Tesla has signed an agreement to build a grid-scale battery energy storage facility in China, marking the company’s first such project in the country. According to reports from Chinese media outlet Yicai, the 4 billion yuan ($556 million) deal involves Tesla, the Shanghai municipal government, and China Kangfu International Leasing. Tesla confirmed the project via a post on China’s Weibo platform.
Once completed, the installation is expected to be the largest of its kind in China. It will use Tesla’s Megapack units, which are large lithium-ion battery systems designed to store and dispatch energy for grid stabilization. These systems are designed to mitigate supply-demand imbalances resulting from variable power sources, such as wind and solar.
Tesla said its Shanghai battery facility produced more than 100 Megapacks in the first quarter of 2025. The factory also supplies Megapacks to other international markets, including Europe and Asia. The version of the software used in this project was not specified, and pricing details for China were not disclosed.
China continues to expand its battery storage infrastructure, with a government target to reach 40 gigawatts of installed capacity by the end of 2025. The growing demand for grid-scale battery systems has attracted several major suppliers. Tesla competes in this space with domestic firms such as CATL and BYD, both of which have established market share in energy storage. CATL is reportedly supplying battery cells and packs used in Tesla’s Megapacks.
The agreement follows a period of strained trade relations between the United States and China. The United States recently implemented new tariffs on a range of Chinese imports, including electric vehicles and their components. Despite the broader policy environment, Tesla has maintained operations in China across both its automotive and energy business units.
Global energy storage capacity continues to increase. The International Energy Agency reported a 42-gigawatt rise in installed battery storage in 2023, nearly double the increase seen in the previous year. Tesla’s entry into additional utility-scale storage projects aligns with that broader industry trend.
