Construction is expected to begin in the third quarter of this year and the plant will commence production in the second quarter of 2024, the company said in a statement.

The European plane manufacturer will add a second final assembly line for A320 narrow-bodies at its existing factory in Tianjin, under a deal signed by Chief Executive Officer Guillaume Faury in Beijing on Thursday.

The new manufacturing projects give a boost for Chinese industry as other firms like Apple Inc. rethink production in the nation amid heightened tensions with the US over everything from an alleged Chinese spy balloon being shot down over American skies to Beijing’s partnership with Russian President Vladimir Putin.

The Megapack is intended as a massive battery to help stabilise energy grids, with the company saying each unit can store enough energy to power an average of 3,600 homes for one hour. The new factory will initially produce 10,000 Megapacks every year, equal to around 40 GWh of energy storage, and the products will be sold worldwide.

China, home to rising global electric vehicle star BYD Co., is an extremely important market for Tesla. Its existing car factory on the outskirts of Shanghai produced almost 711,000 cars last year, or 52 per cent of its worldwide output, even with production being disrupted by the China’s now-abandoned Covid Zero policy.

Authorities rolled out the red carpet to help Tesla set up its first plant outside the US in early 2019, and Shanghai government officials assisted the company with resuming production in a timely manner after pandemic-related disruptions.

Musk’s time operating in China has not been entirely smooth, however. An expansion of the Shanghai EV plant was delayed over data concerns about Tesla’s connections to Musk’s internet-from-space initiative Starlink, people familiar with the matter said earlier this year, days after angry Tesla owners swarmed showrooms in China to complain about missing out on another round of price cuts.

China’s EV war: BYD, Nio, Xpeng snap at Tesla’s heels with made-for-China models

Tesla cars were also banned from Chinese military complexes and housing compounds in early 2021 over concerns about sensitive data being collected by cameras built into the vehicles.

Musk said in January that China is the most competitive car market. He has made similar comments before, including in September 2021, when he said he had “a great deal of respect for the many Chinese automakers”.