Elon Musk, Chief Executive Officer (CEO) of Tesla, is making significant contributions to South Korean companies through substantial investments.
Tesla has invested 16.5 billion USD in Samsung Electronics and an additional 4.3 billion USD in LG Energy Solution (LGES).
On Wednesday, Reuters reported that Tesla plans to shift its electric vehicle (EV) battery supplier from China’s CATL to LGES, investing 4.3 billion USD in the process to reduce its dependence on China.
The contract will last for three years starting August 2027, with an option to extend it up to seven years, Reuters added.
This move aims to decrease Tesla’s reliance on Chinese battery suppliers, particularly in light of the hefty tariffs imposed on Chinese imports by former President Donald Trump.
Tesla has struggled to expand its domestic battery production capacity. In April, Chief Financial officer (CFO) Vaibhav Taneja admitted during an earnings call that the company’s in-house battery production capabilities were insufficient.
Given this situation, LGES already operates a battery factory in the U.S. Consequently, Tesla appears to have switched its battery supplier from CATL to LGES to avoid tariffs on Chinese products.
Earlier, Tesla also invested 16.5 billion USD in Samsung Electronics.
On Monday, Samsung Electronics announced a 16.5 billion USD contract with Tesla to produce next-generation artificial intelligence (AI) chips.
The agreement, lasting until the end of 2033, will see Samsung manufacture AI6 semiconductors at a new facility in Texas.
Musk confirmed the deal with Samsung Electronics on X (formerly Twitter), stating that the strategic importance of this cannot be overstated.
He added that 16.5 billion USD is just a baseline figure, suggesting the actual production volume could be significantly higher.
Musk emphasized that he would directly oversee the chip manufacturing line and has been granted authority to optimize production with support from Samsung.
The AI6 chips will be used in Tesla’s upcoming robotaxis, humanoid robot Optimus, and AI data centers in the coming years.
Experts believe this contract could bolster Tesla’s ambitions for its soon-to-be-released robotaxi. They agree that the long-term supply agreement will significantly help alleviate Tesla’s chip shortage and stabilize production.
Analysts also note that this contract presents Samsung Electronics with an opportunity to make significant strides in the foundry (contract manufacturing) sector.
Musk is rapidly emerging as a key ally for South Korean companies in their global expansion efforts.
