Inside the $2 Billion Battery Factory Making Cells for Tesla and Toyota

LG Energy Solution is building a $2 billion battery factory in Michigan that will produce lithium iron phosphate cells for Tesla and Toyota, according to a report from InsideEVs.

What Happened

The South Korean battery manufacturer LG Energy Solution confirmed plans for the facility, which represents a significant expansion of its U.S. manufacturing footprint. The plant is designed to produce LFP batteries—a chemistry that has gained popularity for its cost-effectiveness and thermal stability compared to nickel-based alternatives. The factory will supply cells to both Tesla and Toyota, marking rare overlap in battery sourcing between two automakers with historically distinct supplier relationships.

Why It Matters

LFP batteries have traditionally been more common in China but are increasingly being adopted by Western automakers seeking to reduce costs and diversify supply chains. For buyers and owners, LFP chemistry offers longer cycle life and better thermal stability, though it typically provides lower energy density than nickel manganese cobalt batteries. The Michigan facility could help reduce dependency on imported battery cells and potentially support more competitive pricing for EVs equipped with these batteries.

The Bottom Line

LG Energy Solution's investment in domestic LFP production reflects broader industry trends toward cost reduction and supply chain localization. How the factory's output will be allocated between Tesla and Toyota remains to be seen as production ramps up.