LG Energy Solution has secured a major long-term contract to supply electric vehicle batteries to a key affiliate of Mercedes-Benz.

The deal, announced Tuesday, primarily targets North America and other key markets, although the exact regions were not specified.

Under the terms of the agreement, LG will provide 50.5 gigawatt-hours of EV batteries over 10 years, starting in 2028. While financial details of the deal remain undisclosed, industry analysts believe it likely reaches billions of dollars given the volume of batteries involved.

This contract is particularly significant as it marks the first large-scale battery supply agreement LG has secured with a major European automaker beyond its existing ties with Tesla.

Industry analysts believe LG’s next-generation 46 Series cylindrical batteries will be supplied in the deal. Representing a major leap forward in battery technology, these new cells are expected to significantly outperform the current 2170 battery model used in many EVs today.

To meet the demands of this new contract, LG Energy Solution will produce these advanced batteries at a new factory currently being built in Arizona. This plant, which will focus solely on manufacturing cylindrical batteries like the 46 Series, is LG's second standalone factory in North America.

Construction of the facility began in April, and once completed, the factory will have an annual production capacity of 36 GWh, enough to supply hundreds of thousands of EVs each year. The plant is expected to be fully operational by 2026, positioning LG to ramp up production well ahead of the 2028 contract start date with Mercedes-Benz.

Although the Arizona plant will likely play a key role in fulfilling this deal, LG remains cautious about releasing too many specifics at this stage. “We are unable to confirm any additional details beyond what has been announced,” a company official said.