Tesla signs $4.3B battery supply deal with LG Energy
What's the story
LG Energy Solution (LGES), a leading South Korean battery manufacturer, has signed a massive $4.3 billion contract with Tesla. The deal is for the supply of lithium iron phosphate (LFP) batteries for Tesla's energy storage systems. The contract will be fulfilled from LGES's US factory and is valid from August 2027 to July 2030, with an option for extension and increased supply volume.
Production details
LGES is one of few US-based producers of LFP batteries
The LFP batteries for Tesla will be produced at LGES's US factory. The company started production of these batteries at its Michigan facility in May. LGES is one of the few US producers of LFP batteries, a battery chemistry that has long been dominated by Chinese rivals with little presence in the American market. The company has major clients, including Tesla and General Motors.
Deal flexibility
Deal has option to extend contract
The LFP battery contract with Tesla has an option to extend the deal period by up to seven years and increase supply volumes depending on demand from Tesla. This flexibility shows LGES's commitment to meeting Tesla's growing demand for energy storage solutions. The deal comes amid a global race by countries and companies to finalize tariff agreements with the US.