Tesla and LG Energy Solution will build a battery factory in the USA, an investment of 4.3 billion dollars (around 3.7 billion euros), to supply Tesla’s storage systems business.
Confirmation of the agreement was included in a statement from the United States Department of the Interior (USA) to highlight cooperation on energy security between the USA and countries in the Indo-Pacific region.
According to the statement, production at the factory of lithium iron phosphate battery cells is expected to begin next year.
“The cells manufactured in the United States will power Tesla’s Megapack 3 energy storage systems, produced in Houston, creating a solid national battery supply chain,” said the statement.
The deal underscored the South Korean battery maker’s expansion into the fast-growing energy storage systems market in response to rising demand coming mainly from Artificial Intelligence (AI)-driven data centers, the slowing transition to electric vehicles in the US and intensifying competition from China.
Tesla, which currently relies heavily on Chinese-made LFP cells, has also stepped up efforts to diversify the supply chain in order to mitigate pressure from customs duties.
The company reported that the impact of customs duties on the energy storage business amounted to around 200 million dollars (around 173 million euros) in the third quarter alone.
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