LG Launches Major Michigan Factory for LFP Battery Production to Strengthen U.S. Energy Storage Supply Chain

LG Opens Massive Michigan Factory to Produce LFP Batteries for the Grid

The U.S. battery supply chain has taken a significant step forward with LG Energy Solution’s new facility in Holland, Michigan. This factory, which recently began producing lithium iron phosphate (LFP) battery cells, represents a $1.4 billion investment aimed at bolstering domestic battery manufacturing. Previously, LFP batteries were primarily sourced from China, creating supply chain vulnerabilities amidst tariff and tax policy uncertainties.

At full capacity, the new production lines will generate an impressive 16.5 gigawatt-hours of LFP cells each year. Noah Roberts, vice president for energy storage at the American Clean Power Association, remarked, “That’s a sizable portion of annual domestic demand for energy storage battery cells,” after touring the facility. He emphasized that this expansion is a clear indication of the industry’s commitment to onshoring manufacturing quickly and effectively.

LFP chemistry is increasingly favored for stationary storage and electric vehicles (EVs) due to its fire-safety benefits, durability, and cost-effectiveness, despite a slight trade-off in energy density. Until now, American manufacturers relied on China for LFP supplies. LG’s facility stands out as the largest giga-scale LFP production site in the U.S., with Japan’s AESC also initiating LFP production in Smyrna, Tennessee, and Tesla exploring similar opportunities.

The decision to establish this factory was initially a strategic move to strengthen local supply chains. However, the passage of the Inflation Reduction Act of 2022, which introduced manufacturing and grid storage deployment incentives, led LG to significantly increase its planned production capacity from 4 gigawatt-hours to 16.5 gigawatt-hours. Originally intended for Arizona, the manufacturing lines were relocated to Holland, allowing LG to start commercial production a full year ahead of schedule.

The Holland facility now spans an area equivalent to 42 football fields and is expected to employ 1,700 workers upon reaching full staffing levels. Roberts praised the facility as “a state-of-the-art facility with the most advanced manufacturing that you can have in the United States.” Demand for LFP products is robust, with orders booked six months in advance, and LG is already considering plans to double production capacity next year.

The factory’s completion comes during a challenging period marked by tariffs and tax credit fluctuations. Manufacturers are navigating the complexities of reshoring battery production that has long been dominated by China. The Biden administration has introduced incentives to offset the cost of domestically produced batteries, including tax credits for EV purchases and bonuses for developers of grid storage that utilize domestic components. However, the current Republican majority in Congress is working to eliminate these policies, creating uncertainty for companies like LG that have committed substantial investments based on existing tax credit frameworks.

Despite these challenges, LG remains optimistic about the long-term prospects of U.S. battery production. Chief Product Officer Tristan Doherty expressed confidence in the industry’s future, stating, “It’s clear that the industry is here and it’s here to stay — the question is just what it looks like and what are the nuances to make it work.”

While Trump’s tariffs on China could theoretically benefit domestic manufacturers, the fluctuating nature of these policies has created instability for companies planning multi-billion-dollar investments. Additionally, high tariffs on battery materials, most of which are processed in China, inflate costs for both raw materials and manufacturing equipment.

Unlike many startups that have struggled to gain traction in the competitive battery market, LG’s established presence provides a level of stability. Its commitment to sourcing battery materials from outside China and obtaining manufacturing equipment from Korea and Japan further positions it favorably in the evolving landscape.

In contrast to the growth trajectory of LG, recent years have seen a decline in new manufacturing investments and an increase in project cancellations, totaling nearly $8 billion in the first quarter of 2025 alone. Startups like Our Next Energy, which aims to build the first large LFP factory in the U.S., face challenges in securing necessary funding to realize their ambitions.

As the battery storage market continues to expand, any disruptions could have detrimental effects on manufacturing, according to Roberts. The success of LG’s facility in Holland serves as a crucial step in reinforcing the U.S. clean energy supply chain during a period of uncertainty in the industry.

*Julian Spector is a senior reporter at Canary Media, focusing on batteries, long-duration energy storage, low-carbon hydrogen, and clean energy advancements globally.*