Tesla Inc. will build a factory in Shanghai to manufacture the Megapack energy storage product, according to Chinese state media outlet Xinhua on Sunday.

Xinhua reported from a signing ceremony in Shanghai that Elon Musk's automaker will break ground on the plant in the third quarter and begin production in the second quarter of 2024.

The new factory will initially produce 10,000 Megapack units per year, equivalent to around 40 gigatonne hours of energy storage, to be sold globally, according to Xinhua, complementing a massive existing Shanghai plant that manufactures electric vehicles.

Tesla's lithium-ion batteries, known as megapacks, are used in battery-storage power stations.

Tesla makes the majority of its money from its electric car business, but Musk has pledged to increase its solar energy and battery businesses to roughly the same size.

Tesla has a Megapack factory in Lathrop, California, capable of producing 10,000 Megapacks per year.

In 2019, the company began producing Model 3 cars in Shanghai and is now capable of producing 22,000 units per week.