South Korea’s LG Energy Solution has entered into a $4.3 billion battery supply agreement with an undisclosed customer, as per a regulatory filing submitted on Wednesday.
The contract, which became effective on 28 July 2025, will run until July 2030.
This development follows closely on the heels of Tesla’s confirmed $16.5 billion chip deal with Samsung Electronics, signalling deepening commercial ties between US EV makers and South Korean tech firms.
Deal boosts LG Energy’s lithium iron phosphate output
The agreement represents one of LG Energy Solution’s largest lithium iron phosphate (LFP) battery contracts to date.
The contract’s total value exceeds LGES’s second-quarter revenue of 5.6 trillion won ($4.05 billion), highlighting its importance to the firm’s financial performance.
The battery maker noted in its filing with the Korea Exchange that key terms of the deal — including price and duration — may be adjusted, and that the contract could be extended by up to seven years.
The scope of the battery order has not been clarified, and LGES did not disclose whether the LFP batteries are intended for use in electric vehicles or energy storage systems (ESS).
However, LG Energy’s current major customers include Tesla and General Motors, both of whom require high-capacity battery modules for their growing EV and energy storage needs.
US expansion plays a key role in fulfilling the contract
LG Energy Solution has been aggressively ramping up its US-based manufacturing.
Its first North American energy storage battery hub in Michigan began operations in the second quarter of this year.
It is building a new plant in Arizona that will manufacture LFP batteries.
Analysts suggest the $4.3 billion order is closely linked to the Michigan facility, which has now commenced production.
With this contract, LGES aims to boost its presence in the US energy storage market — a segment traditionally dominated by Chinese battery firms.
The new deal may help LGES reduce its lag in LFP battery competitiveness and align with American buyers’ goals of diversifying supply chains away from Chinese manufacturers.
Market implications and confidentiality clause
In its disclosure, LG Energy Solution stated that it would not reveal the identity of the counterparty due to business confidentiality.
This is a standard clause in many long-term supply agreements. Investors have been cautioned to factor in the possibility of revisions or cancellations when making portfolio decisions.
Although LGES shares edged up 0.26% following the announcement, market analysts suggest the real effects of the deal will be felt over time, especially if the contract is indeed with Tesla.
The EV giant has previously stated intentions to source more ESS batteries from outside China, in line with US policy and strategic sourcing goals.
Industry trends and competitive landscape
According to industry data, LG Energy Solution trails Chinese competitors in the LFP battery space.
However, its growing traction in North America may offset this disadvantage.
If the Tesla link is confirmed, it would strengthen LGES’s positioning in the US market and give it a competitive edge against regional rivals.
The new deal reflects a broader industry trend where American EV and ESS firms are diversifying their supplier base amidst rising geopolitical and trade tensions.
It also reinforces South Korea’s role as a strategic battery manufacturing hub, particularly in the context of US supply chain realignment.
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