The U.S. government announced on Monday that Tesla, an electric vehicle (EV) maker, and LG Energy Solution from South Korea have entered into a partnership to establish a lithium iron phosphate (LFP) prismatic battery cell manufacturing plant in Lansing, Michigan. The project is valued at $4.3 billion and is set to commence production in 2027.
According to the U.S. Department of the Interior, the agreement aims to produce American-made cells for Tesla’s Megapack 3 energy storage systems manufactured in Houston, thereby strengthening the domestic battery supply chain.
This development was revealed as part of a series of agreements highlighted during the Indo-Pacific Energy Security Summit under the leadership of President Donald Trump. Earlier in July, a source disclosed to Reuters that LG Energy Solution had secured a $4.3 billion deal to supply energy storage system batteries to Tesla. This move was in response to Tesla’s strategy to reduce its dependence on Chinese imports due to tariffs.
LG Energy Solution, a prominent producer of LFP batteries in the U.S., had previously announced a global $4.3 billion contract over three years for supplying LFP batteries without specifying the end-user or the intended application in vehicles or energy storage systems.
Additionally, LG Energy Solution also owns NextStar Energy in Windsor, Ontario, which was previously a joint venture with Stellantis until Stellantis divested its share to LG, making LG the sole owner. The Canadian plant, heavily subsidized by the Ontario and Canadian federal governments, was initially focused on serving the EV battery market but has since shifted its focus to prioritize energy storage amid a sluggish EV market, while still maintaining the capability to produce batteries for both sectors.
