Tesla has decided to build its first battery energy storage system (ESS) in mainland China. Despite the escalating trade conflicts that have intensified since the start of the Donald Trump administration, Tesla CEO Elon Musk seems unbothered.
On the 20th, according to reports from Reuters and China Business News, among other Chinese media, Tesla, the Shanghai Free Trade Pilot Zone Lingang Special Area Administrative Committee, the Fengxian District Government of Shanghai, and China Kangfu International Leasing Co., Ltd. (China Kangfu) held a contract signing ceremony for the ESS power plant construction pilot project that afternoon.
The project involves a total investment of 4 billion yuan (approximately 760 billion won) to establish a large-scale battery ESS facility in the Lingang Free Trade Zone. Kangao Energy, a subsidiary of China Kangfu, will be the executing entity of the project, using Tesla's Megapack batteries to establish a GWh-class independently operated ESS power plant.
Chinese media reported that with this project, Tesla will be making its first attempt to construct battery ESS in mainland China with its energy storage products. Battery ESS refers to equipment that stores electricity when production exceeds demand and supplies electricity when demand is high.
Tesla has a Gigafactory for electric vehicle production in Shanghai, and its battery factory, Megafactory, began official operations last February. Furthermore, local media reported that Tesla and China Kangfu have agreed to deepen their cooperation in the energy sector, contributing to the growth of the ESS industry in the Lingang Free Trade Zone in the future.
Meanwhile, despite a 1.1% decrease in overall automobile sales last year, Tesla sold 657,000 units in China, an 8.8% increase compared to the previous year. China accounts for about 36% of Tesla's revenue, making it the second largest market after the United States.