Tesla has officially confirmed that it’s nearing completion of its first lithium iron phosphate (LFP) battery cell manufacturing facility in North America, located in Sparks, Nevada.
This marks a major milestone for Tesla, which currently imports all of its LFP batteries, primarily used in its Megapack energy storage systems, from China. With the new factory, Tesla will reduce its reliance on foreign-sourced batteries, while also positioning itself to benefit from lucrative domestic manufacturing incentives.
Why is this such a big deal? For one, many people weren’t even aware Tesla was building its own LFP cell plant in the U.S. The company quietly began work on the facility as part of its broader expansion of Gigafactory Nevada. Now, for the first time, Tesla will be able to produce affordable, U.S.-made LFP cells — in a factory it owns and operates — for both its energy storage products and, potentially, electric vehicles.
By localizing LFP production, Tesla aims to cut costs and minimize geopolitical supply chain risks. Additionally, some patents suggest Tesla’s LFP cell designs could be cheaper than even the Chinese versions it currently imports.
Another key advantage is compliance with U.S. EV tax credit requirements. Tesla had previously stopped selling its standard range vehicles with LFP batteries in the U.S. due to sourcing restrictions that disqualified them from federal incentives. Now, U.S.-made cells could qualify Tesla for the 45X manufacturing tax credit — at least while it lasts — and potentially bring back affordable, credit-eligible models for American buyers.
Tesla’s push into local LFP battery production not only improves its supply chain resilience but also expands its manufacturing footprint in the U.S. In 2024 alone, Tesla invested almost $10 billion in stateside facilities and infrastructure.
