LG Energy Solution, a South Korea-based battery manufacturer, has signed a US$4.3 billion contract to supply batteries to an unnamed corporation, according to a filing on the Korea Exchange.

The contract runs from July 30, 2024, until the end of July 2030, with the possibility of extension for up to seven years.

The company said that the identity of the customer will remain confidential due to business reasons.

Reuters reported Tesla as the counterparty, but this has not been confirmed by LG Energy Solution.

The contract’s value exceeds LG Energy Solution’s second-quarter revenue of US$4.05 billion.

LG Energy Solution said the agreement’s terms, including deal size and duration, may change.

The company did not specify whether the lithium iron phosphate batteries will be used for electric vehicles or energy storage systems.

LG Energy Solution is expanding its US manufacturing, with a new facility in Michigan and another under construction in Arizona.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ Scale of contract signals major market position shift for LG Energy

The $4.3 billion contract represents a significant bet on LG Energy Solution’s future, with the deal value exceeding the company’s entire second quarter 2024 revenue of $4.05 billion.

This single agreement could boost LG Energy’s current 14.5% global EV battery market share, especially as the company aims to expand its production capacity to 540 GWh by 20251.

For context, Tesla produced over 100 GWh of batteries in 2023, while market leader CATL holds 37% market share with production capacity exceeding 390 GWh1.

The six-year contract timeline through 2030, with potential extension to 2037, provides LG Energy with the revenue predictability needed to justify major capital investments in new manufacturing facilities.

The deal’s structure also shows how large automakers are securing long-term battery supply agreements to avoid the supply chain disruptions that have impacted the industry in recent years.