SHANGHAI -- US carmaker Tesla Inc on Sunday announced that it will build a new mega factory in Shanghai, which will be dedicated to manufacturing the company's energy-storage product Megapack.

The new plant is scheduled to break ground in the third quarter of the year and start production in the second quarter of 2024, Tesla said at the project's signing ceremony in Shanghai.

The factory will initially produce 10,000 Megapack units every year, equal to approximately 40 GWh of energy storage. The products will be sold worldwide.

Megapack is a powerful battery that provides energy storage and support, helping to stabilize the grid and prevent outages, information on Tesla's website shows.

The company's new plant will be located in the Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone.

Zhuang Mudi, deputy secretary-general of the Shanghai municipal government, said the project will help drive the development of the new energy-storage industry, as well as the green and low-carbon transformation of Shanghai.

In January 2019, Tesla broke ground on its Shanghai Gigafactory, becoming the first to benefit from a new policy allowing foreign carmakers to establish wholly owned subsidiaries in China.

It is Tesla's first Gigafactory outside the United States, and the plant delivered 710,000 vehicles in 2022, an increase of 48 percent from 2021. It has become Tesla's primary vehicle export hub, with electric cars selling well in the Asia-Pacific, Europe and other regions.

Thanks to the excellent business environment in Shanghai and the Lin-gang Special Area, the Tesla Shanghai Gigafactory has an industrial chain localization rate of more than 95 percent, said Tao Lin, vice president of Tesla.

Tesla's decision to build the new mega plant in Shanghai is a positive signal demonstrating foreign enterprises' confidence in the Chinese economy as it bounces back from COVID and presses ahead to maintain steady and quality growth.

China has reiterated its commitment to opening-up in recent weeks at different events, expressing a willingness to share the dividends of an ultra-large consumer market with the world and its consistent resolve to boost common development for all.

The country's economic performance has gotten off to a strong start this year, showing robust growth momentum and raising investors' confidence. In the first two months of 2023, foreign direct investment in the Chinese mainland, in actual use, expanded 6.1 percent year on year to 268.44 billion yuan (about $39.07 billion).

A recent survey conducted by the American Chamber of Commerce in South China also pointed to growing optimism, as over 90 percent of the participating companies consider China to be one of their most important investment destinations, while 75 percent of the surveyed companies said they plan to reinvest in China in 2023.

Since 2019, Tesla has been ramping up investment in the Lin-gang Special Area, expanding the production capacity of its Shanghai Gigafactory and building more facilities, including a supercharger manufacturing factory.

Tesla's new factory is expected to create an industrial cluster worth over 100 billion yuan, said Lu Yu, an official of the Lin-gang Special Area Administration.