Tesla has signed a $557 million agreement with Shanghai authorities for a grid-scale battery storage project, marking its first major energy venture in China. The project involves a 4 billion yuan investment and will utilize Tesla's Megapack batteries, produced at the Shanghai Megafactory, which began mass production in February 2025. This deal is a significant boost for Tesla's energy division, which saw storage deployments more than double to 31.4 GWh in 2024, with a gross profit of $2.6 billion. The Shanghai project positions Tesla to capture a substantial share of the world's largest energy storage market, driven by increasing demand for stable power sources for AI infrastructure. Following the announcement, Tesla shares rose to $327.55 in premarket trading, reflecting strong investor confidence in the company's expanding energy business.