LG Energy Solution Wins $1.5 Billion Battery Deal with Mercedes-Benz

LG Energy Solution (373220.KS) has signed an additional battery supply contract worth approximately 2 trillion won ($1.5 billion) with Mercedes-Benz. The new order is estimated to cover batteries for Mercedes-Benz's mid-to-low-priced electric vehicles. The move demonstrates LG Energy Solution solidifying its position as a key partner, aligning with Mercedes-Benz's electrification strategy of expanding its lineup from premium to affordable EVs.

LG Energy Solution disclosed Wednesday that it signed a long-term battery supply contract worth 2.06 trillion won with Mercedes-Benz. The company will supply batteries for Mercedes-Benz EVs sold in North America and Europe over approximately seven years, from March 2028 to June 2035. Specific details on volume and battery types were not disclosed. "We cannot reveal additional details beyond what was disclosed, in accordance with our agreement with the customer," an LG Energy Solution official said.

Industry observers believe LG Energy Solution has secured a contract to supply lithium iron phosphate (LFP) batteries for Mercedes-Benz's mid-to-low-priced EVs. Mercedes-Benz has set a goal of launching more than 40 new models by 2027 and accelerating its electrification strategy with lower-priced EV models. LFP batteries have lower energy density compared to nickel-cobalt-manganese (NCM) batteries, the company's flagship product, but are considered superior in terms of price and safety.

LG Energy Solution has expanded its product lineup to include LFP batteries in response to automakers' increasing focus on affordable EVs. The company began supplying LFP batteries for Renault EVs last month and has been in discussions with major automakers including Mercedes-Benz. In October, LG Energy Solution CEO Kim Dong-myung told reporters regarding LFP batteries for EVs, "We are in talks with many customers."

LG Energy Solution and Mercedes-Benz have maintained a strong partnership, signing battery supply contracts covering the full lineup from affordable to premium EVs. The two companies signed contracts for 50.5GWh of cylindrical 46-series batteries in October last year and 107GWh in September this year. The 46-series batteries are designed for premium EVs, offering at least five times higher energy and output compared to existing products, with superior space efficiency.

LG Energy Solution plans to increase its market share based on its solid product portfolio and global production bases. Analysts expect the company's market share to rebound as it expands supply to global automakers such as Renault and Mercedes-Benz in the LFP battery market, which has been dominated by Chinese manufacturers. LG Energy Solution has established production bases in Korea, China, Europe, and the United States to actively respond to customer demand. "As LG Energy Solution has successfully captured Mercedes-Benz, a leading premium automotive brand, the company is expected to expand its influence in European and global markets," an industry official said.