The U.S. government announced Monday that electric vehicle giant Tesla and South Korea’s LG Energy Solution have finalized a supply agreement to build a massive $4.3 billion lithium iron phosphate (LFP) prismatic battery cell manufacturing facility in Lansing, Michigan. Production is expected to kick off in 2027.
According to a statement from the U.S. Department of the Interior, the American-made cells will power Tesla’s Megapack 3 energy storage systems, which are produced in Houston. The deal is seen as a major step toward building a robust domestic battery supply chain.
The announcement came as part of a broader roundup of agreements highlighted by the Trump administration during the Indo-Pacific Energy Security Summit. It marks the formal confirmation of a deal first reported last year, when LG Energy Solution revealed it had signed a $4.3 billion contract to supply LFP batteries over three years—though at the time, the company kept the customer’s identity under wraps and didn’t specify whether the batteries would be used in vehicles or energy storage systems.
For Tesla, the partnership offers a strategic path to reduce reliance on Chinese imports, which have become increasingly costly due to tariffs. LG Energy Solution is one of the few LFP battery producers operating in the U.S., a chemistry segment long dominated by Chinese rivals who have minimal presence in the American market.
The Michigan facility is expected to strengthen domestic manufacturing capacity and support Tesla’s growing energy storage business, which has become an increasingly important part of the company’s portfolio alongside its electric vehicle lineup.
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