Tesla has signed a deal for the supply of $4.3 billion worth of energy storage batteries with South Korean battery major LG Energy Solution, Reuters reported, citing an unnamed source.
The Korean company disclosed the news in a securities filing with the Korea Exchange without naming the buyer. The contract’s term is from 2027 to 2030, but it could be extended by seven years.
LG Energy also said that “Investors are advised to carefully consider the possibility of changes or termination of the contract when making investment decisions.”
Reuters’ source told the publication the lithium iron phosphate batteries will be produced at LG Energy’s Michigan factory and will reduce Tesla’s reliance on Chinese batteries in the new trade context featuring import tariffs.
The news comes less than a week after LG Energy warned about slowing EV battery demand because of the tariffs that President Trump is imposing on trade partners around the world. The company also named the Trump administration’s phaseout of EV subsidies as a factor that will drive lower demand for batteries over the short term.
“U.S. tariffs and an early end to EV subsidies will put a burden on automakers, potentially leading to vehicle price increases and a slowdown in EV growth in North America,” the company’s CFO, Lee Chang-sil, said during a conference call on LG Energy’s second-quarter financial results, as quoted by Reuters.
In light of these developments, LG Energy said it would convert some of its EV battery plants into production facilities for battery storage systems. The Michigan plant already produces energy storage system batteries, at a capacity of 17 GWh annually this year, set to be expanded to over 30 GWh next year.
LG Energy is currently the only maker of lithium iron phosphate (LFP) storage batteries in the United States.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com
- Indian Gas Giant Seeks U.S. LNG Cargo Swap
- Turkey Pushes for Full Use of Kurdistan Oil Pipeline
- Egypt’s Growing LNG Imports Could Reshape Global Markets
