Tesla has agreed a $4.3 billion deal with South Korea’s LG Energy Solution to buy advanced battery cells produced at a retooled factory in Lansing, Michigan. These cells are destined to fuel the electric car giant’s fast-growing energy storage business, which is riding a wave of demand from power-hungry data centres.
The plant was originally a joint effort between LG and General Motors, but GM pulled out in late 2024, selling its interest to LG as part of a broader retreat from aggressive electric vehicle investments. Although cars still drive the bulk of Tesla’s earnings, its energy division is surging ahead, with analysts pointing to AI-driven data centres that could double global electricity needs by 2026, per the International Energy Agency.
Tesla’s Megapacks store surplus power from renewables such as solar or wind, or from off-peak generation, making it available when grids face heaviest strain. The company pairs smaller Powerwall units with home solar setups and deploys vast Megapack and Megablock systems for utilities. Last year, energy revenue jumped 27% to $12.8 billion, or 13% of the total, even as vehicle sales dipped 10% and weighed on overall results.
The partnership was unveiled at Japan’s Indo-Pacific Energy Security Summit, where the Trump administration announced $56 billion in private sector pledges, according to a U.S. Department of the Interior release.
A LG Energy Solution spokesperson confirmed the firm “will establish dedicated production lines at our Lansing facility to deliver on this agreement.” LG had already converted the site for safer, cheaper lithium iron phosphate (LFP) prismatic cells and revealed the mystery $4.3 billion customer earlier.
General Motors keeps a footprint near Lansing but has slashed EV ambitions, booking $7.6 billion in related write-downs tied to plants and China pullbacks. Tesla, by contrast, eyes boundless potential.
CEO Elon Musk told the January Q4 earnings call the energy side will “have very high growth for as far into the future as we can imagine,” though CFO Vaibhav Taneja warned of “margin compression” from low-cost foes like China’s BYD—which sold over 3 million EVs last year—and U.S. innovator Form Energy’s long-duration iron-air batteries.