Tesla Secures $4.3bn Battery Deal with LG Energy in Supply Chain Push

NEW YORK, March 21 —

Tesla Inc. locked in a $4.3 billion battery supply agreement with LG Energy Solution, with the US Government confirming the strategic partnership that represents the electric vehicle maker's largest component deal to date.

The supply contract comes as Tesla accelerates its energy storage business beyond automotive applications. The company simultaneously announced a $2.9 billion equipment purchase from Chinese manufacturers for solar panel production and confirmed expansion of its industrial energy storage business into India. The moves show Tesla's push to diversify revenue streams while securing critical supply chain partnerships amid intensifying EV competition.

Tesla's energy generation and storage segment generated $3.0 billion in revenue over the trailing twelve months, representing roughly 3% of total company sales. The LG Energy deal positions Tesla to scale this business as utility-scale battery storage demand accelerates. LG Energy, the world's second-largest battery manufacturer, already supplies Tesla's automotive operations. The company holds leading lithium iron phosphate technology that offers cost advantages for stationary storage applications.

The India expansion targets one of the world's fastest-growing energy markets, where the government has committed to 500 gigawatts of renewable capacity by 2030. Tesla's entry into Indian energy storage follows the company's recent price cuts on Powerwall home batteries and industrial Megapack systems. Management sees significant margin opportunity in the segment.

Investors should watch Q4 2024 energy storage deployment numbers and battery cost per kilowatt-hour trends to gauge whether the supply investment translates into accelerated revenue growth. Tesla reports energy storage deployments quarterly, with the metric serving as a key indicator of the business segment's trajectory. Battery cost reductions would signal improving margins from the scaled LG partnership.

For detailed analysis of Tesla's energy storage expansion strategy and revenue implications, see our full BUY-rated Tesla report.

Basis Report does not hold positions in securities discussed. This is not investment advice.