The U.S. government announced on Monday that Tesla and LG Energy Solution have entered into a supply agreement to construct a $4.3 billion lithium iron phosphate (LFP) prismatic battery cell manufacturing plant 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 American-made cells will be utilized to power Tesla’s Megapack 3 energy storage systems manufactured in Houston, establishing a strong domestic battery supply chain.
This collaboration between Tesla and LG Energy Solution was highlighted as part of a series of deals emphasized during the Indo-Pacific Energy Security Summit under the administration of President Donald Trump.
Earlier in July, a source revealed to Reuters that LG Energy Solution had secured a $4.3 billion deal to supply energy storage system batteries to Tesla. This move was aimed at reducing Tesla’s dependence on Chinese imports due to tariffs.
LG Energy Solution, a key producer of LFP batteries in the U.S., stated that they had signed a $4.3 billion contract to supply LFP batteries globally over three years. The specific customer was not disclosed, and it was not confirmed whether the batteries would be used in vehicles or energy storage systems.
Additionally, LG Energy Solution owns NextStar Energy in Windsor, Ontario, a similar battery cell factory that was previously a joint venture with Stellantis. LG recently acquired full ownership of the plant after Stellantis sold its share. The Canadian government heavily subsidizes the NextStar plant, initially intended for the EV battery market but has since shifted focus to prioritize energy storage amidst a slow EV market, although it retains the capability to produce batteries for both sectors.