Image: Tesla
Tesla is deepening its partnership with South Korea’s LG Energy Solution to secure a massive domestic battery supply for its energy storage business. On Monday, the U.S. government confirmed the two companies have inked a deal to produce lithium iron phosphate (LFP) cells at a new $4.3 billion facility in Lansing, Michigan.
Expected to open in 2027, the Michigan plant will primarily feed Tesla’s Megapack 3 production in Houston. This move helps Tesla insulate its supply chain from heavy tariffs on Chinese-made batteries, a strategy first reported by Reuters last summer when the multibillion-dollar contract was initially signed without a named customer.
For Canadians, the deal highlights the growing importance of LG Energy Solution in the North American “battery belt.” The company is now the sole owner of the NextStar Energy factory in Windsor, Ontario, after recently buying out Stellantis’ half of the venture.
While the Windsor plant has received billions in subsidies from the Canadian federal and Ontario governments to build EV batteries, it has recently pivoted to prioritize energy storage cells. This shift mirrors the strategy seen in the new Michigan-Tesla deal, as manufacturers look to the power grid market to offset a cooling electric vehicle sector.
By localizing LFP production in the U.S. and Canada, LG is challenging the long-standing dominance of Chinese battery giants who have previously controlled the market for this specific chemistry.
