The U.S. Department of the Interior announced on March 16 that Tesla and South Korea’s LG Energy Solution have entered into a supply agreement to build a $4.3 billion lithium iron phosphate (LFP) prismatic battery cell manufacturing facility in Lansing, Michigan.
The plant is expected to begin production in 2027 and will supply cells for Tesla’s Megapack 3 energy storage systems, which are manufactured in Houston. According to the Interior Department, this partnership will help establish a robust domestic battery supply chain by producing American-made cells for utility-scale applications.
This agreement was highlighted as part of a wider package of energy deals presented by the administration during the Indo-Pacific Energy Security Summit. In July, a source told Reuters that LG Energy Solution had already signed a $4.3 billion contract to supply LFP batteries to Tesla over three years, an arrangement aimed at reducing Tesla’s dependence on Chinese imports amid tariff challenges. At that time, LG had confirmed the global contract without specifying end customers or whether the batteries would be used in electric vehicles or stationary energy systems.
LG Energy Solution is among only a handful of companies producing LFP batteries in the United States. LFP chemistry, valued for its safety, thermal stability and cost advantages, has traditionally been dominated by manufacturers based in China, many of which have limited or no domestic production capacity in the U.S. Industry observers view the new Michigan facility as a strategic move to diversify the North American supply chain while supporting local manufacturing and job creation.
By localizing production of LFP cells, Tesla and LG aim to address both economic and geopolitical factors affecting battery availability. The plant in Lansing is expected to bolster the domestic energy storage market and contribute to broader efforts to secure a resilient, homegrown battery ecosystem for electric mobility and grid stabilization.
Source: Reuters
