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(Bloomberg) — Tesla Inc. has signed a $4.3 billion agreement to source lithium iron phosphate, or LFP, batteries from LG Energy Solution Ltd., a person familiar with the matter said, in the second tie-up for the EV maker in South Korea this month.
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The batteries will be manufactured at the South Korean company’s US plants but not be used in vehicles, the person said Wednesday, speaking on condition of anonymity as the information is not yet public. The end use will be for energy storage systems, the person said.
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The agreement is Tesla’s second this month with a South Korean manufacturer, after a $16.5 billion pact with Samsung Electronics Co. for producing AI semiconductors. For LG Energy, the deal came as it seeks to ramp up its energy storage business in the US, and it’s already planning to add more LFP battery production in its joint venture plant with General Motors Co. in Tennessee.
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Tesla’s pact with LG Energy was first reported by Reuters.
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LG Energy had earlier announced in a regulatory filing that it has secured a 5.9 trillion won contract to supply LFP batteries overseas over three years starting August 2027, without naming the client or how its products will be used.
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The company declined to comment beyond the filing, citing a confidentiality agreement. Tesla did not immediately respond to a request for comment.
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The South Korean company’s shares fell as much as 2.4% on Wednesday as investors sought to take profit from earlier gains, before paring some of the losses.
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LG Energy, in the filing, said its agreement included an option to extend the supply period by up to seven years and boost volumes based on consultations with the customer.
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South Korean battery makers have been racing to produce LFP batteries, which are cheaper and can enhance energy density in cold climates, to better compete with Chinese rivals. LG Energy started its own production at its Michigan factory in May.
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Samsung announced on Monday that it secured the 22.8 trillion won chipmaking agreement with Tesla through the end of 2033. The plan is for an upcoming plant in Taylor, Texas, to produce Tesla’s next-generation AI6 chip, Tesla chief Elon Musk said on X, confirming a Bloomberg News report.
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