Catenaa, Wednesday, July 30, 2025- Tesla has signed $4.3 billion deal with South Korea’s LG Energy Solution to supply the EV maker with energy storage system batteries, cutting reliance on China.
Quoting sources, Reuters reported on Wednesday that the lithium iron phosphate (LFP) batteries will be supplied from LGES’s US factory in Michigan.
LGES announced earlier on Wednesday that it had signed a $4.3 billion contract to supply LFP batteries over three years globally, without identifying the customer or saying whether they would be used in vehicles or energy storage systems.
The South Korean company said last week it would try to offset sluggish electric vehicle demand by increasing sales of storage batteries, thanks to a global surge in demand for power driven by data centres to train artificial intelligence.
“In accordance with our agreement, we are unable to disclose the customer’s identity due to confidentiality obligations,” LGES told Reuters.
Tesla Chief Financial Officer Vaibhav Taneja said in April that US tariffs had an “outsized” impact on its energy business, since it sources LFP batteries from China.
“We will also be working on securing additional supply chain from non-China-based suppliers, but it will take time,” he said.
Tesla this week also announced a $16.5 billion deal to buy chips from Samsung Electronics’ factory in Texas as South Korean companies expand their U.S. presence to meet local demand.
Three South Korean cabinet-level officials met US Commerce Secretary Howard Lutnick in Washington in a push to close a trade deal ahead of an August 1 deadline for 25% tariffs on US imports from South Korea to kick in, Seoul said on Wednesday.
LGES said the contract would last from August 2027 to July 2030 and included an option to extend the deal period by up to seven years and to increase supply volumes depending on discussions with its customer.
Tesla’s energy storage and generation business accounts for just over 10% of its revenue, but it has been a bright spot for the company as it struggles with slowing car sales and upcoming cuts to US government support for EVs.
Tesla shares were up by 0.05% on Wednesday Morning, the stock is still down by over 20% so far in the year.
