Tesla and LG Energy to Build $4.3 Billion Battery Plant in Michigan

<p>Tesla and LG Energy will jointly build a battery plant in Michigan that will cost $4.3 billion. Production is slated to begin next year, the Department of the Interior said in a <a href="https://www.doi.gov/trump-administration-announces-deals-totalling-56-billion-during-indo-pacific-energy-security">statement</a>. The facility will have an annual capacity of 50 GWh.</p>
<p>“American-made cells will power Tesla's Megapack 3 energy storage systems produced in Houston, creating a robust domestic battery supply chain,” the statement also said.</p>
<p>Bloomberg last year <a href="https://www.bloomberg.com/news/articles/2025-07-30/tesla-signs-4-3-billion-battery-supply-contract-with-lg-energy">reported</a> the deal was in the making, citing sources as saying the batteries to be built at the facility will be used in energy storage installations rather than electric vehicles. The batteries will use lithium iron phosphate technology, which is dominated by Chinese companies. LG Energy is one of the few non-Chinese manufacturers using the technology.</p>
<p>The initial news reports about the battery plant last July came less than a week after LG Energy warned about slowing EV battery demand because of the tariffs that President Trump was imposing on trade partners around the world. The company also named the Trump administration’s phaseout of EV subsidies as a factor that will drive lower demand for batteries over the short term.</p>
<p>“U.S. tariffs and an early end to EV subsidies will put a burden on automakers, potentially leading to vehicle price increases and a slowdown in EV growth in North America,” the company’s CFO, Lee Chang-sil, said during a conference call on LG Energy’s second-quarter financial results, as quoted by Reuters in late July 2025.</p>
<p>Indeed, the phaseout of EV subsidies in the United States led to a slump in EV sales. The latest data shows that in January, new EV registrations in the country dropped by 41%, pushing EVs’ market share down from 8.3% in January 2025 to 5.1% this year, InsideEVs <a href="https://insideevs.com/news/790092/ev-sales-us-january-2025/">reported</a>. The Michigan plant that LG Energy and Tesla will build was originally planned to produce EV batteries.</p>
<p>By Irina Slav for Oilprice.com</p>
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