Tesla secures major construction permit

With its construction permit obtained on Monday, U.S. electric vehicle maker Tesla's energy storage project in Lin-gang, eastern Shanghai — the first of its kind outside the United States — is expected to break ground this month and enter mass production in the first quarter of 2025.

The news was announced on Monday on the official WeChat account of Lin-gang Special Area, which was included in 2019 as part of the China (Shanghai) Pilot Free Trade Zone. It was less than three months after Tesla signed an agreement with the local government to locate such an energy storage facility in Lin-gang.

Covering some 200,000 square meters, Tesla's new energy storage project has attracted total investment of 1.45 billion yuan ($200 million). The plant is set to produce 10,000 Megapack units — advanced battery systems designed for large-scale energy projects — annually, which translates into nearly 40 gigawatt-hours of energy storage capacity.

Each Megapack can store more than 3 megawatt-hours each. Together, they are set to provide essential energy storage and grid support.

Tesla confirmed the intention of building an energy storage project in Lin-gang in December. This followed Tesla's Shanghai Gigafactory, which broke ground in January 2019 and went operational at the end of the same year.

The energy storage plant in Lin-gang is an important optimization of Tesla's global production layout and "visionary "investment for the future of sustainable energy, the company said in a news release.

China's incremental new-type energy storage capacity spiked 150 percent year-on-year to 46.6 GWh in 2023 and its compound annual growth rate will exceed 30 percent between 2024 and 2030, said the China Energy Storage Alliance.

For the first time, the development of new-type energy storage has been written into the Government Work Report released in March.

Tesla's rapid progress in Lingang can be partly attributed to the welcoming stance and convenient services provided by the local government. Ever since Tesla expressed its new investment intention in December, Lin-gang provided a special "project service package", which can help the company streamline all the processes it needs to take for the new project.

"A construction project will include the coordination of different government departments and it can be quite confusing for a company, especially when its investment intention is not very clear at the very beginning. The package can help the company have an overview of the services the local government can provide and which requirements it needs to meet," said Min Zhiguang, deputy director of Lin-gang's approval and review center.

"When problems arise in launching the new project, the package provides a one-stop service mechanism which can link different government departments. Such efficiency can address the company's problems seamlessly," he added.

Global NEV leader Tesla has faced many challenges in the stock market back in its home country. Its stock price has fallen 31 percent so far this year, leading to speculation that Tesla should perhaps be removed from the so-called Magnificent Seven among listed U.S. tech behemoths.

But a silver lining seems to be appearing for Tesla recently in the Chinese market. Upon the recent visit made by its CEO Elon Musk to China in late April, sources said that the Chinese government may have offered partial support for Tesla to test its autonomous driving system in the Chinese market.