LG Energy Signs $4.3B Battery Deal with Unknown Buyer

Industry Insights from Next Move Strategy Consulting

LG Energy Solution, based in South Korea, announced on Wednesday that it has secured a $4.3 billion battery supply contract with a major corporation, though the identity of the customer was not disclosed.

The contract, which became effective on Tuesday upon receipt of orders, is set to run through the end of July 2030.

LG Energy Solution Cautions Investors on Battery Deal Terms; Tesla Reportedly Linked per Reuters, No Tie to Samsung Chip Contract 

Earlier this week, Tesla CEO Elon Musk confirmed that the electric vehicle giant was behind a previously undisclosed $16.5 billion semiconductor contract with South Korea’s Samsung Electronics. In a related update, LG Energy Solution disclosed in a regulatory filing that its own battery supply agreement—while significant—remains subject to potential adjustments.

According to LG Energy Solution, the specific terms of the deal, including the final contract amount, are not yet fixed and the agreement period could be extended by up to seven years. Notably, the disclosed value of the contract surpasses the company’s reported second-quarter revenue of 5.6 trillion Korean won (approximately $4.05 billion).

Cautioning stakeholders, the company advised investors to “carefully consider the possibility of changes or termination of the contract when making investment decisions.” Following the announcement, LG Energy Solution shares edged up 0.26% on Wednesday.

The filing did not clarify whether the lithium iron phosphate (LFP) batteries involved would be used in electric vehicles or in energy storage systems. LG Energy Solution currently supplies batteries to leading American EV manufacturers, including Tesla and General Motors.

LG Energy Solution Expands U.S. Battery Manufacturing Footprint

• LG Energy Solution has been ramping up its manufacturing footprint in the United States.

• Its first North American energy storage system (ESS) battery manufacturing hub, located in Michigan, began operations in the second quarter of this year.

• The company is also building a new facility in Arizona dedicated to producing lithium iron phosphate (LFP) batteries.

U.S. ESS Deal Signals LGES Momentum Amid Tesla Links

“Although LG Energy Solution has trailed Chinese competitors in the electric vehicle lithium iron phosphate (LFP) segment, this significant U.S. energy storage system (ESS) order could help close that gap and indicates growing momentum in the American ESS market,” she noted.

She added that if Tesla is indeed the counterparty, the deal would align with the company’s stated objective of reducing dependence on Chinese suppliers for its ESS battery needs.

LG Energy Solution declined to provide further details about the agreement, while Tesla did not respond to CNBC’s request for comment.

Source: CNBC

Prepared by: Next Move Strategy Consulting