Why did Tesla choose Shanghai Lingang for another super factory? , after 5 years

Release time:May 23, 2024 15:55 PM

After five years, Tesla has started construction of another super factory in Lingang, Shanghai.

On May 23, Tesla Shanghai Energy Storage Gigafactory started construction. This is Tesla’s first energy storage super factory outside the United States and will produce Tesla’s ultra-large electrochemical commercial energy storage system Megapack. The annual production capacity is expected to reach 10,000 units, with an energy storage scale of nearly 40 GWh.

Due to the differences in the mass attributes of the products, the energy storage factory may not be as eye-catching as the vehicle factory next door. However, Wu Xiaohua, deputy secretary of the Party Working Committee of Lingang New Area, still evaluated the start of construction as "a major event in the history of Lingang development." Zhu Xiaotong, one of Tesla's three core executives and senior vice president, also said: "This is an important milestone for Tesla."

It can be seen that the start of the energy storage super factory has far-reaching significance for Tesla, Lingang and even Shanghai.

Let’s talk about Tesla first. A fact that subverts most people's impressions is that Tesla is more than just a car company.

Many well-known analysts on Wall Street have reached a consensus: Tesla is an innovative technology complex with vertical integration of the entire industry chain in the fields of electric vehicles, energy storage products, artificial intelligence and robotics. For Tesla, the energy storage business and the vehicle business are at least at the same level in Tesla's strategic landscape.

In 2015, Tesla began to deploy energy storage business in the United States and gradually expanded. Tesla energy storage products are now available in more than 65 countries and regions around the world. In 2023, profits from Tesla Energy's power generation and storage business quadrupled from the previous year; in the first quarter of this year, the installed capacity reached a record 4.1 GWh, and the gross profit of the energy storage business increased by 140% year-on-year.

"I've predicted for years that the energy storage business will grow much faster than the electric vehicle business - and it's happening," Tesla CEO Musk said. Bloomberg predicts that in 2030, the global market demand for energy storage batteries will reach 1,000 gigawatt hours, with a market size of US$1.2 trillion, indicating huge potential.

Since the beginning of this year, Tesla has made continuous strategic adjustments. It is generally analyzed by the outside world that at a time when the electric vehicle market is becoming saturated and growth is sluggish, Tesla is optimizing its organizational structure, improving efficiency and innovation capabilities, and better developing its efforts in other core business sectors such as AI and energy storage.

Therefore, Tesla has high hopes for the Shanghai Energy Storage Gigafactory. Zhu Xiaotong said that the start of construction of the Shanghai Energy Storage Super Factory will further consolidate Tesla’s leading position in the energy storage field. Tesla Vice President Tao Lin told the media after the groundbreaking ceremony that the Shanghai energy storage factory will continue the same idea as the Shanghai vehicle factory. As a very important production base and export base, the products will be brought to the market as soon as possible through application. "Everyone hopes to get back to work as soon as the ceremony is over, race against time to build the factory and put it into production as soon as possible."

The speeches of Tesla executives indicate that Tesla hopes to replicate the success of the Shanghai vehicle factory in the Shanghai energy storage factory.

Five years ago, Tesla was gearing up to rapidly expand its vehicle business, but fell into "capacity hell" until Musk chose to place its first overseas vehicle factory in Lingang.

When the Shanghai factory made its first external delivery, Musk danced with excitement.

Everyone knows what happened next. The Shanghai factory achieved a miraculous leap from construction start to completion to production and delivery within one year. Its annual production capacity exceeds 950,000 vehicles, leading the way and becoming Tesla's global export center. Relying on the Shanghai factory, Tesla quickly reached the top of the automotive industry.

This also explains a question that everyone is concerned about: Why Shanghai Lingang again? If Tesla wants to achieve such a miracle again in the field of energy storage business, it can only choose Lingang and Shanghai.

The Lingang New Area has once again set a new "Tesla Lingang Speed" - the negotiation and signing of the Shanghai Energy Storage Gigafactory took only one month. Mike Snyder, senior director of Tesla's energy and charging business, said bluntly that the continued strong support from the Shanghai and Lingang governments allowed the factory to officially start construction in such a short period of time.

Wu Xiaohua also revealed that the Shanghai factory is expected to "start construction this year, put into production this year, and deliver this year." After being put into operation, the two terminals adjacent to the factory, Yangshan Deep Water Port and Nangang, will help Tesla energy storage products to be quickly sold around the world.

On the other hand, what can the energy storage factory bring to the Lingang New Area? Can it also serve as a "chain master" to drive the industrial chain to form an industrial cluster like the Shanghai Vehicle Factory?

In this regard, Lu Yu, director of the high-tech department of the Lingang New Area Management Committee, said that the industrial and supply chains of energy storage and new energy vehicles have a high degree of overlap. Batteries, energy management systems, structural parts, etc. are all connected. " On the one hand, the local new energy vehicle industry cluster is very mature and can quickly build a local industrial chain and supply chain with Tesla’s energy storage factory to achieve synergy.”

On the other hand, such a large industrial cluster originally only served one end product - automobiles, and even mainly only served two brands, Tesla and SAIC, which was unstable to some extent. Once the terminal experiences unfavorable sales, the entire industry cluster will fluctuate, amplifying uncertainty and unfavorable factors. In fact, the automobile market fluctuates very frequently. For example, when Tesla's vehicle sales fluctuated in the past six months, the local automobile industry chain was affected to a certain extent.

When the energy storage factory is put into operation, the industrial cluster will be able to serve another type of terminal industry at the same time. Lu Yu believes that the implementation of Tesla's Shanghai energy storage factory is expected to improve the resilience and risk resistance of the local industrial chain and achieve better health and stability.

Wu Xiaohua and Lu Yu also mentioned that Lingang has a large number of application scenarios that demand energy storage products, such as factories, data centers, computing centers, etc. These local demonstration projects will also help Tesla promote energy storage products to the global market, while helping Shanghai build a green energy system and promote the city to develop in a more environmentally friendly and sustainable direction.

At the groundbreaking ceremony, Tesla and Lingang Group completed the contract for China’s first batch of eight Megapacks. Deng Haoqiang, deputy general manager of Lingang Green Innovation Company, said that these Megapacks are mainly used in Lingang IDC data center.

"Data centers have a large demand for electricity. The application of energy storage equipment to cut peaks and fill valleys can greatly alleviate the pressure on the power grid and use a larger proportion of green electricity. For end users, it can also save a lot of electricity bills." Deng Haoqiang revealed that currently these 8 Megapacks can cover about 20% of the data center’s electricity needs, saving users millions of dollars every year.

It is reported that each unit of the Megapack energy storage system can store more than 3.9 MWh of energy, which is enough to meet the electricity demand of 3,600 households for one hour, or can drive 65 Model 3 rear-wheel drive versions at full charge, and can support up to Gigabit Low-cost, high-density utility and commercial projects at watt-hour scale.

Deng Haoqiang is very optimistic about the application prospects of Megapack in Lingang New Area. He said that with the development of generative artificial intelligence, large models, etc., new productivity requirements for computing power are getting higher and higher, and power consumption is also increasing, so the demand for this type of energy storage products will also increase. more and more.

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