Wu Xiaohua pointed out at the above ceremony that the growth rate of fixed assets investment and gross industrial output value above designated size of the manufacturing industry in Lingang New Area ranked first in Shanghai, and the total volume ranked second in Shanghai. It has become the "growth pole" and "engine" of Shanghai's economic development. In the past 2023, the output value of Lingang's intelligent automobile industry exceeded 300 billion yuan, achieving a 10 fold growth miracle in just 5 years.
Behind this, the efforts of Tesla's Shanghai super factory and SAIC Group's Lingang production base are indispensable. Driven by the two leading enterprises, Lingang New Area has built a whole industry ecology covering new energy vehicles such as automobile chips, auto drive system, automobile interior, body, new materials, precision processing, etc. The intelligent automobile industry has also become the forefront industry with the largest economic scale and the strongest driving benefits in the new area.
In last year's "High Quality Development Research Tour", the Shanghai Municipal Commission of Economy and Information Technology also introduced that Tesla, as a leading enterprise in new energy vehicles, has made positive contributions to the construction of a world-class automotive industry center in Shanghai. Among them, in building the new energy vehicle industry ecosystem, Tesla's Shanghai super factory achieved a localization rate of over 95% in a very short period of time, driving 360 upstream suppliers, 100000 job opportunities, and a cumulative order of 700 billion yuan. It also helped 60 Chinese suppliers successfully enter Tesla's global supplier system, playing a positive role in improving China's new energy vehicle industry chain, technological advancement, scale expansion, and cost reduction.
In 2023, Tesla produced approximately 1.85 million electric vehicles worldwide and delivered approximately 1.81 million, with year-on-year growth of approximately 35% and 38%, respectively. Among them, Tesla's Shanghai super factory delivered a total of 947000 vehicles in 2023, a year-on-year increase of 33%, accounting for more than half of its global production capacity.
Wu Xiaohua said on the scene: Looking back at history, today I have a heartfelt sentence to share with everyone: Tesla's 5-year development history in Lingang is the history of mutual selection and achievement with Lingang.
"Someone asked me, why did Tesla choose Lingang again after 5 years?" Wu Xiaohua threw this question at the scene.
In Wu Xiaohua's view, the factors that led to Tesla's investment and construction in Lingang are diverse, and there is no doubt that the experience of Tesla's Shanghai super factory in Lingang over the past five years is one of the key factors. "The deep friendship formed through deep cooperation with Tesla's Shanghai Super Factory over the past 5 years, first-class business environment, and service response speed."
In addition, Lingang has the transportation advantage of being both an air port and a sea port, which helps Tesla's energy storage products to be sold worldwide; Lingang, backed by the advantages of the energy storage industry chain cluster in the Yangtze River Delta, helps Tesla reduce costs as quickly as possible and to the greatest extent possible; Lingang's advantages in opening up to the outside world in areas such as bonded processing, cross-border data, and capital inflows and outflows provide convenient conditions for Tesla's product globalization
Lu Yu, Director of the High Tech Department of the Lingang New Area Management Committee, further mentioned in an interview with the Paper that for Tesla, its choice to do the second important strategic project in Lingang is mainly based on the fact that Lingang already has a good industrial ecological foundation, and the overlap between the new energy vehicle industry chain and the energy storage industry chain is very high
That is to say, Tesla once successfully jumped out of the "production capacity hell" through its Shanghai super factory, but now, after the rapid landing of energy storage super engineering, it wants to continue to quickly form the ability of mass production. The mature industrial chain system cultivated and formed locally in recent years is a major advantage of Lingang.
Lu Yu also emphasized that the super energy storage project is of great significance to Lingang. "Originally, our large industrial cluster only served the terminal product of automobiles. Now, once this energy storage is implemented, it means that our industrial cluster will serve more diverse terminal industries in the future. This can actually help our industrial chain have better risk resistance and stronger resilience."
"Tesla is not just a car company"
"Tesla is not just a car company, but also an innovative technology enterprise that integrates electric vehicles, sustainable energy, artificial intelligence, and robotics technology." Zhu Xiaotong emphasized this point at the above ceremony, which is exactly what Musk has been showcasing to the public. Especially in the increasingly competitive electric vehicle market, Tesla's strategic adjustment has received much attention.
Zhu Xiaotong mentioned that Tesla is committed to using disruptive technologies to solve fundamental problems in transportation and sustainable energy, forming a vertical integration of the entire industry chain, and accelerating the transition to sustainable energy.
Tesla's business landscape clearly goes beyond cars, what does it mean for energy storage factories to land in China? What is the position of energy storage business in Tesla's business landscape?
Tesla officials mentioned that Tesla's mission is to accelerate the world's transition to sustainable energy. To achieve this, it is not enough to just focus on electric vehicles. Since the Industrial Revolution, due to the large-scale use of non renewable and unsustainable fossil fuels, humanity has been facing two major threats: energy crisis and climate change. The use of sustainable energy such as solar energy has become an excellent solution to address the crisis.
