LG Energy Solution’s $4.3 Billion Tesla Deal Dates to July 2025
Key Facts
LG Energy Solution signed a $4.3 billion agreement on July 29, 2025, to supply batteries for energy storage systems to Tesla, Reuters reported, citing a person familiar with the matter. The deal dates to that day, and available information does not establish that it is a new agreement on November 6, 2026. Reuters reported that the batteries are lithium iron phosphate, or LFP, and will come from the company’s U.S. plant in Michigan. The deal represented a long-term supply contract between the two companies in the energy storage market. Reuters said LGES did not name the customer in its public announcement of the contract.
LGES announced a three-year global contract to supply LFP batteries without naming the customer or clarifying whether the batteries were intended for vehicles or energy storage systems. Reuters later attributed the deal to Tesla, citing a person familiar with the matter, while LGES told the news agency it could not disclose the customer’s identity because of confidentiality obligations. The company said: "We cannot disclose the customer’s identity because of confidentiality obligations." Tesla did not immediately respond to Reuters’ request for comment. This account distinguishes the company’s public announcement from the customer identification reported by the news agency.
The contract runs from August 2027 to July 2030, with an option to extend it for up to seven years, according to Reuters. The agreement also allows volumes to increase after discussions with the customer, the news agency reported, citing LGES. This sets a later start date for deliveries, not a date for production to begin on specific cells at a particular plant. Reuters reported that supplies will come from LGES’s Michigan plant, but did not identify it as the Lansing facility. The agency also did not specify a particular Tesla product model or the cells’ precise end use.
The deal comes as Tesla has said U.S. tariffs have significantly affected its energy business, as the company imports LFP batteries from China. Reuters quoted the company’s chief financial officer as saying: "We will also work to secure additional supply sources from suppliers outside China, but that will take time." The LGES contract adds a U.S. source to the diversification efforts described by the executive, although the announcement does not specify how much of Tesla’s needs the deal will cover. The importance of an alternative source is tied to the energy business’s exposure to import costs and tariffs. Available information does not specify how supplies will be allocated across uses or locations.
LGES began producing LFP batteries at its Michigan plant in May 2025, Reuters reported. The company said it was considering converting some U.S. electric vehicle battery production lines to serve energy storage systems. This comes against the backdrop of a shift in how the company uses its U.S. production capacity, with storage among the potential applications for its battery lines. Reuters did not say that the deal’s cells would be produced specifically at the Lansing plant. The report also does not establish that production related to the contract will begin at any particular facility.
Power generation and storage accounted for slightly more than 10% of Tesla’s revenue, according to a Reuters estimate at the time of its July 2025 report. In its third-quarter 2026 update, Tesla said it had begun production at its Megafactory Texas plant and linked opportunities to deploy Megapack products to grid constraints and power availability amid growing infrastructure demand. The company had recorded 14.2 gigawatt-hours of energy storage product deployments in the fourth quarter of 2025, describing the figure at the time as a record. These figures provide context for the expansion of the storage business, without linking the LGES contract specifically to the Megapack 3 product or the Texas plant. Tesla shares closed at $343.69 on November 5, 2026, according to EL7 data.