The U.S. government announced a partnership between Tesla and LG Energy Solution to establish a $4.3 billion lithium iron phosphate (LFP) prismatic battery cell factory in Lansing, Michigan. The facility is set to commence production in 2027, providing American-made cells for Tesla’s Megapack 3 energy storage systems in Houston. This move aims to strengthen the domestic battery supply chain, as stated by the U.S. Department of the Interior.
The agreement with Tesla was highlighted during the Indo-Pacific Energy Security Summit under President Donald Trump’s administration. In a previous report by Reuters, LG Energy Solution had secured a $4.3 billion deal to supply energy storage system batteries to Tesla, signaling a shift away from Chinese imports due to tariffs. The South Korean company had earlier announced a global contract worth $4.3 billion over three years for LFP batteries, without specifying the customer or the intended use in vehicles or energy storage systems.
LG Energy Solution stands out as one of the few LFP battery producers in the U.S., challenging the dominance of Chinese competitors in this battery chemistry within the American market. Additionally, the company owns NextStar Energy in Windsor, Ontario, formerly a joint venture with Stellantis until LG acquired full ownership recently. The Canadian plant, heavily subsidized by the Ontario and Canadian federal government, initially focused on supplying the EV battery market but has shifted towards prioritizing energy storage amid subdued EV demand, while retaining the ability to manufacture batteries for both sectors.