• Samsung SDI is reportedly set to supply Tesla with lithium-iron phosphate batteries for its Megapack and Powerwall energy storage systems under a three-year deal worth about $2.1 billion.
• The agreement would mark Tesla's first large-scale partnership with Samsung SDI and expand its efforts to shift battery sourcing away from China, which currently supplies all of Tesla's storage-unit cells through CATL and BYD.
• Samsung SDI, which recently saw weaker EV-battery demand from Stellantis, plans to retool its Indiana plant to make energy-storage batteries, aligning with Tesla's supply diversification and U.S. manufacturing push.

Tesla has reached a major supply agreement with South Korea's Samsung SDI worth over $2.1 billion.

The deal marks Tesla's latest move to reduce reliance on China for key battery components amid growing trade tensions and tariffs, according to a Reuters report.

Batteries For Tesla's Energy Storage Business

The three-year contract will see Samsung SDI supply batteries for Tesla's Energy Storage System (ESS) products, including Megapack and Powerwall, rather than for its electric vehicles, Electrek reported.

The agreement could reportedly involve up to 10 GWh of annual supply and represents the first large-scale partnership between the two companies.

For years, Tesla and Samsung had discussed a possible collaboration on 4680-format cells, a design pioneered by Tesla. While Samsung continues to expand production of its 46-series batteries, the new deal appears focused on lithium-iron-phosphate (LFP) cells optimized for stationary storage.

Shift In Strategy For Samsung SDI

Samsung SDI said in its October earnings call that demand for EV batteries from its joint-venture partner Stellantis had dropped sharply. The company plans to repurpose part of its Indiana facility in the U.S. to manufacture energy storage batteries instead - a strategic shift as South Korean battery makers respond to the loss of U.S. EV subsidies by expanding into grid and infrastructure storage markets.

Energy storage batteries use a similar chemistry to those in EVs but power facilities such as data centers and renewable-energy projects.

Tesla's Broader Supply Diversification

The Samsung deal follows a similar ESS battery supply agreement with LG Energy Solution for LFP cells.

Tesla currently sources batteries for its energy storage products from China's CATL and BYD, but executives said during an October earnings call that the company is working to localize supply and mitigate the impact of tariffs.

Tesla has also been developing in-house LFP battery production in the U.S., part of CEO Elon Musk's broader effort to build a more secure and diversified global supply chain.

Stocktwits Users Show Bearish Mood

On Stocktwits, retail sentiment for Tesla was 'bearish' amid 'low' message volume.

Tesla's stock has risen 16% so far in 2025.

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