The U.S. government announced on Monday that Tesla, an electric vehicle (EV) manufacturer, and LG Energy Solution from South Korea have entered into a contract to construct a $4.3 billion lithium iron phosphate (LFP) prismatic battery cell production facility in Lansing, Michigan. The facility is expected to commence production in 2027.
According to a statement from the U.S. Department of the Interior, the agreement will enable American-made cells to power Tesla’s Megapack 3 energy storage systems manufactured in Houston, establishing a strong domestic battery supply chain.
The partnership between Tesla and LG Energy Solution was part of a series of agreements unveiled during the Indo-Pacific Energy Security Summit under the administration of President Donald Trump. Earlier in July, a source informed Reuters that LG Energy Solution had secured a $4.3 billion deal to supply Tesla with batteries for energy storage systems, as Tesla aimed to reduce its dependence on Chinese imports due to tariffs.
LG Energy Solution disclosed that it had signed a $4.3 billion contract to provide LFP batteries globally over three years but did not reveal the specific customer or whether the batteries would be utilized in vehicles or energy storage systems.
LG Energy Solution is among the limited number of producers of LFP batteries in the U.S., as the market has long been dominated by Chinese competitors with minimal presence in the U.S. market. Additionally, the company owns NextStar Energy in Windsor, Ontario, which was formerly a joint venture with Stellantis until LG acquired full ownership from the automaker. The Canadian government heavily subsidizes the Windsor plant, which was initially focused on supplying the EV battery market but has since shifted its focus to prioritize energy storage solutions amidst a sluggish EV market, while still retaining the capability to manufacture batteries for both sectors.
