As major players increasingly invest in stationary energy storage to stabilize power grids and support renewable integration, a significant new deal is set to reshape the supply chain. Tesla Inc. has reportedly tapped LG Energy Solution (LGES) for a massive supply of US-made batteries, signaling a strategic push to bolster its energy division.

According to reports from The Korean Herald, the deal is valued at $4.3 billion and will see LGES supply lithium iron phosphate (LFP) batteries from August 2027 through July 2030. Industry observers in the report believe the batteries are specifically destined for stationary storage with Tesla’s battery energy storage systems (BESS), including products like the Megapack. LGES’s strategic focus for its US manufacturing plants have been increasingly geared toward producing LFP cells optimized for BESS applications.

The move will reduce its reliance on Chinese supplier Contemporary Amperex Technology (CATL) and mitigate the impact of US tariffs on Chinese supplied materials. The report notes that LGES’s joint venture with General Motors, Ultium Cells, is also actively converting its Tennessee factory from producing high-nickel batteries to LFP models, with commercial operation slated for late 2027.

Tesla has a tightly woven electric vehicle battery supply and operation and this deal now is focused on scaling the energy business significantly. That said, according to Tesla’s own Q2 2025 financial report, its Energy Generation and Storage division saw record deployments, yet segment revenue experienced a slight decline year on year, due to apparent product mix and pricing adjustments. The move to securing domestic LFP supply chain with a high-volume output provides new opportunities. Tesla recently achieved a Megapack production line earlier in 2025 in Shanghai.

The report from The Korean Herald also notes the contract includes provisions for a potential seven-year extension.