Tesla has signed a major deal to construct its first grid-scale battery power plant in China, which will become the largest of its kind in the country upon completion. The announcement was made via the Chinese social media platform Weibo.The agreement, valued at 4 billion yuan (approximately $556 million), involves Tesla, the Shanghai municipal government, and China Kangfu International Leasing, according to a report by Chinese media outlet Yicai and confirmed by Reuters.The plant will use Tesla’s Megapack batteries — utility-scale energy storage systems capable of delivering up to 1 megawatt of power for four hours. Tesla’s Shanghai facility has already produced over 100 Megapacks in Q1 2025.In a translated statement, Tesla described the plant as a “smart regulator” for city power grids, aimed at ensuring stable, flexible electricity supply and easing urban energy pressure.This move comes despite ongoing trade tensions between the U.S. and China, worsened by tariffs imposed under U.S. President Donald Trump. The project marks a significant entry into China’s competitive battery market, currently led by domestic giants CATL and BYD. CATL, which holds about 40% of global battery market share, is also a key supplier for Tesla’s Megapack units.China has ambitious energy storage goals, targeting 40 gigawatts of capacity by the end of 2025. Tesla’s expansion in Shanghai also supports global exports to Europe and Asia, amid rapidly rising global demand. According to the International Energy Agency, global energy storage capacity grew by 42 gigawatts in 2023—nearly double the previous year’s increase.
