Tesla will open a "Megafactory" in the Chinese city of Shanghai, the electric vehicle maker announced Sunday.

The big picture: The factory "will initially produce 10,000 Megapack" battery units per year, equal to about 40 gigawatt hours of energy storage, to be sold globally, the Chinese state news agency Xinhua first reported on Sunday.

• The automaker is due to "break ground in the third quarter of the year and start production in the second quarter of 2024," company officials said at a signing ceremony in Shanghai, per Xinhua.
• The new factory will complement production at Tesla's existing factory in Shanghai.

What they're saying: Representatives for Tesla did not immediately respond to Axios' request for comment, but the company's CEO Elon Musk tweeted Sunday that the factory would "supplement output" from its California plant.

Between the lines: Tesla's share of the electric vehicle market has shrunk from 72% to 54% since January 2022 and analysts expect it to slide below 50% in the next month or two, Axios' Joann Muller reports.

• The company has in recent months cut prices on its Model S and X vehicles in the U.S. as the EV manufacturer moves to spark sales in the face of greater competition and investor concerns about demand, per Axios' Hope King.

Editor's note: This article has been updated with details reported from the signing ceremony.