LG Energy Solution Signs USD 1.4 Billion EV Battery Supply Deal With Mercedes Benz For Global EV Push

LG Energy Solution has signed a long term battery supply agreement with Mercedes Benz Group AG valued at around 2.06 trillion won, roughly USD 1.4 billion. The contract will see the South Korean battery giant supply electric vehicle battery packs to Mercedes Benz for models sold in North America and Europe between March 1, 2028 and June 30, 2035.

The latest deal is the fourth major contract between the two companies in just two years and deepens a strategic partnership that sits at the heart of Mercedes Benz global electrification roadmap.

Background of the LG Energy Solution and Mercedes Benz Partnership

LG Energy Solution, one of the world’s leading EV battery manufacturers, has been steadily strengthening its ties with global automakers through long term supply contracts and joint ventures.

Mercedes Benz Group AG, meanwhile, is shifting its product portfolio toward electrified powertrains, with an ambitious roadmap that includes more than 40 new models to be launched globally by 2027. This line up spans luxury flagships, performance cars, and more accessible electric vehicles.

Within this context, the new USD 1.4 billion battery deal is not a standalone transaction but part of a broader strategy. It is the fourth significant agreement in two years, signaling long term confidence and technical alignment between the two companies.

Quick Summary Table

Key Details of the USD 1.4 Billion Supply Agreement

According to regulatory disclosures and media reports, the latest contract is valued at approximately 2.06 trillion won and currently represents about 8 percent of LG Energy Solution’s total revenue of 25.62 trillion won in the previous year.

The deal covers the supply of EV batteries from March 1, 2028 to June 30, 2035, primarily for vehicles sold in North America and Europe. The exact volumes, cell formats, and model specific allocations have not been disclosed, and LG Energy Solution has noted that both the contract value and duration may be adjusted in the future based on discussions with Mercedes Benz.

Industry observers expect the batteries supplied under this deal to be used mainly in mid segment and entry level electric vehicles. This would mark a shift in focus compared to earlier contracts that leaned heavily on high performance applications.

Shift Toward Mid and Entry Tier EV Models

Earlier collaborations between the two companies focused on LG Energy Solution’s cylindrical 46 series batteries, which are suited for high power and performance oriented vehicles.

However, analysts quoted in Korean media suggest that the new contract is more likely oriented toward mass market EVs. The intent is to broaden Mercedes Benz electric vehicle customer base by offering a wider mix of price points and body styles while maintaining acceptable range and performance.

This aligns well with the German carmaker’s strategy of combining halo products with more accessible EVs in order to scale volumes and meet regulatory emission targets across multiple regions.

LG Energy Solution’s Product Portfolio and Strategic Advantage

LG Energy Solution offers a wide range of EV battery chemistries and formats. These include cylindrical 46 series cells for premium and performance vehicles, high voltage mid nickel pouch batteries, and lithium iron phosphate units targeted at standard and lower priced models.

Its global manufacturing footprint spans North America, Europe, and Asia, allowing customers like Mercedes Benz to localise sourcing, benefit from reduced logistics risks, and respond more quickly to regional demand.

The combination of product diversity and regional production bases has been a key reason why LG Energy Solution remains competitive even as Chinese manufacturers expand their presence with lower cost offerings.

Implications for the Global Battery Market

Industry watchers see this agreement as strategically important for several reasons.

First, it helps South Korean battery producers maintain and potentially expand their presence in Europe, where competition from Chinese companies has intensified. By securing a long term contract with a premium European automaker like Mercedes Benz, LG Energy Solution reinforces its standing as a trusted supplier in a key market.

Second, the length of the contract, running through 2035, suggests that both parties view their collaboration as a cornerstone of their respective long term strategies in electrification and energy transition.

Third, the focus on mid and entry tier EVs indicates a maturing electric vehicle market where volume growth will increasingly come from more affordable models rather than only luxury or performance segments.

How the Deal Supports Mercedes Benz Electrification Roadmap

Mercedes Benz laid out an updated electrification roadmap earlier, targeting more than 40 new models by 2027 and placing a strong emphasis on battery electric vehicles.

To execute this strategy, the company needs secure, diversified, and geographically balanced battery supply. The LG Energy Solution deal provides:

1. Long term visibility on cell supply for North American and European operations.
2. Access to multiple chemistries for premium, mid, and entry level models.
3. A partner aligned on sustainability, innovation, and quality, as highlighted during Mercedes Benz Chairman Ola Kallenius visit to LG Group affiliates in Seoul.

Kallenius reportedly emphasised that the two companies share a vision rooted in innovation, quality, and sustainability, and that they aim to set new standards for the global auto industry together.

Outlook and Future Possibilities

The USD 1.4 billion contract is significant on its own, but it may also pave the way for further cooperation in next generation technologies such as solid state batteries, advanced battery management systems, and smarter charging solutions.

As regulatory pressures on emissions tighten and EV adoption accelerates, partnerships like LG Energy Solution and Mercedes Benz are likely to become deeper and more integrated, covering not just battery supply but broader energy ecosystems, recycling, and second life applications.

For now, the deal demonstrates that established automakers continue to rely heavily on proven cell makers to secure their electrified future, even as new players and chemistries emerge.

Frequently Asked Questions

1. What is the value of the LG Energy Solution and Mercedes Benz battery deal

The deal is valued at about 2.06 trillion won, which is approximately USD 1.4 billion, making it one of the larger recent contracts in the EV battery space.

2. When will LG Energy Solution start supplying batteries under this contract

Deliveries under the new agreement are scheduled to run from March 1, 2028 to June 30, 2035, primarily serving Mercedes Benz operations in North America and Europe.

3. Which types of electric vehicles will use these batteries

Analysts expect the batteries to be used mainly in mid range and entry level EV models, as Mercedes Benz seeks to expand its reach beyond the premium segment and grow volume in more accessible price bands.

4. What battery technologies does LG Energy Solution offer to automakers

LG Energy Solution supplies cylindrical 46 series batteries for high performance vehicles, high voltage mid nickel pouch batteries, and lithium iron phosphate packs for standard and lower priced models, along with ongoing research into next generation technologies.

5. How does this deal support Mercedes Benz electrification goals

The long term contract helps secure a reliable battery supply for Mercedes Benz plan to launch more than 40 new models by 2027 and expand its EV portfolio across premium, mid, and entry tiers in key markets.

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