US Confirms Tesla as $4.3B LG Battery Buyer
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- The US government confirmed Tesla as the buyer behind LG Energy Solution's $4.3 billion LFP battery supply contract, ending months of speculation since LG first disclosed the deal in July.
- LG Energy Solution will produce LFP prismatic cells at its Lansing, Michigan factory starting in August 2027, feeding directly into Tesla's Megapack 3 energy storage systems assembled at the Houston Megafactory.
- Tesla's energy storage business was under direct threat from tariffs on Chinese LFP cell imports — now as high as 82.4% under combined Section 301 increases — with Tesla's CFO warning in April that tariffs would have an "outsized" impact.
- The Lansing plant was originally built as Ultium Cells 3, a $2.6 billion joint venture between LG and General Motors announced in January 2022; GM sold its stake to LG in May 2025, freeing the 50 GWh-capacity facility to pivot toward LFP production.
- Tesla also secured a separate $2.1 billion deal with Samsung SDI in November 2025 for approximately 10 GWh of LFP cells per year produced at Samsung's joint venture with Stellantis in Indiana, bringing combined Korean battery commitments to over $6.4 billion.
- Megapack 3, unveiled in September 2025, uses larger 2.8-liter battery cells to deliver roughly 5 MWh of capacity per unit — up from 3.9 MWh in Megapack 2 — with Houston Megafactory production targeted to begin in late 2026.
Why it matters: Tesla's energy storage division — its only consistently growing segment, deploying 46.7 GWh in 2025 — was uniquely exposed to 82.4% tariffs on Chinese LFP cells that the CFO called an "outsized" threat. By committing over $6.4 billion to Korean suppliers for domestic cells, Tesla has secured a tariff-proof supply chain for Megapack 3 production starting in late 2026.
