LG Energy Solution has signed a major $4.3 billion contract with Tesla. This agreement should be seen as a landmark deal in the battery supply chain. This contract started on a Tuesday and will run through the end of July 2030. This agreement illustrates LG Energy Solution’s persistent push to grow its manufacturing capacity. It cements the company’s competitiveness within the rapidly expanding electric vehicle market.
That contract’s value would be greater than LG Energy Solution’s total revenue for the second quarter of this year, which came in at $4.05 billion. For one, the contract value is more than 5.6 trillion Korean won, emphasizing the scale of this new partnership. In reality, LG Energy Solution’s share declined slightly, trading 0.26% lower after the news broke.
LG Energy Solution is making an aggressive push at establishing the manufacturing footprint to manufacture battery materials and cells in the United States. Most recently, its second-quarter nimble hub in Michigan has launched. This facility is LG Energy Solution’s first-ever North American Energy Storage System (ESS) battery manufacturing hub. Second, it makes the company much better positioned to meet rapidly growing demand from key customers like Tesla and General Motors.
The secrecy of the counterparty in this contract remained under the radar until very recently. LG Energy Solution maintained secrecy on Tesla’s role during the entirety of the contract duration. As Reuters has now independently confirmed, Tesla is the counterparty for this massive deal. This collaboration marks a profound synchronization between two of the most progressive companies within the EV and energy storage revolution.
Fourth, LG Energy Solution is growing like, well, LG Energy Solution. The company is encouraging investors to continue to be guarded about these big contract stickiness. In a filing with the Korea Exchange, the company stated, “Investors are advised to carefully consider the possibility of changes or termination of the contract when making investment decisions.”
The partnership between LG Energy Solution and Tesla matches the industry direction overall towards electrification and renewable energy solutions. Don’t take it from us— Elon Musk is out there winning new contracts. He only recently made headlines by announcing Tesla’s involvement in a historic $16.5 billion chip joint venture with Samsung Electronics, further highlighting the intersection of the tech and automotive industries.