The U.S. Department of the Interior announced on March 16 that Tesla and South Korea’s LG Energy Solution have agreed to build a $4.3 billion manufacturing facility in Lansing, Michigan, dedicated to producing lithium iron phosphate (LFP) prismatic battery cells.

Scheduled to begin production in 2027, the plant will supply cells for Tesla’s Megapack 3 energy storage systems, which are assembled in Houston. According to the Interior Department, the partnership is aimed at strengthening the domestic battery supply chain by manufacturing American-made cells for large-scale energy applications.

The announcement was part of a broader set of energy initiatives unveiled by the administration during the Indo-Pacific Energy Security Summit. In July, a source told Reuters that LG Energy Solution had already signed a $4.3 billion, three-year contract to supply LFP batteries to Tesla, a deal intended to help Tesla reduce its reliance on Chinese imports amid growing tariff pressures. At the time, LG confirmed the global agreement but did not disclose the end customer or specify whether the batteries would be used in electric vehicles or stationary storage systems.

LG Energy Solution is one of the few companies currently producing LFP batteries in the U.S. Known for their safety, thermal stability, and cost-effectiveness, LFP chemistries have historically been dominated by Chinese manufacturers—many of which have little to no production footprint in the United States. Industry analysts view the new Michigan facility as a strategic effort to diversify North America’s supply chain while supporting local manufacturing and job growth.

By localizing LFP cell production, Tesla and LG are looking to navigate both economic and geopolitical challenges affecting battery availability. The Lansing plant is expected to strengthen the domestic energy storage sector and contribute to broader efforts aimed at building a resilient, homegrown battery ecosystem for electric mobility and grid reliability.