TUCSON, AZ—American Battery Factory (ABF) has begun construction of a new 2 million-square-foot headquarters and factory here to produce lithium-iron phosphate (LFP) batteries.

The factory, which represents a capital investment of $1.2 billion, is expected to employ 1,000 people. The first phase of construction is expected to be completed by 2025.

The global market for lithium batteries is expected to reach $105 billion by 2025, and demand is expected to increase 10 times over the next decade. LFP batteries are said to be safer, longer-lasting, more reliable and more environmentally friendly than conventional lithium-ion batteries. The batteries are designed to store energy produced from wind and solar power systems.