Mercedes chooses LG over Chinese firms in $11 bil. battery deal

LG Energy Solution's (LGES) cylindrical battery plant is under construction in Arizona in this undated photo. Courtesy of LGES

LG Energy Solution (LGES) has reaffirmed its status as the main supplier to Mercedes-Benz, signing additional deals to provide the German automaker with 107 gigawatt-hours (GWh) of batteries, enough to power 1.5 million electric vehicles (EVs).

According to its regulatory filings Wednesday, LGES will provide Mercedes-Benz AG with 32 GWh of batteries in Europe from August 2028 to December 2035 and to the German carmaker’s affiliate in the United States from July 2029 to December 2037.

The combined value of the two deals is estimated at $10.7 billion, as the batteries are presumed to be 46-series products, which cost $100 per kilowatt-hour. LGES plans to begin mass production of the next-generation cylindrical batteries next year at its Arizona plant, currently under construction.

LG Energy Solution's 46-series cylindrical batteries are on display at the company's exhibition booth for the InterBattery 2025 trade show at Coex in Seoul, March 5. Yonhap

“In compliance with our agreements with the client, we cannot confirm additional details,” an LGES official said.

Last October, LGES signed a separate deal with Mercedes to supply 50.5 GWh of EV batteries in North America and other markets between 2028 and 2038. At the time, industry officials also assumed the Korean firm would provide the German company with its 46-series batteries.

Previously, Mercedes relied heavily on batteries from China’s CATL and Farasis Energy to attract European consumers with more affordable EVs.

However, the luxury automaker’s use of lower-cost batteries has been cited as the main reason behind a fire that broke out in an EQE sedan and burned more than 100 vehicles at an underground garage in an Incheon apartment complex last year. The Fair Trade Commission is also set to sanction Mercedes after its Korean subsidiary claimed all its EVs use CATL batteries, despite the EQE sedan’s use of batteries from Farasis.

Amid growing concerns over Chinese batteries, Mercedes appears to be shifting its focus from cost to technology and safety.

“The latest deal between LGES and Mercedes proves that Korean battery companies outstrip their Chinese rivals in technology,” a battery industry official said. “Korean battery companies are also expected to recover market shares in Europe.”

There is also optimism that LGES will increase its U.S. market share after its Arizona plant is completed, especially considering tariffs on Chinese battery imports imposed by the Donald Trump administration.