Therefore, Tesla has also launched solar panels and solar roofs. However, how to solve the biggest problem of sustainable energy, which is intermittency, volatility, and randomness? Energy storage is one of the essential guarantees, and Tesla also mentioned that among all forms of energy storage, electrochemical energy storage is currently unique, and among electrochemical energy storage, lithium battery energy storage has been widely deployed.
Since 2015, Tesla has launched the Powerwall household energy storage battery and Megapack ultra large commercial energy storage battery in the United States, targeting the household energy storage market and the commercial and industrial energy storage markets, respectively. The installed capacity for the whole year of 2023 was 14.7 gigawatt hours, and the installed capacity in the first quarter of 2024 reached a record high of 4.1 gigawatt hours. The gross profit of the energy storage business increased by 140% year-on-year, making it one of Tesla's fastest-growing businesses.
The future Shanghai Energy Storage Super Factory will be the first to produce Tesla's current energy storage star product, Megapack. Tesla describes it as a "giant power bank" and a "smart energy manager", resembling a white container with a maximum weight of over 38 tons. A single Megapack can store 3900 kilowatt hours of electricity, which is equivalent to driving a Model 3 rear wheel drive version for over 39000 kilometers.
Tesla presents a scenario where in 2023, China's total electricity consumption is 9224.1 billion kilowatt hours. Assuming that sustainable energy sources such as photovoltaics and wind power are stored, and Megapack is used to power the entire China, only about 0.1% of the Taklamakan Desert area is needed to deploy Megapack, which is enough to store 1.4 billion Chinese people's annual electricity consumption.
Tesla emphasizes that electric vehicles, charging stations, solar panels, household energy storage products, ultra large electrochemical commercial energy storage systems, autonomous driving technology, and the Robotaxi fleet These are just a part of Tesla's sustainable energy landscape, and on the basis of achieving interconnectivity in all hardware, Tesla has also developed a complete set of energy software platforms for managing the interconnectivity of sustainable energy facilities. The ultimate goal is to develop a comprehensive sustainable energy solution.
Tao Lin said in an interview with media such as The Paper that, like previous electric vehicles, Tesla's Shanghai Energy Storage Super Factory will "also be a very important production and export base in the company's future global energy storage industry layout."
The current plan for the factory is to start production in the first quarter of 2025. After production, the production of Megapack ultra large energy storage batteries will reach 10000 units, with a storage capacity of nearly 40 gigawatt hours (1 gigawatt hour=1000 megawatt hours). The total area of the project is about 200000 square meters, and the factory is located near Tesla's Shanghai super factory. This is also Tesla's first energy storage super factory project outside of the United States.
Tao Lin also mentioned, "We hope to continue the 'port speed', build factories as soon as possible, achieve product production as soon as possible, and then achieve a highly optimized level of capacity utilization. At the same time, we also hope to make our products recognized by everyone in the market as soon as possible, and promote the healthy operation of the factory."
Lu Yu also stated that energy storage is still an emerging industry, both in terms of technology and products. "Tesla also needs to have better promotion in applications. Lingang has rich scenarios on the terminal and user sides. We have large production and manufacturing bases, a large number of data centers, and these are high energy consuming industries. After importing energy storage, we can provide better energy source solutions for these industries. At the same time, through these demonstration projects, we can also help Tesla's energy storage products better promote to the market and globally."
China's first batch of ultra large commercial energy storage batteries Megapack signed a contract
In contrast to Tesla's ambitious energy storage business, the global energy storage industry has also experienced rapid development in recent years.
According to Bloomberg New Energy Finance's forecast, the new installed capacity in the global energy storage market will set a record in 2024, with an expected global new energy storage capacity of 42GW/99GWh, a year-on-year increase of 163% and 183%. From 2023 to 2030, the energy storage market will continue to grow at a compound annual growth rate of 27%. It is expected that by 2030, the annual installed capacity will reach 110GW/372GWh, which is 2.6 times the expected figure for 2023.
According to incomplete statistics from the Global Energy Storage Database of the Zhongguancun Energy Storage Industry Technology Alliance (CNESA), as of the end of 2023, the cumulative installed capacity of power storage projects that have been put into operation worldwide is 289.2GW, with an annual growth rate of 21.9%. As of the end of 2023, the cumulative installed capacity of power storage projects in China has reached 86.5GW, accounting for 30% of the global market size and a year-on-year increase of 45%.
Whether in the global or Chinese market, more mature lithium batteries are still the mainstream of energy storage projects.
In January of this year, Bian Guangqi, Deputy Director of the Energy Conservation and Technology Equipment Department of the National Energy Administration, introduced the development of new energy storage in China in 2023. He mentioned that new energy storage technologies are constantly emerging, and the technological route is flourishing. Lithium ion battery energy storage still occupies an absolute dominant position, and technologies such as compressed air energy storage, flow battery energy storage, and flywheel energy storage are rapidly developing. As of the end of 2023, the proportion of lithium-ion battery energy storage that has been put into operation is 97.4%, lead carbon battery energy storage accounts for 0.5%, compressed air energy storage accounts for 0.5%, liquid flow battery energy storage accounts for 0.4%, and other new energy storage technologies account for 1.2%.
