South Korea-based battery material supplier L&F Co. revealed in a regulatory filing on Monday that its contract with Tesla has been cut by 99% due to a “change in supply quantity.”
The company was set to supply Tesla with high-nickel cathode materials for battery production from January 2024 through December 2025.
However, according to the company, the 3.93 trillion won ($2.7 billion) contract signed in February 2023 has been reduced to 9.73 million won ($11.4 million).
The materials were set to supply Tesla‘s in-house developed cells, known as 4680, Reuters said on Monday.
CEO Elon Musk said in 2020 that mass-producing the 4680 cells would help the company produce cheaper vehicles.
“About three years from now, we’re confident we can make a very compelling $25,000 electric vehicle that’s also fully autonomous,” the chief executive stated then.
With the new cells, Tesla aimed to cut down or eliminate the use of costly materials, such as cobalt, commonly used in lithium-ion batteries.
Despite its ambitions, the 4860 cells have only been used in the Cybertruck batteries up until now, a source familiar with the matter told Bloomberg earlier on Monday.
Tesla is, however, expected to integrate the cells in the upcoming Cybercab model — to be used in its Robotaxi service and for which production is set to begin in April 2026.
Its best-selling Model 3 and Model Y vehicles currently integrate batteries supplied by Panasonic, LG Energy Solution and China’s largest battery manufacturer CATL.
South Korean Companies Struggle With Policy
The supply agreement was also affected by broader economic and policy changes, including the removal of Inflation Reduction Act subsidies, the report said.
In recent weeks, South Korea’s battery industry has faced growing pressure as automakers reduce their EV plans due to policy uncertainty and weakening demand.
Earlier this month, battery maker SK On and Ford ended their joint venture, BlueOval SK, just four months after the Detroit automaker had announced plans to start producing electric vehicle batteries at its Louisville Assembly Plant.
The announcement was made as Ford announced it is stepping back in its EV strategy, expecting a $19.5 billion impairment in the upcoming quarters.
Chief executive Michael Adams informed employees that nearly 1,600 jobs (the entire workforce) in Kentucky would be cut, with production set to stop in mid-February.
Tesla x LG
In late July, Reuters reported that Tesla signed a $4.3 billion deal with South Korean LG Energy Solution to supply LFP batteries (mainly from LG’s Michigan factory).
The three-year contract, set to run from 2027 to 2030, includes options to extend the term and increase volumes.
The batteries are expected to be used primarily in Tesla‘s energy storage systems, and the deal helps the company reduce dependence on Chinese suppliers.
