The U.S. government announced on Monday that Tesla, an electric vehicle (EV) manufacturer, and LG Energy Solution of South Korea have agreed 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 partnership aims to manufacture American-made cells to support Tesla’s Megapack 3 energy storage systems in Houston, thereby strengthening the domestic battery supply chain.
This agreement between Tesla and LG Energy Solution was part of a larger announcement made during the Indo-Pacific Energy Security Summit promoted by the administration of President Donald Trump. Reuters reported in July that LG Energy Solution had secured a $4.3 billion deal to supply Tesla with energy storage system batteries, as Tesla sought to reduce its reliance on Chinese imports due to tariffs.
LG Energy Solution had previously disclosed signing a $4.3 billion contract to supply LFP batteries globally over three years, without specifying the customer or the intended use in vehicles or energy storage systems.
LG Energy Solution is among the limited number of LFP battery producers in the U.S., a market historically dominated by Chinese competitors with minimal presence in the United States. The company also operates NextStar Energy in Windsor, Ontario, a similar battery cell manufacturing facility that was previously a joint venture with Stellantis before LG acquired full ownership.
The Canadian plant, heavily subsidized by the Ontario and Canadian federal governments, initially focused on serving the EV battery market but has since shifted its emphasis to prioritize energy storage amidst a sluggish EV market. Nevertheless, the facility remains capable of producing batteries for both sectors.
