Tesla has signed a $4.3 billion contract with South Korean company LG Energy Solution to supply lithium iron phosphate (LFP) batteries, Bloomberg reports. The deal is Tesla's second in South Korea in the past month.
The batteries from LG Energy will be manufactured at the company's US plants, but they will be used not for electric vehicles but for energy storage systems. This will allow Tesla to expand its business in the field of energy-saving technologies.
LG Energy already plans to increase production of LFP batteries at a joint venture with General Motors in Tennessee. The agreement with Tesla includes the possibility of extending the supply period to seven years and increasing production volumes upon agreement.
South Korean manufacturers are actively developing LFP batteries, which are cheaper than other types of batteries and work better in cold climates, allowing them to compete with Chinese companies that dominate the market.
It is worth noting that LG Energy began producing such batteries at a plant in Michigan in May 2025.
As a reminder, Samsung Electronics also signed a long-term agreement with Tesla, but for the production of AI chips. The contract is worth more than $16 billion.