LGES to Provide 50 GWh Batteries to a Mercedes Affiliate for One Decade

South Korea's LG Energy Solution (LGES) announced on Tuesday that it signed a major contract to supply electric vehicle (EV) batteries to a Mercedes-Benz affiliate in North America and other regions, causing a sharp increase in its share price. Under this agreement, LGES will provide 50.5 gigawatts per hour of batteries between 2028 and 2038, although the financial details of the deal were not disclosed. The specific Mercedes affiliate involved in the agreement was also not revealed.

The news led LGES shares to jump by as much as 5.7%, outperforming the broader KOSPI index, which fell 0.4%. The contract strengthens LGES's standing as a key supplier in the EV battery market, alongside customers such as Tesla, General Motors, and Hyundai Motor.

The announcement coincided with LGES's third-quarter forecast, which projected a 40% drop in operating profit to 448 billion won ($332.27 million), a figure still higher than analysts' expectations. This improvement was attributed to increased battery supply for U.S. customers and energy storage systems despite challenges in the EV market. Without tax credits from the U.S. Inflation Reduction Act, LGES noted it would have posted an 18 billion won operating loss.

This deal comes at a time when major automakers, including General Motors and Ford, are experiencing weaker EV sales due to consumer concerns about affordability. Tesla, too, reported a smaller-than-expected increase in quarterly deliveries earlier this month. LGES is scheduled to release its full earnings report on Oct. 28.