LG Energy Solution Confirms $4.3 Billion Battery Supply Deal with Tesla

LG Energy Solution recently confirmed it will supply Tesla with $4.3 billion worth of lithium iron phosphate (LFP) prismatic batteries for its Megapack 3 energy storage system. The batteries will be produced at LG’s Lansing, Michigan facility in the U.S., with production expected to begin next year. This move aims to support Tesla’s efforts to localize its battery supply chain and alleviate tariff pressures stemming from its reliance on Chinese-made batteries—tariff costs alone are projected to reach approximately $200 million in the third quarter of 2025. The partnership also highlights LG Energy Solution’s accelerated push into the rapidly growing energy storage market, driven by surging power demand from AI data centers, a slowdown in the U.S. electric vehicle transition, and intensifying competition from Chinese rivals. LG plans to retool its production lines and, together with other Korean firms like Samsung SDI, target over 60 GWh of energy storage battery capacity by 2026. Following the announcement, LG Energy Solution’s stock rose by 4%. Tesla has not yet responded to the news.