The U.S. government announced on Monday that Tesla, an electric vehicle (EV) manufacturer, and LG Energy Solution from South Korea have finalized a contract to construct a $4.3 billion lithium iron phosphate (LFP) prismatic battery cell production facility in Lansing, Michigan. The facility is set to commence production in 2027 and will supply American-made cells for Tesla’s Megapack 3 energy storage systems manufactured in Houston, establishing a strong domestic battery supply chain, as stated by the U.S. Department of the Interior.
This agreement between Tesla and LG Energy Solution was part of a series of deals emphasized during the Indo-Pacific Energy Security Summit under the administration of President Donald Trump. Earlier in July, a source disclosed to Reuters that LG Energy Solution had sealed a $4.3 billion deal to provide energy storage system batteries to Tesla, aiming to lessen its reliance on Chinese imports due to tariffs.
LG Energy Solution, a leading producer of LFP batteries in the U.S., is challenging the dominance of Chinese competitors in the LFP battery chemistry market in the country. The company also operates NextStar Energy in Windsor, Canada, which was previously a joint venture with Stellantis before LG acquired full ownership. The Canadian plant, heavily subsidized by the Ontario and Canadian federal governments, was initially focused on serving the EV battery market but has shifted its focus to prioritize energy storage solutions due to market conditions. Nevertheless, it retains the capability to produce batteries for electric vehicles as well.