The U.S. government announced on Monday that Tesla and LG Energy Solution have entered into a supply agreement to establish 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 produced by this collaboration will be utilized in Tesla’s Megapack 3 energy storage systems in Houston, enhancing the domestic battery supply chain.
This agreement between Tesla and LG Energy Solution was part of a series of deals highlighted during the Indo-Pacific Energy Security Summit presided over by President Donald Trump’s administration. In July, a source informed Reuters that LG Energy Solution had inked a $4.3 billion deal to supply energy storage system batteries to Tesla, aiming to decrease dependence on Chinese imports due to tariffs.
LG Energy Solution, a key manufacturer of LFP batteries in the U.S., stated earlier that it had secured a $4.3 billion contract to supply LFP batteries globally over three years, without specifically revealing the customer or the intended use in vehicles or energy storage systems.
In addition to its operations in the U.S., LG Energy Solution also manages NextStar Energy in Windsor, Ontario, which was previously a joint venture with Stellantis until LG acquired full ownership recently. The Canadian plant, heavily subsidized by the Ontario and Canadian federal governments, was initially focused on serving the EV battery market but has since shifted its focus to prioritize energy storage, while still being capable of producing batteries for electric vehicles.
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