LG Energy Solution (LGES) has secured a new electric vehicle (EV) battery supply contract with Mercedes-Benz Group AG valued at approximately two trillion won ($\text{€}1.39$ billion / US$1.4 billion), marking the fourth significant supply agreement between the two companies in less than two years.
According to a regulatory filing by the South Korean battery maker on Monday, the new contract covers the supply of batteries to Mercedes-Benz for its North American and European markets. The supply period is slated to run for seven years, from March 1, 2028, to June 30, 2035. LGES noted in the filing that the contract value and duration “are subject to change under an agreement with the client.” The value accounts for approximately eight per cent of LGES’s total revenue from the previous year.
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Industry analysts suggest that this latest deal signals a strategic expansion of the partnership beyond the premium segment. Previous major contracts, which totaled nearly $160$ GWh, were believed to involve the supply of high-performance 46-series cylindrical batteries for Mercedes-Benz’s high-end EVs.
The new volume is expected to be allocated to the German automaker’s growing lineup of mid-range and entry-level electric vehicles. A report from Pulse, the English-language edition of Maeil Business News Korea, stated, “Considering that the three major supply deals between the companies over the past two years were believed to involve cylindrical 46-series batteries for high-performance, high-end models, analysts view this new deal as targeted toward mid-priced vehicles.”
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The long-term collaboration underscores Mercedes-Benz CEO Ola Källenius’s strategy to secure stable supply lines and diversify its battery procurement portfolio. Källenius met with representatives of the LG Group in Seoul in mid-November to discuss future collaboration. Källenius subsequently stated that “Mercedes-Benz and LG share a common vision based on innovation, quality, and sustainability—and that they are working together to set new standards in the global automotive industry.”
This supply agreement aligns with Mercedes-Benz’s strategy to broaden its electric vehicle offering, including the introduction of its new generation of entry-level and mid-range EVs. The automaker plans to launch more than 40 new models globally by 2027, with a strong focus on electrification.
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Key upcoming models that may utilize these batteries include the new electric version of the GLB (replacing the EQB), which will be offered alongside a hybrid variant, and the new electric C-Class and GLC models. These new EVs are built on dedicated electric architectures designed to accommodate various battery chemistries and form factors, allowing Mercedes to optimize costs for different vehicle segments.
For LGES, the deal is a significant strategic win, allowing the company to diversify its supply beyond the premium 46-series cylindrical batteries and potentially include high-voltage mid-nickel or Lithium Iron Phosphate (LFP) cells needed for more cost-competitive entry-level models. Furthermore, the long-term nature of the contract is crucial for Mercedes to navigate increasingly stringent European regulations on battery supply chain traceability and carbon emissions that are scheduled to take effect in the coming years.
