Tesla Found Its Battery Partner. It's LG.

LG Energy Solution signs $4.3B deal with Tesla to build a Michigan LFP battery plant for Megapack 3 grid storage systems

11 Jun 2026

LG Energy Solution has agreed to supply Tesla with lithium iron phosphate prismatic cells under a $4.3bn, long-term contract, with a dedicated manufacturing facility planned for Michigan. Announced on 11 June 2026, the deal represents one of the largest domestic battery supply commitments in recent US market history.

Cells produced at the Michigan plant will feed Tesla's Megapack 3 grid-scale energy storage systems exclusively, binding two of the sector's largest players to an onshore supply chain. For utilities and grid operators, locally manufactured Megapack 3 units should reduce exposure to import disruptions and shorten delivery windows relative to overseas alternatives.

The agreement extends LG Energy Solution's US manufacturing presence while broadening its cell chemistry portfolio beyond nickel-based formats. Tesla, meanwhile, secures a domestic source for a flagship storage product at a time when grid-scale demand is accelerating.

Policy and capital flows support the timing. US battery manufacturing capacity is on track to cover more than 100 per cent of domestic demand, driven by a sustained wave of investment and federal incentives aimed at onshoring production. This contract adds billions in committed output to that pipeline.

Prismatic LFP chemistry carries specific advantages for grid storage: longer cycle life, stronger thermal stability, and lower cost per kilowatt-hour than many competing formats, attributes that suit long-duration applications as more renewable generation connects to the grid. Construction planning is under way.