Tesla Secures $4.3 Billion Battery Deal with LG Energy Solution for LFP Cells

Tesla has confirmed a $4.3 billion contract with LG Energy Solution for lithium iron phosphate batteries, set to start production in mid-2027. The batteries will be used in Tesla's next-generation Megapack, produced in Houston. This deal is part of Tesla's strategy to secure a domestic battery supply chain. Additionally, Elon Musk announced the launch of the Terafab Project on March 21, 2026, aimed at vertically integrated chip manufacturing. Tesla's energy division saw a 26.6% revenue increase in 2025, contributing 13% of total revenue.

Published Mar 20, 2026

Tesla has secured a $4.3 billion contract with LG Energy Solution for lithium iron phosphate (LFP) batteries, with production starting in mid-2027. These batteries will support Tesla's Megapack energy storage system.

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This agreement is key for Tesla's strategy to establish a domestic battery supply chain, reducing reliance on imports from China. Concurrently, Elon Musk announced the Terafab Project, scheduled to start on March 21, 2026, focusing on integrated chip manufacturing. Tesla's energy division revenue grew 26.6% in 2025, representing 13% of total revenue, while the automotive sector declined by 10%.