Battery supply chains in the United States are shifting as electric vehicle and energy storage companies look to domestic manufacturers for critical components. Tesla’s move to collaborate with LG Energy Solution (LGES) for lithium iron phosphate (LFP) battery production at the Lansing, Michigan facility signals a strategic effort to diversify and strengthen its energy storage business in North America. This deal marks a notable shift in sourcing as global competition, trade policies, and sustainability goals reshape manufacturing priorities for both automakers and energy firms.
Unlike previous arrangements where LG Energy Solution operated the Lansing plant as Ultium Cells 3 through a joint venture with General Motors, LGES secured full ownership of the facility after acquiring GM’s stake in May 2025. Earlier reports focused on LG Energy Solution’s broader expansion into LFP batteries for electric vehicles and grid storage, primarily highlighting partnerships with Asian customers. News of a major unnamed customer in last year’s $4.5 billion supply announcement initially pointed toward market diversification within Asia until new information identified Tesla as a key buyer tied directly to North American energy storage requirements. The Lansing site’s transition reflects the increasing significance of regional supply networks and the scaling potential of U.S.-based production.
Why is Tesla Sourcing LFP Batteries From LG Energy Solution?
Tesla previously relied on CATL’s prismatic LFP batteries for its Megapack systems, largely produced in China. Increasing domestic procurement strengthens Tesla’s supply chain resilience in the U.S. market and reduces exposure to geopolitical risks. By partnering with LGES, Tesla aims to align with shifting policies favoring local battery manufacturing and secure a stable supply for its expanding Megafactory initiatives.
How Will the Lansing Facility Transition to LFP Battery Production?
LG Energy Solution has begun retooling part of its Lansing plant specifically for LFP energy storage system batteries. The company placed orders for manufacturing equipment, with suppliers such as CIS, Hirano Tecseed, TSI, CK Solution, A-Pro, and Shinjin Mtech supporting the conversion. Full-scale production is slated for the second half of next year, leveraging a yearly capacity of up to 50 GWh. LGES highlighted its approach:”
“Converting Lansing to LFP production is a significant step for our U.S. operations.”
The company expects the site to become a central hub in its North American strategy.
What Does the Tesla Agreement Involve?
LGES’s previously disclosed 5.94 trillion won battery supply contract, set between August 2027 and July 2030, is reportedly for Tesla’s energy storage business. The arrangement, while not officially named by LGES, is widely regarded by industry observers as a crucial supply line for Tesla’s North American Megapack projects. A representative from LG Energy Solution stated,
“Our aim is to provide high-quality, reliable batteries that meet the needs of our partners in the United States.”
This positions the Lansing plant at the confluence of increased domestic manufacturing and growing demand for grid-scale storage solutions.
Growing demand for renewable energy storage has placed new pressure on U.S. companies to secure reliable, local sources of batteries. The Tesla-LG Energy Solution partnership at Lansing not only reinforces Tesla’s ambitions within the industrial-scale storage sector but also underscores larger trends in U.S. energy manufacturing. By converting existing auto battery infrastructure for the ESS market, companies like LGES can pivot quickly to meet evolving commercial needs. For readers interested in energy storage supply chains, recent policy shifts and increasing capital investment in U.S. plants suggest that local battery manufacturing will continue to expand. Stakeholders should monitor how quickly these new supply lines ramp up and impact the pricing and availability of grid storage products across North America.
