On June 21, U.S. automotive giant Tesla formalized a significant partnership with Chinese affiliates, aimed at constructing a grid-side energy storage station in Shanghai, which will utilize its innovative Megapack energy-storage batteries.

With a total investment amounting to 4 billion yuan, approximately 556 million U.S. dollars, this agreement signifies Tesla's entry into China's rapidly growing energy storage sector, setting the stage for its facility to seamlessly connect to the nation's extensive power grid, recognized as the largest in the world.

The newly planned energy storage station, which will be designed on a gigawatt-hour scale, is set to be established within the Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone. This project involves collaboration with the administrative committee of Lin-gang, the people's government of Fengxian District in Shanghai, and China Kangfu International Leasing Co., Ltd.

This development will mark Tesla's inaugural grid-side energy storage station on the Chinese mainland, enhancing the company’s operational footprint in the country.

According to Dong Kun, the general manager of Tesla China's energy division, the station, when operational, will engage in electricity spot trading, playing a critical role in balancing peak and off-peak power demands within the local grids and ultimately contributing to improved grid stability.

In addition to this project, Tesla is poised to deepen its collaboration with China Kangfu to promote zero-carbon energy solutions on a global scale.

Earlier this year, in February, Tesla initiated production of Megapack batteries at its new Megafactory located in the Lin-gang Special Area, marking the company's second manufacturing plant in Shanghai following its Gigafactory.

Looking ahead, Tesla is optimistic about its energy storage segment, expecting a considerable annual increase of 50 percent in deployments by the year 2025.