The U.S. government announced on Monday that Tesla, an electric vehicle (EV) manufacturer, and South Korea’s LG Energy Solution have entered into a contract to establish a $4.3 billion lithium iron phosphate (LFP) prismatic battery cell manufacturing 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 American-made cells produced at this facility will be utilized to power Tesla’s Megapack 3 energy storage systems manufactured in Houston, thereby establishing a strong domestic battery supply chain.
This agreement between Tesla and LG Energy Solution was part of a series of deals emphasized during the Indo-Pacific Energy Security Summit, as highlighted by the Trump administration. In July, a source disclosed to Reuters that LG Energy Solution had inked a $4.3 billion deal to supply energy storage system batteries to Tesla, aiming to lessen its dependence on Chinese imports due to tariffs.
LG Energy Solution, one of the few LFP battery producers in the U.S., had previously announced 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.
The South Korean company also operates NextStar Energy in Windsor, Ontario, which was formerly a joint venture with Stellantis until Stellantis sold its stake to LG, making LG the sole owner. The Canadian plant, heavily subsidized by the Ontario and Canadian federal governments, was initially focused on supplying the EV battery market but has shifted to prioritize energy storage due to a sluggish EV market, although it remains capable of producing batteries for both markets.