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Tesla is building a new factory in Shanghai, China, that will crank up production of its energy storage product, Megapack.

Targeted to be operational in the second quarter of 2024, the new site will have an initial output of 10,000 units per year, with the Megapacks set to be distributed worldwide. In a tweet on the Shanghai factory, Tesla's co-founder and CEO Elon Musk said the new site would supplement output of its Megapack plant in California.

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Construction of the factory is slated to begin in the third quarter this year, according to local media reports. 

Plans for the new plant were announced after Tesla on Sunday inked an agreement with the Lin-gang Special Area Administration in Shanghai, reported state-owned newspaper China Daily. 

Citing a statement from Tesla, the report added that the U.S. electric car maker would continue to invest in China through "a wider range of products and services". 

Home to Tesla's first Gigafactory outside the US, Shanghai began producing Tesla Model 3 cars in 2019. The Chinese site currently yields 20,000 cars a week. 

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The new Megapack plant will be located in the city's Pilot Free Trade Zone, which has been marked as a new energy storage industrial cluster for Shanghai and China. 

According to Tesla, each Megapack is capable of storing more than three megawatts of energy, or enough to power an average of 3,600 homes for an hour.

A Canalys report last month pointed to China as the world's largest electric market, accounting for 59% of all units sold in 2022. More than 5.9 million electric vehicles were sold in the Asian market, with 2.4 million units clocked in the first half alone. Europe, with a 26% share, was the second-largest market last year, while the U.S. contributed just 9% of global sales. 

A report from state-owned Chinese media Global Times described the latest Tesla deal in Shanghai as further indication of US companies' "confidence" in investing in China. The report pointed to Intel's new office for its integrated circuit business in Sanya, located in China's Hainan province, which officially opened over the weekend.

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The US chipmaker's new site will oversee "international trade, technology services, and equity investment activities", the Global Times article stated, quoting a statement from Intel. The Sanya office also will establish Intel Capital's business headquarters in China.

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