Tesla Secures $4.3B Battery Deal with LG Energy for U.S. Storage Projects

Tesla Inc (NASDAQ: TSLA) has signed a $4.3 billion agreement with South Korea’s LG Energy Solution Ltd (KS: 373220) to supply lithium iron phosphate (LFP) batteries for energy storage, according to a Reuters report on Wednesday.

The batteries will reportedly be manufactured at LG Energy’s U.S. facility, though specific production timelines were not disclosed. Earlier in the day, LG Energy had confirmed a $4.3 billion battery and storage technology supply contract but did not identify the customer.

LG Energy Solution, one of the world’s largest battery manufacturers, is already a major supplier of lithium-ion batteries to Tesla, particularly for the Model 3 and Model Y vehicles produced in China and Europe. This new deal underscores Tesla’s ongoing strategy to diversify its battery supply chain and increase its capacity for energy storage solutions amid growing demand in the renewable energy sector.

While the contract specifies lithium iron phosphate batteries, it remains unclear whether the supply will be dedicated solely to Tesla’s energy storage projects, such as Megapack and Powerwall, or also extend to electric vehicle production in the U.S. The move aligns with Tesla’s broader push to ramp up domestic sourcing of battery components, which has become a key priority under U.S. clean energy incentives and supply chain security initiatives.

The partnership further strengthens Tesla’s relationship with LG Energy, signaling potential future collaborations as both companies scale production to meet surging global demand for sustainable energy solutions and EV adoption.

This deal is expected to bolster Tesla’s energy storage market position and support its long-term growth strategy in North America.