Tesla makes $4.3 billion battery deal with LG

In a bid to lower its dependence on China's CATL, the world's biggest battery producer, Tesla has reportedly signed a $4.3 billion deal with Korea's LG Energy Solution.

The deal will see LG supply Tesla with LFP batteries from August 2027 and until the end of July 2030. LG Energy Solution is the largest Korean battery maker.

The deal includes provisions to extend the contract period for up to seven years and increase the supply volume accordingly.

While neither Tesla nor LG have announced what these batteries will be used for, industry observers speculate they are meant for Tesla's energy storage system devices, as LG's manufacturing plants in the US are dedicated to LFP batteries optimized for such applications.

LG has slowly been shifting its focus to the LFP chemistry, which is cheaper and thus suitable for more affordable EVs. The cheaper pricing of LFP versus traditional NMC batteries means energy storage solutions are increasingly turning to LFP too.

Source