South Korea Battery materials supplier L&F Co signed a contract Tesla Inc. TSLA for KRW 3.83 trillion or US$2.9 billion for the supply of materials.

What happened: L&F Co announced the details of its deal with Tesla in a regulatory filing on Tuesday. The contract is for two years, beginning January 1, 2024 through December 31, 2025, L&F Co. said.

The deal would further expand the US electric vehicle giant’s battery manufacturing capabilities.

See also: Everything you need to know about Tesla stock

L&F Co will supply Tesla with high-nickel cathode materials critical to the manufacture of EV batteries — making this new contract a key element for Tesla Tesla’s attempts to make its own batteries and reducing dependency on other suppliers such as Contemporary Amperex Technology Co., Limitedor CATL, and panasonic PCRFF.

Apart from Tesla, China-Headquarters CATL also supplies batteries to other EV manufacturers such as Nio Inc. NEVER. earlier this month, Ford Motor Company f 3.5 billion dollars invested to build the first lithium iron phosphate battery factory in the United States with the leading battery manufacturer.

Why it matters: The battery is the most important and expensive component of an electric vehicle, and 2022 saw the supply chain face challenges and an increase in input costs amid geopolitical tensions. Tesla is more vertically integrated than any other automaker. Rumors hinted earlier this month Elon Musk-managed company I’m looking for a lithium miner Sigma Lithium Corp. SGML.

Australian miner Magni’s Energy Technologies announced a deal with Tesla Earlier this month to deliver battery materials. The supply agreements will likely help the company boost production.

Price promotion: Tesla shares were up 1.93% to $211.64 in premarket trading on Tuesday Benzinga Pro data.

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