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Tesla is already constructing a mega factory in Shanghai to ramp up energy storage for its current and upcoming models including the Cybertruck.
Tesla Inc (NASDAQ: TSLA) shares spiked on Tuesday to close the day trading at $201.16, up 4.14 percent from the day’s opening price. As a result, Tesla stock turned more bullish from last year’s bearish sentiment after a report that tech billionaire Elon Musk met with Foreign Minister of China Qin Gang on Tuesday to discuss business expansion. According to Qin, China is ready to work with the United States on matters regarding technology for mutual benefit and the world at large.
This is after the United States and other G7 members recently noted that the nations will be decoupling from China. The United States has blamed the Chinese government for using its technology including semiconductor chips to advance its military capabilities through the nuclear program.
However, Musk ostensibly expressed satisfaction with the Chinese market and is reportedly working on expanding Tesla’s production in the country by opening a new battery factory. With China openly inviting Tesla to its competitive electric vehicle market, Musk noted that he does not support the United States’ move to decouple from the Chinese market.
Notably, the Biden administration enacted export restrictions pertaining to semiconductor chips in a move to slow down Beijing on its technological advancements. In retaliation, the Chinese counterparts barred local tech companies from purchasing semiconductor products from Micron Technology Inc (NASDAQ: MU).
The Cyberspace Administration of China states that Micron poses a security threat based on the semiconductor assessment. The move did not resonate well with the American counterparts who accused the Chinese authority of being biased.
Tesla and China Market Outlook
Although details of Qin and Musk’s meeting are not fully available to the public, Tesla remains a major investor in the Chinese EV market. According to Tesla’s first-quarter earnings results, the Giga factory in Shanghai has been supplying exports to other Asian markets. For instance, Tesla launched EV sales in Thailand, which are supplied from the Shanghai Giga factory.
Additionally, Tesla noted that it will be starting the construction of a 40 GWh Megafactory in Shanghai later this year to ramp up energy storage.
“We are rapidly growing energy storage production capacity at our Megafactory in Lathrop and we recently announced a new Megafactory in Shanghai. We are also continuing to execute on our product roadmap, including Cybertruck, our next-generation vehicle platform, autonomy, and other AI-enabled products,” Tesla noted.
Tesla is, however, competing with other Chinese electric vehicle companies including BYD Co Ltd (Shenzhen: ZE594-CN) and NIO Inc (Hong Kong: 9866-HK) that have been selling competitive models. Meanwhile, the Tesla stock market is up approximately 63 percent YTD.