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 construct a $4.3 billion lithium iron phosphate (LFP) prismatic battery cell manufacturing plant in Lansing, Michigan. The facility is projected to commence production in 2027.
According to a statement by the U.S. Department of the Interior, the American-made cells will be utilized to power Tesla’s Megapack 3 energy storage systems manufactured in Houston, establishing a strong domestic battery supply chain.
This agreement with Tesla 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 informed Reuters that LG Energy Solution had inked a $4.3 billion deal to provide energy storage system batteries to Tesla, as the U.S. company aimed to diminish its dependence on Chinese imports due to tariffs.
At that time, the South Korean company disclosed that it had secured a $4.3 billion contract to supply LFP batteries globally over three years, without disclosing the specific customer or the intended use in vehicles or energy-storage systems.
LG Energy Solution stands out as one of the limited producers of LFP batteries in the U.S., an area usually dominated by Chinese competitors with minimal presence in the American market.
Moreover, LG Energy Solution also operates NextStar Energy in Windsor, Ontario, formerly a joint venture with Stellantis until LG acquired full ownership from the automaker. The Canadian plant has received substantial subsidies from the Ontario and Canadian federal government. Initially targeting the EV battery market, NextStar has shifted its focus to prioritize energy storage amid sluggish EV demand but retains the capability to manufacture batteries for both sectors.