The U.S. government announced on Monday that Tesla and LG Energy Solution have finalized a contract to establish a $4.3 billion lithium iron phosphate (LFP) prismatic battery cell production plant in Lansing, Michigan. The facility is expected to commence operations in 2027.
According to the U.S. Department of the Interior, the agreement aims to manufacture American-made cells to power Tesla’s Megapack 3 energy storage systems in Houston, strengthening the domestic battery supply chain.
This development was part of a series of agreements highlighted during the Indo-Pacific Energy Security Summit promoted by President Donald Trump’s administration. LG Energy Solution had previously secured a $4.3 billion deal to supply Tesla with energy storage system batteries, as reported by a source to Reuters in July. This move was intended to reduce Tesla’s dependence on Chinese imports due to tariffs.
LG Energy Solution, a key player in LFP battery production in the U.S., has traditionally faced competition from Chinese counterparts that have limited presence in the American market. The company also operates NextStar Energy in Windsor, Ontario, which was formerly a joint venture with Stellantis until LG acquired full ownership. The Canadian plant, heavily subsidized by the Ontario and Canadian federal government, was initially focused on serving the EV battery market but has shifted towards prioritizing energy storage amidst challenging conditions in the EV sector. Nonetheless, it retains the capability to produce batteries for both applications.