Tesla to buy $4.3 billion of LG Energy battery cells made in Michigan
Harmony Energy Ltd. near Burgess Hill, England. and a Tesla Megapack battery at the Fotowatio Renewable Ventures BV battery energy storage project, May 11, 2021.
Chris Ratcliffe | Bloomberg | Getty Images
Tesla’s Lansing is expanding its ties with South Korea’s LG Energy Solution to purchase $4.3 billion worth of battery cells for energy storage systems to be manufactured in Michigan.
The facility was previously developed for a joint venture between LG and LG. General Engines before the automaker decides to pull out of the venture in late 2024 and sell its stake to LG as part of a pullback on the automaker’s electric vehicle investments.
Although Tesla still derives most of its revenue from electric vehicles, the company is investing in its faster-growing energy business as data centers increase demand for electricity. Tesla’s Megapacks can store power generated using intermittent sources like solar or wind or during off-peak hours and make it available for use during times of high demand.
Tesla’s it currently sells Powerwall backup batteries for residential use with solar installations and much larger Megapack and Megablock systems for utility-scale power storage. Last year, the company’s revenue from its energy segment rose 27% to $12.8 billion, accounting for 13% of total revenue. Total revenue fell 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. A statement from the US Department of Internal Affairs. The Trump administration announced private sector commitments totaling $56 billion at the event.
A spokesperson for LG Energy Solution said the company “will install dedicated production lines at our Lansing facility to fulfill this agreement.” LG last year retooled the facility to build LFP (lithium iron phosphate) prismatic cells and later confirmed a $4.3 billion deal with an unnamed company.
GM continues to have a significant presence in and around its Lansing battery plant, but the company has largely withdrawn from the electric vehicle market and announced related losses of $7.6 billion.
Tesla, meanwhile, CEO Elon Musk said during the company’s fourth-quarter earnings call in January that he expects its energy business to “achieve very high growth in the future as far as we can imagine.” Chief Financial Officer Vaibhav Taneja warned that the energy segment expects “margin compression” from low-cost competition and tariff costs.
Tesla’s competition includes companies like BYD in China and climate tech startups like Form, which makes iron-air batteries, and others.
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