- One Tesla supplier has cut nearly 99% of its supply contract.
- The contractor was originally supposed to supply the Tesla 4680 battery components.
- It’s now coming to an end with revenue of just $6,800, well below the $2.9 billion expected in 2023.
Tesla expected the Cybertruck to sell like a gangster. Things didn’t go quite as planned, as with the CEO Elon Musk Be warned that EV could “flop(But at least he likes it.) Ultimately, the only real monetary risk was to Tesla, right?
Well, not exactly. What many people forget is that Tesla may have vertically integrated much of its product development, but even the most efficient manufacturers still need upstream providers. One South Korean supplier is now feeling the pressure after its contract with Tesla was reduced by almost 99%.
Photo by: Tesla
Battery materials supplier L&F Co. is the latest victim of the short-lived Cybertruck fiasco. According to a report from BloombergL&F revealed this week that a huge supply contract – originally worth $2.9 billion when awarded nine months before the first Cybertruck was delivered – has been cut by almost 99%. The contract, which officially expires on December 31, amounts to nominal revenue of $6,800 (at current transfer rates) for L&F.
The material L&F supplied to Tesla was a high-nickel cathode, said to be intended for the Holy Grail 4680 cell developed by Tesla for use with new products like the Cybertruck.
due to bad luck, The 4680 program didn’t go entirely smoothly. What was supposed to be an engineering and manufacturing leap for Tesla has sparked competition from other global battery suppliers. Meanwhile, Tesla’s internal battery program has struggled to gain traction — such as Cybertruck sales — and geopolitical Customs disruptions have turned car suppliers upside down.
Now, it’s important to note that while demand for the Cybertruck may have contributed to the L&F contract write-off, it may not have been the only factor. Bloomberg Reports indicate that L&F acknowledged changes in the global EV supply trade in a statement:
The supply contract was also affected by broader political and economic issues, including the elimination of the Inflation Reduction Act subsidies, the person added. Tesla representatives did not immediately respond to an email request for comment.
L&F said in a statement that the review was inevitable as timelines were adjusted in line with changes in the global electric vehicle market and battery supply conditions.
“There have been no changes to shipments or customer supply of the company’s key high-nickel product,” L&F said, adding that shipments to major Korean cell manufacturers are going smoothly.
The unfortunate losers in this scenario are L&F investors, who were counting on the supplier contract as a big win for the company. Instead of achieving record returns, the company’s shares are now trading down more than 11% this week and 64% since the Tesla contract was announced in early 2023.
For Tesla, this is just a footnote. The Cybertruck still exists, still sells and makes headlines. Suppliers should take notes of caution, though: Building a business around Tesla’s vision may be bold, but it’s also ruthlessly conditional. If anything comes in the way, including tariffs, the future could change at any moment.
