Samsung SDI in talks with Tesla on $2.1b battery supply deal

Samsung SDI is in talks to supply energy storage system (ESS) batteries to Tesla in a deal reported to be worth at least 3 trillion won (US$2.1 billion).

Samsung SDI, based in South Korea, manufactures batteries for EVs and energy storage.

If finalized, the agreement would further Tesla’s efforts to reduce dependence on Chinese suppliers.

Tesla has recently signed contracts with other South Korean firms, including Samsung Electronics and LG Energy Solution, for chips and batteries.

South Korean battery makers are shifting EV battery production lines to ESS batteries due to the removal of US subsidies for EVs.

The Korea Economic Daily reported that Samsung SDI is said to have reached an agreement to supply Tesla with ESS batteries over a three-year period, but the deal has not been officially confirmed.

Tesla has not commented on the reported deal.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

Samsung SDI’s US lithium iron phosphate (LFP) production timeline remains unclear amid reported Tesla ESS talks

Reports peg an energy storage system (ESS) supply deal with Tesla at $2.1 billion over three years 1, but it remains unconfirmed and talks continue.
Samsung SDI’s Indiana plant plans to mass-produce 263 amp-hour (Ah) prismatic (rectangular-format) LFP cells by late 2026 2. The company intends to convert EV battery lines to ESS products, with no capacity or timing disclosed.
Domestic ESS batteries would help Tesla meet Foreign Entity of Concern (FEOC) rules tied to technology-neutral tax credits 3, while imports may not qualify.
The FEOC thresholds rise from at least 55% non-prohibited content in 2026 to 75% for projects starting after 2029 3. Megapack is Tesla’s grid-scale storage product.

US storage developers face FEOC pressure on supply chains

Developers and engineering procurement and construction (EPC) firms with 2026 utility-scale work need FEOC-compliant suppliers 3. Rules apply to tax years starting after July 4, 2025 and to projects starting in 2026 3. Projects can lose technology-neutral tax credits if prohibited-entity content exceeds limits.
Tanana Chiefs Conference is an Alaska Native tribal consortium 4. It has seven solar-plus-storage projects that require vendors submit bills of materials, traceability logs, and origin declarations.
Compliance software and consulting firms can help developers run the three-step FEOC analysis 3. Steps cover material assistance ratios, ownership screens, and prohibited control terms.
Errors can trigger longer Internal Revenue Service (IRS) audits and fines, which drives demand for third-party verification 3.