Tesla has signed a major deal worth $4.3 billion with South Korea’s LG Energy Solution (LGES) to supply rechargeable batteries. The batteries come with energy storage systems that run on lithium iron phosphate (LFP), reported Reuters on Wednesday. LGES will export the batteries to the Michigan-based plant to power Tesla EV cars.

The move makes Tesla end its reliance on China for rechargeable EV batteries and reduce Chinese imports due to trade tariffs. However, neither Tesla nor LG made the deal public and kept it under wraps. Several officials close to the matter disclosed the partnership to Reuters on the condition of anonymity.

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As the news of the partnership leaked to the media, LG provided a statement of client protection and business confidentiality. “In accordance with our agreement, we are unable to disclose the customer’s identity due to confidentiality obligations,” LGES told Reuters. Tesla did not respond and failed to provide a comment on the partnership with LGES.

Tesla & LG Battery Supply Partnership Gives China the Blues

China mostly dominates the EV battery markets, and the South Korean firm LGES barely has a presence in the US. The dominance is slowly being shifted away from China due to tariffs and trade wars. Manufacturers are finding it expensive to import goods from China as the tariffs are a premium. Therefore, Tesla has sidelined China for South Korea’s LG for the recent battery deal.

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Also, LGES confirmed that the battery partnership with the new client will last till 2030. The firm could extend the partnership if required by the client, depending on the volume and discussions of the deal. The partnership comes at a time when Tesla is facing lower consumption, with sales and revenues dipping worldwide. How the company will navigate the hardships and come back at a time when tariffs will be known next quarter.