South Korean battery manufacturer LG Energy Solution has reportedly signed a long-term purchase agreement with Mercedes-Benz, involving a total battery capacity of 50.5 GWh to be supplied from 2028 to 2038. According to a Reuters report, this deal includes supplying electric vehicle batteries to a subsidiary of Mercedes-Benz, covering North America and “other regions.”
The details of the agreement remain vague, as the report does not specify which Mercedes subsidiary is involved or the financial scope of the deal. Similarly, both companies have yet to disclose technical information, such as cell format or chemistry.
While Mercedes produces batteries through its own company, Automotive Cells Company (ACC), in Europe, the German automotive giant likely faces demand that exceeds ACC’s planned output, particularly since two out of three ACC plants are currently on hold.
Recently, LG Energy Solution announced its intention to diversify its business more aggressively and reduce its overall dependence on the automotive sector. In a new strategy called “Empower Every Possibility,” the company aims to combine financial and strategic goals to double its revenue by 2028 compared to 2023, targeting 67.4 trillion won (approximately 45.7 billion euros).
Although LG Energy Solution is aiming to increase its focus on aviation, maritime, and robotics sectors, electric vehicles remain a core aspect of its business. Other electric vehicle clients include General Motors, Tesla, and Hyundai. Following the announcement of the agreement, LG Energy Solution’s shares surged.
The contract announcement coincided with LG Energy Solution releasing a forecast showing a 40% decline in third-quarter operating profit to 448 billion won ($332.27 million), which is still above analyst estimates as the company managed to expand supplies of EV batteries for U.S. customers and batteries for energy storage systems.
This announcement comes amid reports of declining EV sales from major automakers, including General Motors and Ford, with buyers increasingly hesitant due to affordability concerns. Tesla also reported a smaller-than-expected rise in quarterly deliveries earlier this month. In this context, LG Energy Solution’s collaboration with Mercedes-Benz brings new confidence to the market.
