The U.S. government announced on Monday that Tesla, an electric vehicle manufacturer, and LG Energy Solution from South Korea have entered into a contract to establish 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 American-made cells will be utilized to power Tesla’s Megapack 3 energy storage systems manufactured in Houston, thus enhancing the domestic battery supply chain.
This collaboration between Tesla and LG Energy Solution was part of a series of agreements publicized during the Indo-Pacific Energy Security Summit under the administration of former President Donald Trump.
Earlier in July, a source revealed to Reuters that LG Energy Solution had sealed a $4.3 billion deal with Tesla to provide energy storage system batteries as part of Tesla’s strategy to reduce dependence on Chinese imports due to tariffs.
LG Energy Solution, a prominent LFP battery producer in the U.S., had previously announced a $4.3 billion contract to supply LFP batteries globally over three years, without specifying the recipient or the intended use in vehicles or energy storage systems.
The LFP battery market in the U.S. has been largely controlled by Chinese competitors, with LG Energy Solution being one of the few domestic manufacturers. Additionally, the company operates NextStar Energy in Windsor, Ontario, a battery cell plant that was previously a joint venture with Stellantis before LG acquired full ownership.
The NextStar Energy plant in Canada has received substantial subsidies from both the Ontario and Canadian federal governments. Originally focused on serving the EV battery sector, the plant has shifted its focus to prioritize energy storage amidst a sluggish EV market but retains the capability to produce batteries for both markets.