On Friday, Tesla Inc.’s shares jumped after Elon Musk broke ground on the company’s new megapack manufacturing factory in Shanghai.
The Austin-headquartered tech firm’s shares surged by 3.17% to $179.24 apiece on May 24, snapping a two-session losing streak. However, it slid 0.22% after hours, with analysts predicting a 1.84% drop to $175.94 per share in the coming session.
Musk first announced the plant in April last year and said it would start production in the first quarter of next year. Located near the Tesla Gigafactory, the carmaker’s largest plant outside the US, it boasts an annual capacity of 10,000 megapacks.
According to Lingang Group, the area’s developer, a megapack is an enormous battery that can store massive amounts of electricity. It is designed to stabilize power grids, with each unit capable of storing enough electricity to power 3,600 homes for an hour.
Unlike the brand’s other products, which target general consumers, megapacks are aimed at utility companies and power stations. According to tech specialists, having clients outside the automotive industry will make the automaker’s finances more liquid and stable.
Tesla reiterated that the $200.00 million project aims to diversify the company’s offerings and reduce its reliance on its electric vehicle (EV) line. Since late last year, the firm’s EV segment tussled with slowing demand, aggravated by a brutal price war in China.
Megapack Plant Helps Tesla Manage Rising Tensions
Chinese Premier Li Qiang praised the Tesla megapack factory as a symbol of successful collaboration between the US and China. The two countries are embroiled in an intensifying tech war that began with high-end semiconductors and later expanded to EVs.
Earlier this month, President Joe Biden announced he would nearly quadruple import tariffs on China-made EVs from 27.50% to 100.00%. Biden stressed that the move was necessary to prevent Chinese vehicle manufacturers’ aggressive price cuts from disrupting the US market.
Musk criticized the additional tariffs, fearing they may lead to Beijing hiking tariffs on American vehicles in a tit-for-tat response. Currently, China protects domestic automakers by levying a 40.00% import tax on all cars shipped from the US.
