Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Tesla has signed a landmark 4 billion yuan ($556 million) deal to construct China’s largest grid-scale battery power plant in Shanghai, marking a significant step in the company’s global energy strategy despite ongoing trade tensions between the United States and China.
The agreement, confirmed by Tesla via the Chinese social media platform Weibo, involves collaboration with the Shanghai municipal government and financing firm China Kangfu International Leasing, according to Reuters.
The facility, set to utilize Tesla’s Megapack battery systems, will be the largest of its kind in China upon completion. Each Megapack can deliver up to one megawatt of power for four hours, providing critical support to balance electricity grids strained by the intermittent nature of renewable energy sources like solar and wind.
Tesla’s Shanghai factory, which began mass production of Megapacks earlier this year, produced over 100 units in Q1 2025 and also exports to Europe and Asia to meet global demand.
This deal comes at a time of heightened geopolitical friction, with U.S. President Donald Trump’s recent tariffs on Chinese imports complicating the trade relationship between Beijing and Washington.
Tesla CEO Elon Musk’s earlier alignment with Trump during the trade war’s initial phase adds further complexity to the company’s operations in China, the world’s largest market for electric vehicles and energy storage.
Despite these challenges, China’s push for renewable energy infrastructure fuels significant demand for grid-scale battery systems, with Beijing targeting an additional 5 gigawatts of battery-powered electricity supply by the end of 2025, bringing total capacity to 40 gigawatts.
The project, co-located with Tesla’s Megafactory in Shanghai’s Lingang district, underscores Tesla’s growing focus on energy infrastructure over its traditional automotive business. The company’s energy storage deployments reached 10.4 GWh in Q1 2025, doubling year-over-year, with energy revenue surging 67% to $2.73 billion.
However, Tesla faces stiff competition from Chinese battery giants like CATL, which holds a 40% global market share and reportedly supplies cells for Tesla’s Megapacks.
As U.S.-China trade talks aim to ease tensions, this deal highlights the delicate balance Tesla navigates in maintaining its foothold in China while managing pressures from tariffs and geopolitical dynamics. The project is poised to bolster China’s clean energy transition, but its success may hinge on the broader trajectory of bilateral relations.
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