LG Energy Solution–Tesla $4.3bn ESS deal confirmed

(LG Energy Solution)

LG Energy Solution Ltd.’s energy storage system (ESS) deal disclosed in July has been confirmed to have been signed with Tesla Inc.

According to media reports and industry sources Tuesday, the U.S. government detailed the collaboration in a report summarizing the Indo-Pacific Energy Ministerial and Business Forum held in Tokyo, Japan, on March 14 and 15.

The U.S. government announced a total of $56 billion in energy and infrastructure investments and partnerships, identifying the battery industry as a key pillar of power infrastructure.

According to the report, Tesla and LG Energy Solution have agreed to build a lithium iron phosphate (LFP) prismatic battery cell manufacturing facility worth $4.3 billion in Lansing, Michigan.

In particular, the U.S. government stated that battery cells produced at the facility will be installed in Tesla’s large-scale energy storage system, Megapack 3, manufactured in Houston, Texas. The facility is scheduled to begin production next year.

The announcement marks the first official confirmation that Tesla is the customer behind the contract disclosed by LG Energy Solution in July last year. The company did not name the client or production location at the time due to a non-disclosure agreement, though industry sources had widely speculated Tesla based on the contract size and timing.

Industry observers said the deal is significant as LG Energy Solution’s first large-scale contract securing a customer for prismatic LFP batteries. Beyond its core electric vehicle pouch-type batteries, the company has secured a major client in the ESS market, seen as a key growth area.

The deal is also viewed as strategically important as LG Energy Solution gains a foothold in the North American ESS supply chain with Tesla as a client, in a market largely dominated by Chinese firms in LFP batteries.

“Based on our North American production capabilities, we expect our role to expand further amid the restructuring of the global energy supply chain,” said an LG Energy Solution official.