June 29, 2025: Tesla has agreed a deal with partners to build its first grid-scale BESS in mainland China.

State news agency Xinhua reported on June 21 that the deal, with a total investment of Rmb 4 billion ($556 million), will see Tesla deploy its lithium ion Megapack battery tech.

The gigawatt-hour-scale BESS will be sited in Shanghai’s Lin-gang designated pilot free trade zone, under the terms of the deal signed by Tesla, local authorities and China Kangfu International Leasing.

Dong Kun, general manager of Tesla China’s energy business, told Xinhua the BESS, once launched, will participate in electricity spot trading, helping balance peak and off-peak power demand in the local grids and enhance grid stability.

Tesla is also set to work with China Kangfu on similar projects globally.

Last February, Megapack battery production started at Tesla’s 40GWh plant in Lin-gang, its first Shanghai-area facility. China’s State Council said in February the plant, with an annual production capacity of 10,000 units, would support Tesla’s ambition of a 50% increase in the firm’s global energy storage system projects this year.