Tesla is entering a partnership with South Korea’s LG Energy Solution to purchase $4.3 billion in lithium iron phosphate (LFP) battery cells, which will be manufactured at LG Energy’s factory in Lansing, MI, starting in 2027. The deal aims to secure a domestic battery supply and reduce Tesla’s reliance on China amidst increasing tariffs on imported batteries.
The new collaboration follows General Motors’ exit from a joint venture with LG Energy, allowing the plant to serve new clients like Tesla. This partnership is seen as essential for sustaining Tesla’s energy storage business, which reported a 168% compound annual growth rate in deployments over the past three years, reaching 46.7 GWh in 2025, a 49% increase year-on-year.
Combined with a $2.1 billion deal with Samsung SDI for LFP cells produced in Indiana, Tesla’s total commitments for battery supply now exceed $6.4 billion, bolstering its energy division while also addressing supply bottlenecks. Despite these advancements, Tesla faces significant challenges, including a decline in EV deliveries and increasing competition in the autonomous driving market.
