Tesla strikes $556m deal for China's largest grid battery plant

[noumoe]

Tesla strikes $556m deal for China's largest grid battery plant

Tesla has signed a $556 million deal to build China's largest grid battery plant, enhancing its global energy strategy amid U.S.-China trade tensions. The agreement, announced on social media, is with the Shanghai municipal government and a leasing firm. The facility aims to stabilize urban electricity demand and will utilize Tesla's Megapack systems.

This agreement marks a move into a growing market for grid-scale battery projects in China. There is increasing demand for battery storage, spurred by the government's new targets. Tesla faces competition from leading Chinese battery manufacturers like CATL, which holds a significant market share.

https://interestingengineering.com/ener ... ttery-deal

Tesla strikes $556M deal for China’s largest grid battery plant amid trade tensions
Amid lithium supply concerns, China’s grid sees a sodium-lithium hybrid boost—Tesla joins the race with a $556M push.

Updated: Jun 20, 2025 03:08 PM EST
Neetika Walter

Tesla has signed its first agreement to build a utility-scale battery storage facility in China, marking a significant step in the U.S. automaker’s global energy strategy.

The deal comes at a time of tense U.S.–China trade relations, which worsened after President Donald Trump imposed sweeping tariffs on Chinese goods— now on pause. The two sides are currently in talks to ease tensions and stabilize economic ties.

The $556 million deal, first reported by Chinese outlet Yicai and confirmed by Tesla via Chinese social media platform Weibo, will see the company construct the country’s largest grid-side battery power station when completed.

The agreement was inked with the Shanghai municipal government and China Kangfu International Leasing, according to a report by news agency Reuters.

Grid ambitions spark deal
Utility-scale battery storage systems play a critical role in balancing electricity grids, especially in countries like China that are aggressively scaling up solar and wind installations. Such systems help smooth out supply volatility by storing energy during periods of surplus and discharging it during peak demand.

Tesla said on Weibo that the facility would act as a “smart regulator” for urban electricity, ensuring a safe and stable supply.

This would “effectively solve the pressure of urban power supply and ensure the safe, stable and efficient electricity demand of the city,” the post added. “After completion, this project is expected to become the largest grid-side energy storage project in China.”

The plant will use Tesla’s Megapack battery systems, which are designed for industrial-scale energy storage. Each Megapack delivers up to one megawatt of power for four hours and typically sells for just under $1 million in the U.S.

Tesla’s Shanghai factory has already produced over 100 Megapacks in the first quarter of 2025. The facility also exports units to Europe and Asia.

Megapack muscle in China
The move intensifies Tesla’s competition with Chinese battery giants like CATL and BYD, which dominate the global battery supply chain. CATL alone holds a 40 percent market share and has reportedly been supplying cells for Tesla’s Megapack systems.

Despite Musk’s early proximity to Trump during the trade war’s initial phase, Tesla continues to navigate a complex political climate to secure its position in China, the world’s largest EV and energy storage market.