Holland Reporter

Tesla has announced a $4.3 billion agreement with LG Energy Solution to supply U.S.-made lithium iron phosphate batteries for its Megapack energy storage systems starting in 2027. The announcement was shared in a post on X.

According to PV Magazine International, Tesla has selected LG Energy Solution as a key partner to source these batteries manufactured in the United States. This decision is part of Tesla's long-term strategy to reduce supply chain risks and dependency on tariffs imposed on Chinese imports. The batteries will be produced at LG Energy Solution's Michigan factory, with deliveries scheduled from August 2027 through July 2030. The agreement includes options to extend and scale up production, aligning with Tesla’s broader strategy to diversify suppliers and enhance its U.S.-based manufacturing footprint.

The agreement is reportedly valued at approximately $4.3 billion and spans three years, during which LG Energy Solution will supply lithium iron phosphate batteries from its U.S. facilities. Reuters confirmed that the deal runs from August 2027 to July 2030, with potential extensions totaling up to seven additional years, subject to further negotiations. This flexibility reflects Tesla’s intent to scale storage deployment while maintaining tariff-compliant sourcing.

According to Reuters, CATL is the world’s largest manufacturer of electric vehicle batteries and is based in China, supplying major automakers including Tesla. In January 2025, the U.S. Department of Defense added CATL to its list of Chinese military companies, a designation that restricts certain business activities and could prevent American companies from engaging in future contracts with CATL. This action creates regulatory and compliance obstacles for U.S. firms involved in the battery supply chain.

Interesting Engineering is a digital publication covering scientific breakthroughs, technological innovations, and major engineering feats for a global audience. It offers daily and weekly newsletters, podcasts, and educational courses, operated by a diverse team headquartered in New York and Istanbul.