Shanghai welcomes the second Tesla Gigafactory.
Yesterday, Tesla's energy storage factory officially started construction.This is Tesla's first energy storage super factory overseas.
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Moreover, the company received an order just after the construction started. Lingang Group and Tesla signed the contract for Megapack, China's first batch of ultra-large electrochemical commercial energy storage systems.
The background is that Tesla's sales in the Chinese market have declined significantly, down 18% year-on-year in April, which means that price cuts have not effectively increased sales. At the same time, Tesla also suffered a Waterloo in the European market, which fell to a 15-month low in April.
Whether in the United States or overseas markets, Musk is in urgent need of finding a new growth curve, and energy storage has become a key leap for Tesla.
Zhu Xiaotong, senior vice president of Tesla who was responsible for the establishment of the Shanghai Super Factory, also attended the groundbreaking ceremony. This was Zhu Xiaotong's first official public appearance after returning to China. Also present at the event was Tesla Vice President Tao Lin.
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This is enough to show how much Tesla values the new factory. After racing on the pure electric vehicle track, Tesla is planning to play the role of a catfish in the field of energy storage.
01. Two super factories in Shanghai are adjacent to each other
As Tesla's first overseas energy storage super factory, Tesla Shanghai Energy Storage Super Factory is Tesla's seventh super factory in the world. It is mainly responsible for the production of Tesla's energy storage business products – the ultra-large electrochemical commercial energy storage system Megapack.
The energy storage plant covers a total area of about 200,000 square meters and is only separated from the Tesla Gigafactory by a river. It is expected to be put into production in the first quarter of 2025.The annual production capacity will reach 10,000 units, with an energy storage capacity of nearly 40 GWh (1 GWh = 1,000 MWh), and the products will be supplied to the global market.
On the first day of construction, Tesla's Shanghai energy storage factory received its first order from Shanghai Lingang Group. After the production of China's first batch of Megapack products is completed, they will be mainly used in the data center of the Lingang New Area.
Construction is underway now and production will begin in the first quarter of next year, which doesn’t even take a year. In this way, the speed of the energy storage factory is comparable to that of Tesla’s Shanghai Super Factory. Mike Snyder, senior director of Tesla’s energy and charging business, said that the construction could be officially started in such a short time thanks to the continued strong support of the Shanghai and Lingang governments.
On April 9, 2023, Tesla's energy storage super factory project was officially announced to be located in the Lingang New Area of Shanghai. On May 13 this year, the construction permit for Tesla's Shanghai Energy Storage Super Factory construction project was issued.
The Shanghai energy storage factory was originally scheduled to break ground in the third quarter of last year and start production in the second quarter of this year. The time has now been slightly delayed, but the speed is still very fast.
Zhu Xiaotong said that Tesla's Shanghai Energy Storage Super Factory is another large-scale investment project in China after Tesla's Shanghai Super Factory in the past ten years since it entered China.
With the groundbreaking of the Shanghai Energy Storage Super Factory,Shanghai has also become the only city in the world with two Tesla Gigafactories.
Zhu Xiaotong's appearance at the groundbreaking ceremony of the Shanghai Energy Storage Factory also means that Musk has once again entrusted Zhu Xiaotong with the important task of factory construction. At that time, Tesla's Shanghai Super Factory created industry legends in terms of construction speed, start-up speed, production and delivery speed. Zhu Xiaotong, as the vice president at that time, played an indispensable role.
In April last year, Zhu Xiaotong, who had worked at Tesla for 9 years, officially joined Tesla's global management team, became one of Tesla's four top executives worldwide, and was promoted to senior vice president of Tesla's automotive business.
Zhu Xiaotong's permanent residence then changed to the United States, where he was responsible for Tesla's global production operations as well as sales in North America and Europe. Earlier this month, it was rumored online that Zhu Xiaotong would return to China's business to “put out fires” during Tesla's global layoffs and would resume his position as vice president.
Now it seems that Zhu Xiaotong's work focus after returning to China is most likely the establishment of Tesla's Shanghai Energy Storage Super Factory, which also shows Musk's emphasis on the Shanghai Energy Storage Factory.
After all, Shanghai is too important to Tesla and even Musk himself. The Chinese market is Tesla's second largest market after the United States. At the same time, Tesla's Shanghai Super Factory is also its most productive factory in the world, achieving the achievement of 1 million vehicles rolling off the production line in just three years.
