Tesla has agreed to purchase $4.3bn (£3.4bn) worth of battery cells from LG Energy Solution, strengthening its position in the fast-growing energy storage market.
The cells will be produced at LG’s facility in Lansing, Michigan, a site originally developed as a joint venture with General Motors, before the US automaker exited the project in 2024 as part of a wider pullback in electric vehicle investment.
The agreement marks a further step in Tesla’s strategy to expand its energy division, which is growing more rapidly than its automotive business.
The company’s energy segment, which includes Powerwall systems for homes and Megapack units for utility-scale storage, saw revenues rise 27% last year to $12.8bn (£10.1bn).
Large-scale battery storage is becoming increasingly important as electricity demand rises, particularly from data centres, while also supporting the integration of renewable energy sources such as wind and solar.
Tesla’s Megapack systems store excess energy generated during low-demand periods and release it when demand peaks.
LG Energy Solution said it will establish dedicated production lines at the Lansing site to fulfil the order, producing lithium iron phosphate battery cells designed for cost efficiency and scalability.
Tesla Chief Executive Elon Musk has said the company expects its energy business to see sustained high growth, although it faces increasing competition and potential margin pressure from global rivals.
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