Tesla signs landmark deal for China’s largest grid-scale battery plant

Tesla has officially signed its first major agreement to build a grid-scale battery power station in China, marking a significant step in clean energy collaboration between a U.S. tech giant and the world’s biggest energy consumer.

The $556 million deal, brokered with the Shanghai local government and China Kangfu International Leasing, is poised to deliver the largest battery energy storage facility in China once completed. Tesla made the announcement on China’s social platform Weibo, noting the project will significantly boost the country’s energy grid resilience.

The batteries at the heart of the project will come from Tesla’s Shanghai Megapack factory, which produced over 100 Megapacks in Q1 2025. Each Megapack delivers up to 1 megawatt of power for four hours, making it a critical tool for stabilizing grids heavily reliant on intermittent sources like solar and wind.

“This grid-side energy storage power station is a smart regulator for urban electricity,” Tesla stated on Weibo. “It will ease pressure on cities’ power supply and ensure stable, efficient energy delivery.”

China’s push for clean energy infrastructure is rapidly accelerating. Last year, Beijing announced it aims to add nearly 5 gigawatts of battery-powered capacity by 2025, reaching a total of 40 GW. Tesla’s deal aligns with that strategy and cements its presence in a market where local rivals like CATL and BYD already hold substantial ground.

Tesla’s move also comes at a time of renewed tension between China and the U.S. Following recent tariffs by President Trump’s administration, the deal signals rare cooperation and a bold bet by Elon Musk on long-term global energy demand.

Read more on Tesla pauses Cybertruck and Model Y production to boost efficiency