October 12, 2024: South Korea’s LG Energy Solution (LGES) the world’s third-largest EV battery manufacturer, has signed a deal to supply cells to a Mercedes-Benz affiliate in North America, in a deal estimated to be worth billions of dollars.

The battery maker, whose customers include Tesla General Motors and Hyundai Motor said in a regulatory filing it would supply 50.5GWh in batteries — enough for about 630,000 EVs — from 2028 to 2038, but said it could not disclose the monetary size of the contract, citing a non-disclosure agreement with the customer.

The announcement, on October 8, sent the firm’s share price to a 10-month high and came on the same day as it released a forecast showing a 40% fall in third-quarter operating profit to W448 billion ($332.27 million). This is still higher than analysts’ estimates as LGES managed to expand supplies of EV batteries for US customers as well as batteries for energy storage systems.

Industry sources believe that the order is for the next-generation cylindrical batteries known as the 46 series. These 46 series batteries boast a fivefold increase in energy capacity, a sixfold increase in power output, and a 16% increase in driving range compared to the existing 2170 batteries.

The batteries will be produced at its factory in its Arizona production complex where it has been building a production line dedicated to the high-performance batteries since April with a schedule to complete the line by 2027.

The contract announcement was made even as major automakers including General Motors and Ford reported weaker EV sales for the latest quarter with buyers continuing to shy away from purchases on affordability concerns, and Tesla  reported a smaller-than-expected rise in quarterly deliveries earlier this month.

“The deal provided us with opportunities to beat Chinese rivals,” said an LG Energy official.