Now, choosing to build an energy storage super factory in Shanghai again may be the best choice for Musk and Tesla after considering many factors.
02. Opening the third chapter of the grand plan
Unlike other car companies, Tesla's slogan is to accelerate the world's transition to sustainable energy, which also means that cars are only the first step in realizing the dream.
Just like Apple's “halo effect”, Tesla has begun to make rapid progress in its entire energy strategy by leveraging the rapid growth of its electric vehicle business.
Last March, Musk ambitiously announced the third chapter of his grand plan, which aims to completely eliminate fossil energy, the most important of which is energy storage.
Tesla's current energy storage products include home energy storage products Powerwall, commercial energy storage products Powerpack, and ultra-large energy storage battery packs Megapack.
A common feature of these energy storage products is that they can “process and redistribute” energy.
For example, Megapack is a stationary energy storage product designed for grid use and is also Tesla’s largest stationary energy storage product.It is not just a large lithium iron phosphate battery pack, but also integrates components such as cables, electrical systems, and thermal management systems.
Its power output is up to 1.5 megawatts (MW), and this high power output capability allows Megapack to respond quickly to changes in demand and supply on the grid.
Megapack also has many application scenarios. It can be used in combination with renewable energy systems (such as solar and wind energy) to achieve efficient distribution and utilization of energy. It can also be used as a power station to connect power facilities.
Tesla has installed multiple Megachargers at PepsiCo's factory in California to charge Tesla Simi trucks, with a maximum charging power of up to 750 kilowatts. These charging stations are connected to Tesla Megapack.
Specifically,Each Megapack unit can store more than 3.9 megawatt-hours of energy, enough to meet the electricity needs of 3,600 households for one hour, or to drive 65 Model 3 rear-wheel drive versions to full charge.
In addition, Megapack’s design is not limited to being a lithium battery pack. It represents a highly integrated energy storage system. The integrated design can ensure quick installation. In a sense, as long as the space is large enough, Megapack can be expanded infinitely.
03. Rapid expansion of energy storage
At the 2022 earnings conference, Musk said that the three pillars of advancing the sustainable energy future are electric vehicles, solar/wind energy, and stationary energy storage. Megapack occupies an important position in these three pillars. As Megapack's production capacity increases, its growth rate is expected to exceed that of electric vehicle production capacity.
Currently, energy storage has become one of Tesla's fastest growing businesses. According to Tesla officials, its commercial energy storage products have been installed in more than 65 countries around the world and have achieved billions of hours of safe operation at more than 1,500 sites.
The financial report shows that Tesla's total installed energy storage capacity reached 14.7 GWh in 2023, more than double that of 2022.
Profits from the energy generation and storage business almost quadrupled by 2023, while gross profit from services and other businesses increased from negative $500 million in 2019 to $500 million in 2023.
In 2023, Tesla's annual revenue totaled US$96.773 billion (approximately RMB 692.2 billion), of which the core business automotive segment had revenue of US$82.419 billion, accounting for 85% of total revenue. The Tesla Energy division, which sells solar power generation and energy storage systems, had a revenue growth of 54% in 2023, contributing US$6.04 billion in revenue.
Although it accounts for a small proportion, it is growing rapidly. Tesla has revealed that this year, the deployment and revenue growth of its energy storage business may exceed that of its automotive business.
Musk has always insisted that Tesla is not just a car manufacturer, and that Tesla's areas of involvement are very broad, from electric vehicles, autonomous driving, humanoid robots to Robotaxi, charging and energy storage, etc. What Tesla wants is to create a complete set of sustainable energy solutions and achieve a closed business loop.
In the first quarter of this year, Tesla's energy generation and storage business revenue also hit a record high, a year-on-year increase of 7%, gross profit increased by 140% year-on-year, and the profit margin reached 24.6%, far exceeding that of automobiles.
In the earnings call, Musk reiterated that Tesla's energy storage business will grow much faster than its automotive business. There is no doubt that the energy and energy storage business will continue to grow into Tesla's core segment in the future.
At the same time, there is still a lot of room for the energy storage market. Bloomberg predicts thatBy 2030, the global market demand for energy storage batteries will reach 1,000GWh, with a market size of US$1.2 trillion.
The energy storage market is currently in a period of rapid development. With the widespread adoption of renewable energy and the increasing demand for grid stability, the energy storage market is bound to usher in a major explosion.
By then, can Tesla just sit back and count money?