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Tesla is preparing for a massive expansion of Gigafactory Shanghai, according to Chinese media. It will be made for the production of a new budget car model. Mass production of it is expected to begin in 2025.

The news comes after Tesla CEO Elon Musk had dinner with Chinese President Xi Jinping along with other U.S. company executives on the sidelines of the Asia-Pacific Economic Cooperation Summit in San Francisco on November 15.

In a statement posted on Chinese platform Weibo, Tesla said it looks forward to joint developments with China in areas such as clean energy vehicles, energy storage, and artificial intelligence, citing Xi’s support for Tesla’s activities in the country, technode noted. These steps will help Tesla significantly increase its local production capacity and diversify its revenue sources.

The Phase 3 expansion could support the production of Tesla’s future vehicle model. It is expected to cost around RMB 150,000 ($21,800), according to people familiar with the matter. The expansion had been frozen, according to a Bloomberg report in January. It appears that plans have now been resumed.

Details of the project remain unclear. If implemented, Tesla is expected to be able to nearly double its production capacity in China to 2 million electric vehicles per year. Analysts expect mass production of Tesla’s cheaper next-generation car to begin no earlier than 2025.

Local reports also claim that Tesla is ready to ship its large battery packs, Megapacks, to Chinese customers starting next year. The company has also reportedly begun searching for a local sales manager. The availability of Megapack in China will accelerate Tesla’s entry into the country’s energy storage market.

The company announced a plan to build a Megapack factory in China in April this year. Since then, Tesla has made great progress. The factory will have a capacity of 40 gigawatt-hours (GWh) and will begin operations in the second quarter of 2024. The batteries produced will be shipped locally and overseas.

Article edited by @SmokeyShorts; follow him on X

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