Samsung SDI and Tesla in Talks for Trillion-Won ESS Battery Deal

South Korean battery maker Samsung SDI is negotiating with Tesla for an energy storage system (ESS) battery supply deal potentially worth trillions of won. Talks are in early stages, and production may occur at Samsung's joint plant in Indiana, reflecting efforts to meet North America's growing ESS demand.

South Korea's Samsung SDI Co. is reportedly in discussions with Tesla Inc. regarding a substantial supply of energy storage system (ESS) batteries. According to Pulse, the English language service of Maeil Business News Korea, these talks come as ESS demand climbs in North America, fueled by investments in artificial intelligence (AI) data center infrastructure.

While the specifics of the agreement have yet to be determined, the potential deal could reach trillions of won. A Samsung SDI official indicated that the discussions are at an early stage, focusing on the expansion of supply, Tesla's requirements, and Samsung SDI's own production capabilities. No official decision on supply volumes has been made, the official added.

If an agreement is reached, production of the ESS batteries could take place at Samsung SDI's joint battery plant with Stellantis NV in Indiana, USA. The company recently announced, during its third-quarter earnings briefing, plans to shift the plant's electric vehicle (EV) battery production line to ESS manufacturing with a goal of achieving 30 gigawatt-hours (GWh) in U.S. production capacity by the end of next year.

Tesla's engagement with Samsung SDI and LG Energy Solution Ltd. signifies a strategic move to reduce its reliance on batteries from China. As North America's ESS demand increases, driven by AI data center expansion, the role of Korean manufacturers, especially those with local production facilities, becomes increasingly crucial.

LG Energy Solution is also reportedly engaging in talks with Tesla for additional ESS battery supplies, indicating that finalizing the deal's terms may take some time, according to company sources.

(With inputs from agencies.)