A major link in Tesla’s 4680 battery supply chain has just snapped. South Korean battery material supplier L&F Co. announced today that the value of its massive supply deal with Tesla has been slashed by over 99%, signaling a catastrophic drop in demand for the automaker’s in-house battery cells.
This is arguably the strongest evidence yet that Tesla’s 4680 program, and the vehicle that relies on it, the Cybertruck, is in serious trouble.
In early 2023, L&F announced a $2.9 billion contract to supply high-nickel cathode materials directly to Tesla.
At the time, the industry saw this as a major move by Tesla to secure materials for its ramp-up of the 4680 battery cell, which Elon Musk had touted as the key to halving battery costs and enabling cheaper electric vehicles, a plan he later scrapped.
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Right now, Tesla’s Cybertruck is the only vehicle using the automaker’s own 4680 cells.
In a regulatory filing today, L&F revealed that the contract’s value has been written down to just $7,386.
No, that is not a typo. $2.9 billion to roughly $7,400.
L&F did not explicitly state the reason for the cut, citing only a “change in supply quantity,” but the dots are easy to connect. The high-nickel cathode was destined for Tesla’s 4680 cells, and the primary consumer of those cells is the Cybertruck.
We have been reporting on the Cybertruck’s demand issues for the better part of this year. In March, we noted that the truck was turning out to be a flop as Tesla began offering discounted financing to move inventory. By June, Tesla became desperate, launching 0% APR incentives as inventory piled up in lots across the US.
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