Electric car manufacturer Tesla has announced plans to open a new ‘Megafactory’ in Shanghai.

The factory will be able to produce 10,000 ‘Megapacks’ per year, which are large batteries used to store utility-scale amounts of electricity.

Tesla made the announcement with a picture of a signing ceremony in China, and CEO Elon Musk confirmed the news on Twitter, saying; “Tesla opening Megapack factory in Shanghai to supplement output of Megapack factory in California”.

Chinese state media outlet Xinhua first reported the news, saying that the factory will break ground in the third quarter of this year and begin production in the second quarter of 2024.

The new Megafactory will supplement Tesla's existing Megapack factory in California, which can also produce 10,000 Megapack units per year. The Megapack is capable of storing 3 MWh of energy and is used for utility-scale energy storage projects.

Tesla's first quarter sales this year saw a modest 4 per cent rise compared to the previous quarter, despite several price cuts on its lower-priced vehicles. This was the fourth consecutive quarter that Tesla produced more vehicles than it delivered to customers. 

However, the company attributed some of this excess production to the ramp up in production at its new factories in Texas and Germany, which opened last spring.

Despite the relatively weak sales figures, Tesla remains one of the most valuable automakers in the world, with a market capitalisation of over $700 billion. 

The company is currently working on several new projects, including the development of new battery technology and the launch of its Cybertruck ute.