Tesla Strikes $4.3B Battery Supply Deal With LG Energy For Storage Push: Report

The deal includes an option to extend for up to seven years and increase volumes, and comes as battery makers face mounting pressure to meet U.S. trade and manufacturing rules.

South Korea’s LG Energy Solution (LGES) has reportedly signed a $4.3 billion deal to supply Tesla with lithium iron phosphate (LFP) batteries, which will be used in Tesla’s expanding energy storage business.

The batteries will be supplied from LGES’s U.S. facility in Michigan, where LFP production began in May, Reuters reported, citing a source familiar with the matter.

The agreement runs from August 2027 to July 2030 and includes an option to extend for up to seven years, with the potential to increase volumes, subject to future negotiations. LGES disclosed the deal earlier Wednesday without naming Tesla, citing confidentiality obligations. 

LGES is one of the handful of U.S.-based LFP battery makers, an area where most of the world’s battery producers have come from China. 

The agreement also comes as battery makers face increasing pressure to onshore battery supply chains, as well as adhere to U.S. trade and manufacturing requirements, such as those outlined in the Inflation Reduction Act.

The partnership also highlights Tesla’s growing push into utility-scale energy storage. 

The company’s first grid-scale battery storage station is located in Shanghai, China. The 4 billion yuan ($556.8 million) project will use Tesla’s Megapack batteries and involves a deal with China Kangfu International Leasing and the Shanghai municipal government, Reuters reported, citing local media Yicai.

Tesla’s battery megafactory in Shanghai began producing Megapacks in February.

On Stocktwits, retail sentiment for Tesla was ‘bullish’ amid ‘high’ message volume.

Tesla’s stock has declined 15.3% so far in 2025.

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