Plant Origins: From Ultium Cells to Dedicated Megapack Lines

What is little known is that the Lansing plant, which LG Chem is using to produce batteries for Tesla, originally had a completely different purpose. The site was originally the location of the Ultium Cells 3 project, a joint venture between LG Chem and General Motors, planned for the production of pouch batteries for GM electric vehicles.

However, this partnership shifted as General Motors adjusted its electrification spending pace. In May 2025, LG Chem completed its acquisition of GM's stake, making the factory wholly owned. Subsequently, LG Chem decided to convert the factory into a lithium iron phosphate (LFP) prismatic battery production base, with Tesla becoming the end customer. This transformation not only demonstrates the flexible allocation of battery production capacity but also reflects the ebb and flow of resource competition between the North American electric vehicle and energy storage sectors.

Capacity and Timeline: 50GWh to Match Houston Megapack Lines

According to disclosed information, the Lansing factory is designed to have an annual capacity of 50 gigawatt-hours, a scale that perfectly matches the capacity requirements of Tesla's Houston Megapack 3 factory. Once operational, the factory will be able to provide battery support for approximately 5,000 large-scale energy storage projects annually.

Regarding the production schedule, the factory is expected to officially begin production in 2027. The initial supply contract period is from August 2027 to July 2030, with an option to extend for up to seven years, meaning the partnership could potentially extend to 2037. This long-term commitment provides LG Energy with a certain return on its capacity investment and also ensures the long-term stability of Tesla's supply chain.

Technology: Prismatic LFP Becomes ESS Standard

Notably, this collaboration utilizes prismatic lithium iron phosphate (LFP) batteries, rather than LG New Energy's traditionally strong pouch cell approach. This signifies that LG New Energy has officially acquired the capability to produce all mainstream battery forms—pouch, cylindrical, and prismatic—in North America, becoming the first global manufacturer to achieve this diversified portfolio.

LFP technology, due to its safety and cycle life advantages, is particularly suitable for stationary energy storage scenarios. Tesla's choice of the prismatic approach is likely closely related to the design of its Megapack 3. Prismatic batteries offer unique advantages in pack efficiency, thermal management, and system integration, enabling the Megapack 3 to achieve higher energy density and lower levelized cost of electricity (LCOE).

Division of Labor: LG Manufactures, Tesla Procures

In terms of specific cooperation, the two parties adopted a complementary "manufacturing + procurement" model. LG Chem is responsible for the construction, operation, and maintenance of the factory, undertaking the heavy asset investment on the production side; Tesla provides battery specifications, adaptation technology support, and makes long-term procurement commitments.

This model allows Tesla to avoid the financial pressure and operational risks of directly investing in a factory, while ensuring the supply security of core components; for LG Chem, it provides stable order support and allows it to enter the rapidly growing North American energy storage market, a win-win situation.

An LG Chem executive responded to this matter, stating, "Based on our production capabilities in North America, we look forward to playing a greater role in the process of global energy supply chain restructuring." With the 2027 production launch date approaching, how this "former GM factory" will reshape the North American energy storage industry landscape is worth continued attention.