Samsung SDI, Tesla finalize $2 billion, 3-year deal for ESS batteries

South Korea’s Samsung SDI on Monday agreed to supply electric car manufacturer Tesla with more than 3 trillion won ($2.11 billion) worth of ESS (Energy Storage System) batteries. According to the agreement, the deal is expected to last approximately three years.

Samsung SDI also mentioned in March that it had partnered with U.S. energy holding company and project developer-owner NextEra to supply ESS to the company. According to the announcement, the deal is worth approximately $310 million and covers the period from 15 April 2024 to 20 November 2025.

Samsung SDI reports drop in quarterly revenue

The initiative to supply Tesla with batteries comes as Samsung SDI reported a 4% drop in quarterly revenue for the third quarter ended September 30. The tech company posted quarterly revenue of KRW 3.05 trillion ($2.13 billion) and an operating loss of KRW 591.3 billion.

Despite Samsung SDI experiencing a 22.5% drop in quarterly revenue from the same period a year earlier, the firm reported a net profit of KRW 5.7 billion for Q3, driven by gains from the discontinuation of its polarized film business.

Samsung SDI’s battery business also generated KRW 2.82 trillion in revenue, a 4.8% quarter-on-quarter drop and a 23.2% year-on-year drop. The firm also reported an operating loss of KRW 630.1 billion for the quarter, primarily driven by lower sales of its EV batteries and the negative impact of U.S. trade policies on ESS batteries. 

The battery manufacturer also experienced a 12.1% year-over-year decline but a 6.2% increase in quarterly revenue to KRW 231.8 billion. Samsung SDI’s operating profit rose by 17.6% to KRW 38.8 billion.

The firm acknowledged that it has achieved significant progress in its business by promoting sales of EV and ESS batteries during the third quarter. Samsung SDI revealed that it secured several supply contracts totaling over 110 gigawatt-hours (GWh) with global automotive companies. The agreements cover both the company’s 46-series cylindrical and prismatic batteries. Samsung SDI also acknowledged that it won the majority of deals in a large government-led ESS supply project.

Samsung SDI forecasts a surge in earnings for Q4, driven by growth in the EV market in Europe and the ESS market in the U.S. The firm said that it aims to focus its capabilities on the ESS market, strengthen its presence in the EV sector, and improve operational efficiency.

Samsung SDI announced plans to respond to the growing U.S. ESS market by establishing manufacturing infrastructure in the country. The firm debuted its local production of NCA batteries for ESS at the StarPlus Energy factory in Indiana last month.

The battery manufacturer also announced plans to install lines for LFP batteries, with mass production scheduled to commence in Q4 2026. Samsung SDI also forecasts that its annual ESS battery capacity in the U.S. to reach 30 GWh.

Samsung SDI debuts new ESS batteries

The new initiative comes as the South Korean battery manufacturer debuted its new ESS products at the RE trade show in Las Vegas, U.S. Samsung SDI announced that the Samsung Battery Box (SBB) 1.7 and SBB 2.0 are scheduled to begin production in the U.S. next year.

The electronics material manufacturer revealed that SBB 1.7 uses high-nickel cobalt aluminium oxide (NCA) cells. The 6.14MWh batteries also deliver around 17% higher energy density than the SBB 1.5.

Samsung also revealed that SBB 2.0 utilizes lithium iron phosphate (LFP) cells and features its proprietary prismatic form factor and differentiated material and electrode technologies. The firm stated that the electrode materials help overcome the low energy density of LFP cells and maximize advantages such as safety and low costs.

Samsung said the new SBB batteries come with Enhanced Direct Injection (EDI) technology, which provides improved safety and reliability for companies such as Tesla. The tech company also confirmed both models are built with its AI-based predictive maintenance and durability prediction algorithms.

Get seen where it counts. Advertise in Cryptopolitan Research and reach crypto’s sharpest investors and builders.