Tesla's energy storage plant in Shanghai's Lin-gang Special Area breaks ground on May 23. [Photo/chinadaily.com.cn]

Tesla's energy storage plant broke ground in eastern Shanghai's Lin-gang Special Areaon Thursday, marking a major milstone as this is the first time the US electric carmaker has developed such a facility outside of its home country.

Covering some 200,000 square meters, the energy storage plant is expected to enter mass production in the first quarter of 2025.

The plant is set to produce 10,000 Megapack units — advanced battery systems designed for large-scale energy projects — annually, which translates into nearly 40 gigawatt-hours of energy storage capacity.

The new plant obtained construction permit on May 13. It took one month for Tesla and Lin-gang Special Area to reach an agreement on the project, said Wu Xiaohua, deputy-secretary of the Party working committee of Lin-gang Special Area during the groundbreaking ceremony.

"It is our hope that Tesla's new mega factory will serve as an icon, helping Lin-gang to grow into a hub for world-leading companies, an international highland for industrial innovation and a demonstration zone for green transformation and low-carbon development," said Wu.

During an online speech, Tesla's senior vice-president Mike Snyder said that Megapack can meet the diversified energy demands from customers across the world, facilitating the world's green energy development.

The total investment of Tesla's energy storage plant in Lin-gang is 1.45 billion yuan ($200 million).

The State-owned commercial conglomerate Lingang Group reached an agreement with Tesla on Thursday to introduce the latter's Megapack system, which will be the first ultra-large electrochemical commercial energy storage systems to be introduced in China.