Seoul: South Korean battery maker LG Energy Solution Ltd. announced on Monday that it has entered into a significant battery supply agreement with Mercedes-Benz AG, valued at 2.06 trillion won (US$1.39 billion). The partnership will see LG Energy Solution providing batteries to Mercedes-Benz from March 2028 through June 2035, as stated in a regulatory filing.

According to Yonhap News Agency, the deal represents 8 percent of LG Energy Solution's projected annual sales of 25.6 trillion won in 2024. The batteries are intended for the North American and European markets. The company noted that the contract's volume, duration, and other terms could be adjusted based on mutual agreement with Mercedes-Benz.

Industry experts suggest that LG Energy Solution is expected to supply batteries for medium-range and budget electric vehicles (EVs) as part of this deal. Earlier this year, Mercedes-Benz revealed its strategy to introduce 40 new models, ranging from entry-level to premium segments, globally by 2027.

In addition to this latest agreement, LG Energy Solution disclosed in September that it had signed two supply contracts with Mercedes-Benz, with a combined capacity of 107 gigawatt-hours. These products are anticipated to include the next-generation 46-series cylindrical batteries, which are designed for high-end models.