LG Energy Solution inks $1.4bn EV battery deal with Mercedes-Benz

(LG Energy Solution)

LG Energy Solution will supply electric vehicle (EV) batteries worth about 2 trillion won ($1.4 billion) to Mercedes-Benz Group AG, a move that will bring their partnership to a new level.

According to a regulatory filing on Monday, LG Energy Solution announced that it signed a 2.06 trillion won battery supply agreement with Mercedes-Benz. The deal represents roughly 8 percent of the company’s 25.62 trillion won in revenue last year.

The batteries will be supplied to North America and Europe, with the agreement running from March 1, 2028, through June 30, 2035.

LG Energy Solution said the contract value and duration may change depending on discussions with the customer and that no further details can be disclosed at this time.

Industry sources widely expect the supplied product to be batteries for mid- to entry-tier EV models.

Mercedes-Benz announced in September a bold electrification roadmap, pledging to launch more than 40 new models globally by 2027, which requires battery solutions across premium and entry-level segments.

Considering that the three major supply deals between the companies over the past two years were believed to involve cylindrical 46-series batteries for high-performance, high-end models, analysts view this new deal as targeted toward mid-priced vehicles.

LG Energy Solution currently offers a broad portfolio tailored to different segments – including cylindrical 46-series for high-performance models and high-voltage mid-nickel pouch batteries for standard and mid- to low-priced models, and lithium iron phosphate batteries.

The company has leveraged its product range and local production capacity to expand partnerships.

Industry watchers expect the deal to help Korean battery makers regain share in Europe and globally, where Chinese suppliers have strengthened their presence with low-priced products.

The deeper partnership with Mercedes-Benz is seen as an opportunity for LG Energy Solution to expand its influence.

The contract marks the fourth major supply agreement between the companies in two years.

LG Energy Solution previously agreed to supply 50.5 GWh of batteries in North America and other regions in October last year, and 75 GWh and 32 GWh in the U.S. and Europe respectively, in September this year. Those deals were widely believed to involve 46-series cylindrical batteries, though details were not disclosed.

Ahead of the latest agreement, Mercedes-Benz Chairman Ola Källenius met LG Group affiliates in Seoul in mid-November to discuss future mobility cooperation.

Källenius said at the time that Mercedes-Benz and LG share a vision rooted in innovation, quality and sustainability, and that the companies are working together to set new standards in the global auto industry.