Tesla has officially signed a ¥4 billion (C$764/US$557 million) deal to build its first grid-scale battery energy storage station in China, leveraging its Megapack technology. The agreement, reported by Chinese financial media outlet Yicai on Friday, marks a major milestone for Tesla’s energy business in the world’s fastest-growing clean energy market.
The deal was signed between Tesla Inc., China Kangfu International Leasing Co., and the Shanghai municipal government. The station will be located in Shanghai, adjacent to Tesla’s new Megapack manufacturing facility, which began full-scale production in February 2025.
Tesla’s Megapacks are large lithium-ion battery systems designed for utility-scale energy storage. These systems store energy and discharge it to the grid during periods of peak demand. Their growing use helps stabilize power grids, prevent outages, and reduce reliance on fossil fuels.
This project is Tesla’s first large-scale energy storage installation in China, complementing its existing automotive manufacturing presence in the city through Giga Shanghai. The timing of the project aligns with China’s increasing focus on renewable energy and storage infrastructure, as the country looks to manage the intermittent nature of solar and wind power while reducing carbon emissions.
Tesla’s decision to invest in China’s grid-scale storage market also highlights the rapid growth of its energy division. In 2024, Tesla deployed a record-breaking 31.4 gigawatt-hours (GWh) of energy storage worldwide—more than double the 14.7 GWh deployed in 2023. This helped boost the division’s revenue to over $10 billion, with gross profit rising to $2.6 billion in 2024, up from $1.1 billion the year prior.
The newly opened Shanghai Megafactory is expected to supply Megapacks for the new energy storage station. The factory has a targeted annual capacity of 10,000 Megapack units, equal to 40 GWh of storage.
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