LG Energy Solution Secures $1.4 Billion Mercedes-Benz EV Battery Contract
LG Energy Solution clinched a $1.4 billion supply deal with Mercedes-Benz for electric vehicle batteries, bolstering the German automaker’s push into electrified lineups amid intensifying global competition. The agreement, disclosed in a regulatory filing, commits LG to deliveries across North America and Europe starting in 2028 and extending through 2035. This long-term pact aligns with Mercedes’ target of 50 percent battery-electric sales by 2030, addressing supply chain vulnerabilities exposed by prior shortages.
The contract encompasses pouch-type and prismatic battery cells optimized for high-density energy storage, though exact chemistries remain unspecified in the disclosure. Production will ramp at LG’s facilities in South Korea, Poland, and Michigan, with annual volumes projected to exceed 20 GWh to support models like the upcoming ‘EQS’ refresh and next-generation ‘EQE’ sedans. Mercedes’ North American assembly in Tuscaloosa, Alabama, stands to benefit directly, integrating locally sourced cells to qualify for U.S. incentives under the Inflation Reduction Act.
LG’s win underscores its position as a top-tier supplier, holding 14 percent global EV battery market share through the third quarter of 2025, per SNE Research data. The deal adds to LG’s $30 billion order backlog, providing revenue stability amid volatile raw material costs for lithium and nickel. For Mercedes, it mitigates risks from overreliance on single suppliers, following a 2024 joint venture with Stellantis that faltered over quality disputes.
Mercedes plans to deploy the batteries in vehicles featuring 800-volt architectures for 350 kW fast charging, enabling 10 to 80 percent replenishment in under 20 minutes. The partnership includes provisions for over-the-air firmware updates to enhance cell longevity, targeting 500,000-mile warranties on battery packs. In the U.S., where EV registrations reached 1.2 million in 2025 per Experian, this influx supports Mercedes’ goal of doubling ‘EQ’ series volumes to 400,000 units annually by 2028.
European deliveries will feed factories in Bremen and Sindelfingen, where the ‘CLA’ electric sedan begins production next year with a 75 kWh pack derived from similar tech. LG’s prismatic cells, weighing 500 kilograms per module, offer 20 percent higher volumetric density than cylindrical alternatives, aiding compact packaging in crossovers like the ‘GLC EQ’. The agreement also paves the way for recycling initiatives, with both firms committing to 95 percent material recovery by 2030.
This collaboration arrives as U.S. tariffs on Chinese battery components rise to 25 percent, prompting Mercedes to diversify away from Asian imports. LG’s Michigan plant, operational since 2022, employs 1,200 workers and produces 40 GWh yearly, directly feeding American assembly lines. The deal fortifies Mercedes’ competitive edge against Tesla and Rivian, whose vertical integration squeezes traditional suppliers.
For American consumers, the contract signals more affordable ‘EQ’ models, with entry-level trims projected under $50,000 post-incentives. LG anticipates a 15 percent margin uplift from economies of scale, while Mercedes accelerates its Ambition 2039 carbon-neutral roadmap. The partnership exemplifies shifting alliances in the $500 billion EV battery sector, where long-term contracts now average 10 years to hedge against geopolitical flux.
