Tesla and South Korea’s LG Energy Solution have signed an agreement to build a $4.3 billion lithium iron phosphate (LFP) prismatic battery cell manufacturing facility in the United States. The goal is to reduce reliance on foreign uppliers as the Trump Administration’s continued (illegal) tariffs continue.
While Tesla faired well compared to automakers with facilities outside the United States, the American electric vehicle maker still lost $400 million due to tariffs in 2025. Despite the Supreme Court ruling that President Donald Trump’s tariffs were illegally imposed, they appear to be continuing, impacting not just vehicle imports but also any imported materials and parts. Recently, President Trump raised tariffs on South Korean cars and auto parts to 25%, costing Tesla quite a bit of extra cash.
The new battery cell manufacturing facility will open in Lansing, Michigan, and production is planned for 2027. It will not only benefit Tesla but also other American automakers seeking to avoid additional costs. The new battery plant partnership is one of the deals highlighted by the Trump Administration after the Indo-Pacific Energy Security Summit. Stated the U.S. Department of the Interior: “American-made cells will power Tesla’s Megapack 3 energy storage systems produced in Houston, creating a robust domestic battery supply chain.”
Tesla has been one of LG Energy Solutions’ larger clients for a while now, with the automaker buying its vehicle batteries from the manufacturer to avoid Chinese suppliers. LG Energy Solutions is one of the few companies producing LFP batteries in the United States — a market dominated by Chinese rivals that typically don’t operate in the U.S. market. A deal between Tesla and LG Energy Solutions has been rumored for quite some time, first reported by Reuters in July 2025. At the time, LG Energy Solution stated it had signed a $4.3 billion contract to supply its LFP batteries globally over the next three years, but didn’t mention Tesla as a partner or customer.
What are Tesla’s plans going forward?
The LFP battery facility is part of Tesla’s larger vision for the future. Recently, Tesla ended production of the Model S and Model X in the United States as the country shifts from luxury EVs. Instead, CEO Elon Musk stated that Tesla would focus on building its Optimus humanoid robots. However, we also just got word on March 17th that Musk is hoping to reveal the latest version of the Tesla Roadster in late April. He mentioned this on X, where else.
The Tesla Roadster is the brand’s first-ever model, released in 2008. Musk has been promising a new generation since 2017, but there have been several delays with the sports car. It’s refreshing to see this is still happening — and being revealed soon — since Tesla has been moving away from vehicle production to focus on robots and robotaxis, which could be ramping up the rides and spreading to other cities despite ongoing safety concerns.
Along with the new battery plant, Tesla is hoping to design its own AI chips. There is also a solar energy project in the works, according to Musk. To me, it feels a bit scattered, with too many ideas and plans floating around. Batteries, robots, taxis, sports cars? I guess Tesla is used to the chaos, which usually includes a few lawsuits added to the mix. Either way, this new battery facility will bring Tesla one step closer to its massive plans, most of which lack firm dates.
