Elon Musk recently announced plans for a new battery factory in Shanghai during a visit there. The factory will make large-scale energy-storage units called Megapacks. Tesla said the factory will aim to produce 10,000 Megapacks a year to be sold worldwide.

The Megapack is a huge battery designed to help stabilize energy grids and can store enough energy to power about 3,600 homes for an hour, according to Tesla. This new development will expand Tesla’s presence in China and tap into the country’s massive battery production capabilities to increase production and lower costs.

Elon Musk announced that Tesla would build a factory in Shanghai with the aim to assemble 10,000 giant batteries annually for electric producers and distributors. https://t.co/InXQbKliW3

— The New York Times (@nytimes) April 10, 2023

This move comes as the US government has been pressing American companies to become less reliant on China amid rising tensions between Beijing and Washington. Last year, US technology firms that receive federal funding were banned by the Biden administration from building “advanced technology” facilities in China for 10 years. The guidelines were part of a $50bn plan aimed at building up the US semiconductor industry.

Despite these tensions, Musk is continuing to invest in China. In 2019, Tesla opened its first factory outside the US in Shanghai. The plant currently produces 22,000 vehicles a week. With the addition of this new battery factory, Tesla’s presence in China is set to grow even further.