The move comes as Tesla works to avoid US tariffs on Chinese imports|Ivan Radic|CC BY 2.0
Tesla has reportedly signed a $4.3 billion deal with South Korea’s LG Energy Solution to secure a supply of lithium iron phosphate (LFP) batteries.
These batteries, intended for energy storage systems, will be manufactured at LG’s Michigan factory.
Although the LFP battery industry has been largely dominated by Chinese firms, LG began US production in May, positioning itself as one of the few domestic players in the space.
Amid cooling electric vehicle demand, LG is shifting its focus toward the booming energy storage market, driven in part by the rise of AI-powered data centers.
This deal aligns with Tesla’s strategy to reduce reliance on Chinese imports and avoid related US tariffs. CEO Elon Musk also recently disclosed a separate $16.5 billion contract with Samsung to supply semiconductors.