With more than 400 miles of range, the Tesla Model S is one of the longest-range EVs on the market, though it was recently beaten by the 520-mile Lucid Air Dream Edition. While Tesla is constantly improving battery technology for its electric cars, the electric carmaker also offers the Megapack energy storage system to commercial and utility customers.

Offering a capacity of up to three megawatt-hours (equivalent to 3,000 kWh), Tesla's Megapack is primarily used by solar and wind farms to store energy. Previously, Tesla's Megapack was manufactured at Tesla's Gigafactory in Nevada alongside the Powerwall and Powerpacks. As Tesla's energy division expands, the Megapack will be manufactured at a new production facility in Lathrop, California, near Tesla's factory in Fremont, California.

Tesla also operates a 870,000-square-foot distribution center in Lathrop. This will be Tesla's first factory dedicated to Megapack production, but it isn't clear if production of the Powerwall and Powerpacks will also move to the Lathrop site.

Lathrop Mayor Sonny Dhaliwal announced on Facebook that construction of the new factory has begun. "We are proud to be the home of the Megafactory, Tesla's most recent expansion here," he said. "The future of green energy will be produced right here in our community. This development means more prosperity for our city, more employment opportunities for our residents, and a brighter future for our planet."

During Tesla's earnings Q2 earnings call Elon Musk confirmed the Megapack was "basically sold out through next year," adding that there was "significant unmet demand" for the energy storage product. He also said that demand for the Powerwall exceeds one million units per year. Unfortunately, the ongoing semiconductor chip shortage crisis has affected the production of Tesla's energy storage products, so it could take a long time until the new Lathrop can produce Megapacks at full capacity.

"We use a lot of the same chips in the Powerwall as you do in a car, so it's like, which one do want to make?" said Musk. "Cars or Powerwalls? So we need to make cars, so that will - Powerwall production has been reduced."