Tesla splurges $4.3 billion to procure LGLFP batteries, exclusively for U.S. energy storage systems
Tesla has signed a $4.3 billion agreement with LG Energy Solution to procure lithium iron phosphate (LFP) batteries exclusively for U.S. energy storage systems. This is Tesla's second deal with a South Korean manufacturer this month, having previously signed a $16.5 billion agreement with Samsung Electronics. LG Energy Solution plans to produce these batteries at its U.S. factory, aiming to expand its energy storage business in the United States. The agreement also includes an option to extend the supply period
According to Zhitong Finance APP, informed sources revealed that Tesla (TSLA.US) has signed a $4.3 billion agreement with LG Energy Solution to procure lithium iron phosphate (LFP) batteries from the latter. This is the second deal the electric vehicle manufacturer has reached in South Korea this month.
The sources stated on Wednesday that these batteries will be produced at LG Energy Solution's factory in the United States but will not be used for vehicles. The ultimate purpose will be for energy storage systems.
This is Tesla's second agreement with a South Korean manufacturer this month, following a $16.5 billion deal with Samsung Electronics to produce artificial intelligence semiconductors. For LG Energy Solution, this deal comes as the company seeks to expand its energy storage business in the United States, having already planned to increase LFP battery production at its joint venture factory with General Motors in Tennessee.
Earlier, LG Energy Solution announced in a regulatory filing that it has secured a contract worth 59 trillion Korean won to supply LFP batteries overseas over three years starting in August 2027, but did not disclose the customer's name or the intended use of its products.
The company declined to comment on matters outside the filing, citing confidentiality agreements.
LG Energy Solution stated in the filing that its agreement includes an option to extend the supply period by up to seven years and increase the supply volume through negotiations with the customer.
South Korean battery manufacturers have been competing to produce LFP batteries, which are cheaper and can improve energy density in cold climates, thereby competing better with Chinese rivals. LG Energy Solution began production at its factory in Michigan in May.
On Monday, Samsung announced that it has reached a 22.8 trillion Korean won chip manufacturing agreement with Tesla, with the contract lasting until the end of 2033. Tesla CEO Elon Musk confirmed the media reports on X, stating that the plan will produce Tesla's next-generation AI6 chips at the upcoming factory in Tyler, Texas
