Exclusive: Tesla signs $4.3 billion LGES battery deal, source says, reducing China reliance
The lithium iron phosphate (LFP) batteries will be supplied from LGES's U.S. factory in Michigan, the person said on condition of anonymity because the details were not public.
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 if 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 did not immediately respond to a request for comment.
Tesla Chief Financial Officer Vaibhav Taneja said in April that U.S. 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' (005930.KS), opens new tab factory in Texas as South Korean companies expand their U.S. presence to meet local demand.
Three South Korean cabinet-level officials met U.S. Commerce Secretary Howard Lutnick in Washington in a push to close a trade deal ahead of an August 1 deadline for 25% tariffs on U.S. imports from South Korea to kick in, Seoul said on Wednesday.
LGES is one of the few U.S. producers of LFP batteries, a battery chemistry long dominated by Chinese rivals that have little presence in the U.S. market.
It started production of LFP batteries at its Michigan factory in May. The company said it was considering converting some electric vehicle battery production lines in the United States to cater to energy storage systems in response to slowing EV demand.
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.
"Other players, including South Korean firms like Samsung SDI and SK On, have yet to enter the U.S. LFP market, allowing LGES to enjoy a first-mover advantage," said Cho Hyun-ryul, a senior analyst at Samsung Securities. "While rivals have announced plans, LGES remains the only one actively producing at scale."
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 U.S. government support for EVs.
"Energy is growing really well despite headwinds from tariffs and various supply chain challenges," Tesla CEO Elon Musk said on an earnings call last week. "I think not that many people appreciate just how gigantic the scale of battery demand is."
Tesla has said its first LFP cell manufacturing facility will be online by the end of the year, but the in-house factory in Nevada will likely account for a small portion of its demand.
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The Independent
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Plans to build around 1,000 new homes at a former Edinburgh paper factory have been submitted to the council, with the development also including plans for a 170-bed hotel. Sign up to our daily newsletter Sign up Thank you for signing up! Did you know with a Digital Subscription to Edinburgh News, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... Located in the west of the city, the mixed-use development at Edinburgh Gateway would provide a mixture of affordable housing (35 per cent), Build to Rent (BTR) homes and private sale housing. The 15.5-acre site is a former industrial location on Turnhouse Road once occupied by Spain-based paper and cardboard company Saica, but was more recently used as the venue for this year's Hidden Door Festival. Advertisement Hide Ad Advertisement Hide Ad Summix Capital, who submitted the plans, said the residential-led development is a unique opportunity to transform 'one of the last major pieces of brownfield land in the city' into a vibrant new neighbourhood and will help address the city's well-publicised housing emergency. View looking east from Maybury Green | 3D Reid Stuart Black, development director for Summix Capital, said: 'We are delighted to be submitting this planning application for Edinburgh Gateway, which represents a significant investment in the capital. Our exciting proposals provide a unique opportunity to redevelop one of the last major pieces of brownfield land in the city into a brand-new, sustainable mixed-use community, supporting the tackling of the housing emergency. 'This will ensure that Edinburgh Gateway fulfils our vision to be one of the most exciting and best-connected development sites in Scotland. The planning application follows extensive engagement with the local community, and we would like to thank individuals for taking the time to provide highly valued comments and feedback.' The development masterplan defines seven development plots, with plots 1 and 2 delivering private sale housing, plots 3 and 4 for BTR homes, plots 5 and 6 allocated for affordable housing and plot 7 to accommodate the new 170-bed hotel.
