[News Space=Reporter seungwon lee] LG Energy Solution (LG Ensol) officially announced that it has signed a contract to supply lithium iron phosphate (LFP) batteries worth KRW 5.9442 trillion (approximately USD 4.39 billion), the largest single contract in its history. The secondary battery industry and foreign media outlets such as Reuters believe that the actual customer for this massive contract will be Tesla of the United States.

The largest single contract ever… contract size and duration

The contract is worth 5.9442 trillion won, a staggering 23.2% of LG Ensol's sales last year. The contract period runs for three years, from August 1, 2027, to July 31, 2030 (with a possible extension of up to seven years upon agreement).

This contract is considered a major deal, accounting for over 23% of LG Ensol's total sales. Notably, the supply targets LFP batteries for ESS (energy storage systems), and this comes at a time when the US is imposing a high tariff of 40.9% (58.4% starting next year) on Chinese batteries, prompting calls for a local US supply chain.

Partnership with Tesla: Premium North American Production Base

LG Ensol has established a total of seven to eight large-scale production bases in North America alone, including three independent plants in Michigan, Ohio, and Tennessee, as well as joint ventures with companies like GM and Hyundai. This has enabled local production in the US, replacing Chinese production, and has enabled a large-scale supply of batteries for Tesla's ESS project.

The industry estimates that the contract volume will amount to approximately 50 GWh, based on the price of LG Ensol's LFP batteries for ESS production in North America (approximately $85 per cell).

Battery Big Deals Resonate with Domestic and International Investors and Markets

Domestic investors are expressing daily expectations for rising stock prices, citing the impact of Tesla's investment, saying, "LG Ensol will replace Chinese battery makers like CATL." The combination of high US tariffs and the policy of diversifying North American suppliers is expected to further strengthen the global influence of the Korean battery industry.

Samsung Electronics and Tesla's semiconductor contract also creates synergy.

This contract follows the approximately 23 trillion won (US$16.5 billion) contract between Samsung Electronics and Tesla for the consignment manufacturing (foundry) of AI semiconductors (next-generation AI 6 chips), further solidifying the position of Korean companies in the US market. Elon Musk himself stated, "The contract size is the minimum, and actual production will be much larger," raising expectations for further growth.