The U.S. government announced on Monday that Tesla, an electric vehicle (EV) manufacturer, and LG Energy Solution from South Korea have finalized a supply contract to establish a $4.3 billion production facility in Lansing, Michigan, dedicated to manufacturing lithium iron phosphate (LFP) prismatic battery cells. The plant is set to commence production in 2027.
According to a statement from the U.S. Department of the Interior, the domestically produced cells will be utilized in Tesla’s Megapack 3 energy storage systems made in Houston, thereby strengthening the national battery supply chain.
This agreement between Tesla and LG Energy Solution was part of a series of deals emphasized by the administration of President Donald Trump at the Indo-Pacific Energy Security Summit. Earlier in July, a source revealed to 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 decrease its dependence on Chinese imports due to tariff implications.
LG Energy Solution, a prominent producer of LFP batteries in the U.S., has traditionally faced competition from Chinese counterparts dominating the LFP battery sector with limited presence in the American market.
Additionally, LG Energy Solution owns NextStar Energy in Windsor, Ontario, a battery cell plant that was previously a joint venture with Stellantis before LG acquired full ownership. The Canadian facility, heavily subsidized by the Ontario and Canadian federal governments, was initially focused on supplying the EV battery market but has shifted its focus to prioritize energy storage in response to a sluggish EV market, although it retains the capability to manufacture batteries for both sectors.
