LG Energy Solution Signs 6 Trillion Won LFP Supply Deal... US Turns to Korean Batteries Over China

Industry Estimates Supply of "ESS Batteries for Tesla in the U.S."
Rising Tariffs Reduce Price Competitiveness of Chinese Batteries

LG Energy Solution has signed a supply contract for LFP (lithium iron phosphate) batteries worth approximately 6 trillion won. As the United States has raised import barriers by imposing high tariffs on Chinese batteries, it is interpreted that domestic battery manufacturers have emerged as alternative suppliers.

On the 30th, LG Energy Solution announced that it had signed an overseas supply contract for LFP batteries worth 5.9442 trillion won. The contract period is for three years, starting from August 1, 2027, to July 31, 2030. This is a large-scale contract equivalent to 23.2% of the company’s total sales.

Through the disclosure, LG Energy Solution stated, "This contract includes the possibility to extend the total contract period up to seven years and supply additional volumes, depending on negotiations with the customer. Therefore, the contract amount and period may change in the future." The company also explained, "The counterparty to the contract will be disclosed after the expiration of the confidentiality period, due to the need for business confidentiality."

In the battery industry, considering the size of this supply contract, it is estimated to be a supply agreement for LFP batteries for energy storage systems (ESS) destined for Tesla in the United States. An industry official stated, "As demand for data centers has increased, U.S. companies such as Tesla have been purchasing Chinese LFP batteries for their ESS business. However, as the U.S. has recently strengthened its policy of reducing reliance on China, Korean batteries are emerging as alternatives."

In fact, various tariffs are already being imposed on Chinese ESS batteries imported into the United States, and the total is estimated to reach 40.9% this year. Compared to last year, when the tariff on Chinese ESS batteries was 10.9%, this is about four times higher.

Starting in 2026, the tariff under Section 301 of the U.S. Trade Act is scheduled to rise from 7.5% to 25%, and the cumulative tariff rate is expected to reach 58.4%. Accordingly, the industry expects the price of Chinese LFP battery cells supplied to the U.S. to increase from 73 dollars (approximately 108,420 won) last year to 87 dollars in 2026.

Given that the expected supply price of LFP battery cells from domestic battery manufacturers with production bases in the United States is around 85 to 90 dollars, the price advantage of Chinese batteries in the U.S. market is expected to disappear.

Meanwhile, an LG Energy Solution official stated regarding this contract, "We cannot disclose details such as the counterparty to the contract due to the need for business confidentiality."