Tesla plans to source energy storage batteries from Samsung SDI’s joint venture facility with Stellantis in Indiana, starting with a 10 GWh annual supply.
Samsung SDI is in the final stage of negotiations with Tesla to supply energy storage system (ESS) battery cells worth US$2.1 billion, according to industry sources in Seoul. The multi-year supply agreement, expected to commence in 2026, will strengthen Tesla’s shift toward South Korean battery makers as the company diversifies its supply chains away from China.
The deal is expected to cover approximately 10 gigawatt-hours (GWh) of lithium-iron-phosphate (LFP) battery cells annually. These will power Tesla’s Megapack units for large-scale energy storage products assembled at the company’s California facility. Tesla will integrate the supplied cells into its existing ESS production lines, expanding capacity to meet growing demand from utility and grid-scale projects.
Samsung SDI plans to produce the cells at its joint venture facility with Stellantis in Indiana, which currently manufactures EV batteries for North American clients. The plant will convert part of its existing EV-focused capacity into ESS-dedicated lines for Tesla. The agreement is projected to generate $740 million to $1.1 billion in annual revenue for Samsung SDI, starting from the first phase of production.
The deal comes as Tesla increases reliance on Korean manufacturers, following earlier partnerships with LG Energy Solution, which supplies up to 20 GWh of LFP ESS batteries per year and may expand output to 30 GWh. If both contracts are finalised, combined Korean supply to Tesla could reach 40 GWh annually.
Tesla’s pivot toward South Korean suppliers aligns with US policy encouraging reduced dependence on Chinese-made battery materials. Analysts expect Korean LFP cells to reach cost parity or gain a price advantage over Chinese supplies once US tariffs are accounted for.
The partnership offers Samsung SDI a potential boost following a 22.5% year-on-year revenue decline in the third quarter and an operating loss of $438 million. It also reflects broader consolidation in the global ESS battery market, where Korean firms are positioning to capture North American demand growth under US localisation and supply chain incentives.
