LG Energy Solution has signed new agreements to supply Mercedes-Benz with 107 gigawatt-hours (GWh) of batteries for use in Europe and the US.

The deals, valued at around US$10.7 billion, will see LGES deliver 32 GWh of batteries to Europe from August 2028 to December 2035, and supply the automaker’s US affiliate from July 2029 to December 2037.

LG Energy Solution, based in South Korea, manufactures batteries for EVs and plans to start mass production of its next-generation cylindrical batteries at its Arizona plant in 2026.

In October 2024, LGES also agreed to supply 50.5 GWh of batteries to Mercedes-Benz for North America and other markets between 2028 and 2038.

🔗 Source: The Korea Times

🧠 Food for thought

1️⃣ Safety incidents are reshaping premium automaker procurement strategies

Mercedes’ decision to abandon Chinese battery suppliers reflects how single incidents can trigger major strategic shifts in the automotive industry.

The German automaker previously relied on cheaper Chinese batteries from CATL and Farasis Energy, but a fire involving a Mercedes EQE sedan with Farasis batteries destroyed over 100 vehicles in an Incheon apartment garage last year 1.

This incident prompted Mercedes to prioritize technology and safety over cost considerations, leading to the $10.7 billion deal with LG Energy Solution despite the Korean company’s higher prices 1.

The shift demonstrates how premium automakers are increasingly willing to pay substantial premiums to avoid reputational damage from safety issues.

Mercedes’ experience mirrors other industry recalls, including LG Energy Solution’s own $1.9 billion settlement with General Motors over battery defects that caused fires in Chevrolet Bolt EVs 2.

2️⃣ Korean battery makers secure premium contracts despite Chinese market dominance

While Chinese companies like CATL control 37% of the global EV battery market, Korean firms are successfully positioning themselves in high-value segments 3.

LG Energy Solution holds just 14.5% global market share but has secured major contracts with premium brands including the $10.7 billion Mercedes deal, a $4.3 billion Tesla agreement, and partnerships with Toyota 345.

This pattern suggests Korean battery manufacturers are competing on technology and safety rather than pure cost, allowing them to command higher margins in premium segments.

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