Tesla has now been officially confirmed as the partner behind a previously announced $4.3 billion battery deal with LG Energy Solution.
The confirmation came from the U.S. government, who announced on Monday that Tesla and LG Energy Solution have signed an agreement to build a lithium iron phosphate (LFP) prismatic battery cell manufacturing facility in Lansing, Michigan, with production expected to begin in 2027.
According to the announcement, the facility will be used to support Tesla’s rapidly growing energy storage business.
“American-made cells will power Tesla’s Megapack 3 energy storage systems produced in Houston, creating a robust domestic battery supply chain,” the U.S. Department of the Interior said in a statement.
While the deal is only now being officially confirmed by the U.S. government, the deal was first announced in mid-2025. At the time, LG Energy Solution disclosed a $4.3 billion battery supply agreement in a regulatory filing but did not name its customer.
Connecting the dots pointed to Tesla as the likely partner based on the contract size, timing, and focus on energy storage applications. This announcement removes any remaining uncertainty, confirming Tesla as the end customer.
The new Michigan factory represents a significant step in Tesla’s efforts to localize its battery supply chain in North America. LFP battery chemistry, while increasingly popular for energy storage due to its lower cost and improved longevity, has historically been dominated by Chinese manufacturers.
That reliance has become a growing challenge for Tesla, particularly as U.S. tariffs and trade policies have made importing Chinese-made batteries more expensive. By partnering with LG Energy Solution, Tesla is positioning itself to mitigate those risks while ensuring a steady supply of cells for its Megapack and Powerwall products.
LG Energy Solution is currently one of the few companies producing LFP batteries in North America. The company has already begun LFP production in Michigan and continues to expand its footprint, including the NextStar Energy facility in Windsor, Ontario.
