The U.S. government announced on Monday that Tesla, an electric vehicle (EV) manufacturer, and LG Energy Solution from South Korea have entered into a supply agreement 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 the U.S. Department of the Interior, the agreement will see the production of American-made cells to power Tesla’s Megapack 3 energy storage systems in Houston, contributing to the development of a robust domestic battery supply chain.
This agreement was part of a series of deals highlighted during the Indo-Pacific Energy Security Summit by the administration of former President Donald Trump. In July, a source informed Reuters that LG Energy Solution had secured a $4.3 billion deal to supply energy storage system batteries to Tesla, as the company sought to reduce its dependence on Chinese imports owing to tariffs.
LG Energy Solution, a prominent producer of LFP batteries 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, previously a joint venture with Stellantis until LG acquired full ownership from the automaker.
The Canadian plant, heavily supported by the Ontario and Canadian federal governments, initially targeted the EV battery market but has shifted focus to prioritize energy storage due to market conditions. However, it retains the capability to manufacture batteries for electric vehicles as well.