NEW YORK, March 17, 2026, 12:00 EDT
Tesla stock edged up 79 cents to $396.35 near midday Tuesday, after the U.S. government late Monday confirmed Tesla and LG Energy Solution reached a $4.3 billion supply deal for a lithium iron phosphate battery-cell plant in Lansing, Michigan. Production at the site is slated for 2027.
This deal carries weight: battery cells built in Lansing are set to go straight into Tesla’s Megapack 3 systems for Houston, shoring up a segment that investors have favored as car sales soften. These batteries use lithium iron phosphate (LFP), a chemistry with limited U.S. manufacturing and a supply chain still dominated by Chinese producers.
Tesla’s got incentive to move forward. The latest annual report showed energy generation and storage revenue climbed 25% year over year, hitting $3.84 billion in the fourth quarter. Storage deployments topped out at 46.7 gigawatt-hours for 2025.
Tesla picked up 1.1% on Monday, after finding support the previous session. Elon Musk told investors the company’s Terafab initiative—meant to produce AI chips—would get underway in seven days. That lit up speculation Tesla’s value still leans heavily on its AI and self-driving ambitions, not just car deliveries. Musk has argued chip suppliers outside the company can’t keep up with Tesla’s future demand.
Tesla isn’t the only player pivoting to storage. On Tuesday, General Motors and LG announced plans to retool a battery plant in Tennessee for stationary-storage production. GM battery chief Kurt Kelty described demand in the space as one where “supply tremendously” trails, and expects that gap to persist for years. Reuters
Tesla’s main auto segment continues to weigh things down. “If I look at two of the three largest markets, I’m seeing a decline,” Morningstar’s Seth Goldstein said earlier this month, projecting a third consecutive year of shrinking deliveries in 2026. For next year, analysts are penciling in roughly $5.19 billion in negative free cash flow—money flowing out after investments—while Tesla has already ceded the global EV crown to BYD. Reuters
Tesla has already flagged the price tag for its shift. Back in January, the company projected capital expenditures would push past $20 billion this year. Thomas Monteiro, a senior analyst at Investing.com, called it a “transition phase” for Tesla—investors now footing the bill upfront for things like robotaxis and software, betting those pay off before auto sales rebound. Reuters
Supply chain wrinkles linger. On Monday, Syrah Resources and Tesla pushed back their deadline to settle a claimed default tied to their graphite supply agreement, now eyeing June 1. The move highlights unfinished business in Tesla’s battery materials pipeline—despite market buzz around the automaker’s new U.S. facility.
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