At the same time, energy storage technology has also become a key lever for local governments to promote new economic drivers, and the frequency and intensity of policies continue to increase.
Lingang is also promoting new energy storage demonstration applications to lead industrial innovation and development. At the Low Energy Demonstration City Construction Promotion Conference in Lingang New Area held in January this year, the "Implementation Plan for Promoting New Energy Storage Demonstration Applications and Leading Industrial Innovation and Development in Lingang New Area" (hereinafter referred to as the "Implementation Plan") was released. The implementation plan clearly aims to achieve a utilization scale of 50000 kilowatt hours and an industrial scale of 50 billion yuan by 2025, and to strive for an application scale of 300000 kilowatt hours and an industrial scale of 100 billion yuan by 2030.
It is reported that in terms of scenario applications, Lingang mainly promotes from three aspects. Firstly, actively develop source testing and energy storage, make good use of the resources such as wind power and photovoltaics in the new area, promote "renewable energy+energy storage", and build it in the form of independent energy storage power stations, which can be self built, co built, leased, and other methods.
Secondly, develop grid side energy storage according to local conditions. Exploring the configuration of new energy storage based on the construction needs of Yangshan Island microgrid, and reasonably laying out and constructing new energy storage at the end of the new area's power grid and in areas with insufficient power supply capacity and scarce transmission and transformation station resources.
Thirdly, it is to flexibly develop user energy storage. For users with high power loads or high requirements for power quality, such as integrated circuits, data centers, communication base stations, high-end equipment, etc., new energy storage facilities should be reasonably configured. Actively developing "comprehensive energy stations+energy storage", exploring the construction of integrated projects for light storage and charging, laying out demonstration applications for intelligent charging and discharging (V2G), and exploring the construction of integrated hydrogen production and refueling stations.
According to the reporter from Pengpai News, Lingang has also issued corresponding support policies in supporting the high-quality development and market-oriented operation of new energy storage. The Implementation Plan also specifies that Lingang will promote the high-end development of the lithium-ion battery energy storage industry by focusing on leading enterprises, expanding the scale of the energy storage industry, and improving the energy storage enterprise chain.
It is worth noting that at the aforementioned groundbreaking ceremony, Tesla also signed the contract with Lingang Group for China's first batch of ultra large commercial energy storage batteries, Megapack. This also marks the official breakthrough of Tesla's energy storage business in China.
Gong Wei, Vice President of Lingang Group, stated that energy storage technology, as a key technology supporting the large-scale application of renewable energy resources and the construction of new power systems, has huge market potential and broad development space. As the main body of industrial park development and operation, as well as the main force of Lingang New Area development and construction, Lingang Group currently holds and operates over 10 million square meters of industrial carriers, serving nearly 18000 physical enterprises. "It has gathered a large number of enterprises with energy storage needs, such as artificial intelligence, integrated circuits, and biopharmaceuticals, with rich application scenarios such as photovoltaic, wind power, hydrogen energy, and energy storage."
Gong Wei mentioned that based on this background and market demand, Lingang Group has established in-depth cooperation with Tesla, promoting the first commercial demonstration application of Megapack in China by purchasing Tesla's Megapack energy storage products, and serving the energy storage needs of park enterprises. "We have chosen IDC data centers as the scenario, utilizing energy storage technology to solve the operational pain points of traditional data centers' high energy consumption, improve energy utilization efficiency, and assist in the construction of green computing centers."
Gong Wei also pointed out that this cooperation between the two sides is just a starting point. In the future, Lingang Green Innovation Company, which focuses on green energy business under the group, will achieve rapid breakthroughs and continue to expand its energy storage business.
Deng Haoqiang, Deputy General Manager of Lingang Green Innovation Company, told Pengpai News that the first order includes a total of 8 Megapacks and 32 megawatt hours, mainly used for the data center scenario of Lingang IDC, specifically for the user side energy storage project of Youfu Intelligent Computing Center in Lingang New Area. "This is also an important scenario of user side energy storage actively supported by the government, because data centers require a relatively large amount of electricity support, and using energy storage equipment can greatly alleviate this pressure, playing a role in peak shaving and valley filling. At the same time, the proportion of green electricity usage will further increase."
Deng Haoqiang mentioned to the reporter from Pengpai News that the first batch of ordered products will be delivered and put into use before the end of this year. Given the construction and production progress of Tesla's Shanghai Energy Storage Super Factory, this batch of ordered products will be directly imported from other Tesla factories.
In five years, two super factories have landed near the port. Is there still greater cooperation space in the future?
Regarding this issue, Wu Xiaohua said: Tesla is a respected world-class enterprise, with new products such as automobiles, humanoid robots, solar energy, energy storage... all demonstrating Tesla's ability to change the future. The cooperation between Tesla and Lingang is currently mainly focused on automobiles and energy storage, and I believe the future is full of imagination.