Tesla to buy Michigan-made LG Energy battery cells for $4.3 billion

Tesla South Korea’s LG Energy Solutions is expanding its relationship with a deal to buy $4.3 billion worth of battery cells for energy storage systems to be made in Lansing, Michigan.

The plant was previously developed for a joint venture between LG and General Motors The automaker sold its stake to LG as part of a pullback in the automaker’s electric vehicle investments, before deciding to back out of that initiative at the end of 2024.

While Tesla still generates most of its revenue from EVs, the company is investing more in the fast-growing energy business as data centers increase demand for electricity. Tesla’s Megapacks can store energy generated using renewable sources such as solar or wind, or make it available for use during off-peak times, when demand is high.

Tesla Powerwall currently sells backup batteries with its solar installations for residential use and larger Megapack and Megablock systems for utility-scale power storage. Last year, revenue in the company’s energy division rose 27% to $12.8 billion, accounting for 13% of total revenue. Total revenue declined due to a 10% decline in the auto business.

Details of the Tesla-LG partnership were announced during the Indo-Pacific Energy Security Summit in Japan, released by the US Department of the Interior. The Trump administration announced a total of $56 billion in private sector commitments at the event.

A spokesperson for LG Energy Solutions said the company will “install dedicated production lines at our Lansing facility to deliver this contract.” LG last year revisited a facility to make LFP (lithium iron phosphate) prismatic cells, after securing a $4.3 billion deal with an unnamed company.

GM continues to have a significant presence in and around the Lansing battery plant, but the company has largely retreated from the EV market, announcing $7.6 billion in related write-downs.

Tesla, meanwhile, said its energy business has “as much future growth as we can imagine,” CEO Elon Musk said on the company’s fourth-quarter earnings call in January. CFO Vaibhav Taneja warned that the energy segment expects “margin compression” from low-cost competition and tariff costs.

Tesla’s competition in China includes companies like BYD and climate-technology startups like Pharm, which is making iron-air batteries and others.

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