The U.S. government announced on Monday that Tesla, an electric vehicle (EV) manufacturer, and LG Energy Solution from South Korea have agreed to collaborate on constructing a $4.3 billion lithium iron phosphate (LFP) prismatic battery cell manufacturing plant in Lansing, Michigan. The facility is set to commence production in 2027 and will supply American-made cells for Tesla’s Megapack 3 energy storage systems in Houston, thus establishing a strong domestic battery supply chain, according to a statement from the U.S. Department of the Interior.
This partnership between Tesla and LG Energy Solution was part of a series of agreements highlighted at the Indo-Pacific Energy Security Summit under the previous administration of President Donald Trump. In a previous report from July, LG Energy Solution had already secured a $4.3 billion deal to provide energy storage system batteries to Tesla as the company aimed to decrease its dependence on Chinese imports due to tariffs. The South Korean company had also signed a separate $4.3 billion contract to supply LFP batteries globally over three years, though the specific customer or the intended use of the batteries were not disclosed at that time.
LG Energy Solution stands out as one of the limited LFP battery producers within the U.S., as this battery chemistry sector has been predominantly controlled by Chinese competitors with minimal presence in the American market. Apart from the newly announced collaboration with Tesla in Michigan, LG Energy Solution also operates NextStar Energy in Windsor, Ontario. This battery cell factory was previously a joint venture with Stellantis until LG acquired full ownership after Stellantis sold its share. Supported by the Ontario and Canadian federal government, the Canadian plant primarily focused on supplying the EV battery market but has since shifted its focus towards energy storage due to the sluggish EV market conditions, while still retaining the capability to manufacture batteries for electric vehicles.