The U.S. government announced on Monday that Tesla, an electric vehicle (EV) manufacturer, and LG Energy Solution of South Korea have entered into a supply agreement to construct a $4.3 billion lithium iron phosphate (LFP) prismatic battery cell manufacturing facility in Lansing, Michigan. The facility is scheduled to commence production in 2027.
According to the U.S. Department of the Interior, the American-made cells will be utilized to power Tesla’s Megapack 3 energy storage systems made in Houston, establishing a strong domestic battery supply chain.
The agreement between Tesla and LG Energy Solution was part of a series of deals highlighted by the Trump administration during the Indo-Pacific Energy Security Summit. In July, a source informed Reuters that LG Energy Solution had secured a $4.3 billion deal to supply energy storage system batteries to Tesla, as the company aimed to lessen its dependence on Chinese imports due to tariffs.
Previously, the South Korean company had disclosed a $4.3 billion contract to supply LFP batteries globally over three years, without specifying the customer or the intended usage in vehicles or energy storage systems.
LG Energy Solution stands as one of the few LFP battery producers in the United States, a market that has traditionally been dominated by Chinese competitors with limited presence in the U.S.
Additionally, the company owns NextStar Energy in Windsor, Ontario, a similar battery cell factory that was formerly a joint venture with Stellantis until the automaker divested its stake to LG, making it the sole proprietor. The Canadian plant has received substantial subsidies from the Ontario and Canadian federal governments. Initially targeting the EV battery market, NextStar has shifted its focus to prioritize energy storage amidst a sluggish EV market, though it retains the capability to produce batteries for both applications.