Counterattack Against Chinese Batteries: LG Energy Solution Secures 2 Trillion Won EV Battery Supply Deal with Mercedes-Benz

Supply to North America and Europe through 2035
Equivalent to 8% of last year's sales
Mounting an offensive against Chinese battery dominance

LG Energy Solution has secured a battery supply contract worth 2 trillion KRW from Mercedes-Benz in Germany. This is the first order win following Mercedes-Benz Chairman Ola Kallenius's visit to Korea last month. Notably, industry observers say this contract marks a diversification of LG Energy Solution's portfolio from previously high-end focused supply to now include mid- to low-priced models. As a result, the company is seen as launching a full-scale counterattack against Chinese battery makers, which have been dominating the European and global markets.

On December 8, LG Energy Solution announced in a regulatory filing that it had signed a contract with Mercedes-Benz AG to supply electric vehicle batteries worth 2.06 trillion KRW. This amount is equivalent to 8% of last year’s sales of 25.6196 trillion KRW. The supply regions are North America and Europe, and the contract period runs from March 1, 2028, to June 30, 2035.

An LG Energy Solution representative stated, regarding specific contract details, "Due to discussions with our client, we cannot disclose any additional information beyond what has been announced."

This contract follows three previous large-scale battery supply agreements signed last year and this year. It demonstrates that the two companies are establishing themselves as key partners in the race to lead the electric vehicle market.

Industry experts believe the batteries supplied under this contract are highly likely to be installed in "mid- to low-priced electric vehicle models." Last month, Mercedes-Benz unveiled a major electrification strategy, announcing plans to launch more than 40 new models globally by 2027. To achieve this, batteries are needed for a wide range of segments, from premium to entry-level models. Considering that the three previous large-scale supply contracts between the two companies were all for high-performance, high-end cylindrical 46-series batteries, analysts believe this latest contract is likely for batteries intended for mid- to low-priced models.

The domestic battery industry expects that LG Energy Solution’s supply contract will be a turning point for recapturing lost market share in the European and global electric vehicle markets, which Chinese companies have been dominating with their low prices. It is true that aggressive pricing strategies and local investments by Chinese firms have gradually eroded the market share of Korean batteries in Europe. However, with LG Energy Solution’s success in targeting Mercedes-Benz, a leading premium automotive brand, the industry anticipates that the company will be able to expand its influence in European and global markets going forward.

Last month, Mercedes-Benz Chairman Ola Kallenius visited LG Group and met with key executives of LG Energy Solution, LG Electronics, and other major group leaders to discuss ways to strengthen future cooperation in the automotive electronics sector. At the time, Chairman Kallenius said, "Together with LG, Mercedes-Benz shares a vision based on innovation, quality, and sustainability," adding, "By combining the strengths of both companies, we are creating vehicles that will set new standards for the global automotive industry."

Previously, the two companies announced large-scale battery supply contracts totaling approximately 150 gigawatt-hours (GWh) last year and this year. In October last year, they agreed to supply a total of 50.5 GWh for North America and other regions. In September this year, they signed contracts to supply 75 GWh and 32 GWh of electric vehicle batteries for the United States and Europe, respectively. Although the specific products and contract details were not disclosed at the time, industry sources speculated that the batteries were cylindrical 46-series (46 mm diameter) models. In particular, this achievement is seen as a result of LG Energy Solution’s 46-series technology, which enabled the company to overcome competition from Chinese firms such as CATL and Farasis, who have been leading with price competitiveness.