The U.S. government announced on Monday that Tesla, the electric vehicle (EV) manufacturer, and LG Energy Solution of South Korea have entered into a supply agreement to construct a lithium iron phosphate (LFP) prismatic battery cell manufacturing plant in Lansing, Michigan. The project, valued at $4.3 billion, is expected to commence production in 2027.
According to a statement from the U.S. Department of the Interior, the plant will produce American-made cells to power Tesla’s Megapack 3 energy storage systems in Houston, thereby establishing a strong domestic battery supply chain.
The collaboration between Tesla and LG Energy Solution was highlighted as part of a series of agreements revealed during the Indo-Pacific Energy Security Summit under the administration of President Donald Trump.
Earlier reports indicated that LG Energy Solution had secured a $4.3 billion deal to supply energy storage system batteries to Tesla, as the latter sought to decrease its dependence on Chinese imports due to tariffs. The South Korean company had previously announced a separate $4.3 billion contract to supply LFP batteries globally over three years, without specifying the recipient or the intended use of the batteries.
LG Energy Solution is among the few LFP battery producers in the United States, a market traditionally dominated by Chinese competitors with limited presence in the U.S. market.
Additionally, LG Energy Solution owns the NextStar Energy plant in Windsor, Ontario, which was previously a joint venture with Stellantis until LG acquired full ownership. The Canadian facility has received substantial subsidies from the Ontario and Canadian federal governments. Initially focused on serving the EV battery market, NextStar Energy has shifted its focus to prioritize energy storage while retaining the capability to manufacture batteries for electric vehicles as well.