Updated 29 December 2025 at 21:44 IST
South Korea’s L&F Slashes Value of Battery Material Supply Deal With Tesla
South Korean battery material maker L&F said the value of its 2023 supply deal with Tesla has shrunk to $7,386 from an earlier projection of $2.9 billion, without providing reasons for the sharp cut.
Battery of Tesla: South Korean battery material maker L&F said on Monday the value of its 2023 supply deal with Tesla has shrunk to $7,386 from an earlier projection of $2.9 billion, without providing reasons for the sharp cut.
L&F said in 2023 it had signed a deal to supply high-nickel cathode materials to Tesla and its affiliates from January 2024 through December 2025. Sources and analysts said L&F had planned to supply the key materials for Tesla's in-house batteries known as 4680 cells.
Tesla CEO Elon Musk unveiled a plan in 2020 to mass-produce the 4680, a less expensive battery that he said would help it make a small, compelling $25,000 electric car that was fully autonomous within about three years from then.
However, as EV demand slowed and Tesla struggled to ramp up production and development of the 4680 cells, the company ultimately did not need as much cathode material from L&F as initially anticipated, analysts said.
Neither Tesla nor L&F immediately responded to Reuters' requests for comments.
Tesla currently uses the 4680 batteries in its slow-selling Cybertruck EVs, which have proved a major disappointment despite Musk’s prediction of hundreds of thousands of annual sales.
Musk has also admitted it will be a challenge to scale up a new battery process called dry electrode, used to make the cells.
ORDER CANCELLATION
Cho Hyun-ryul, a senior analyst at Samsung Securities, said issues with production yields of Tesla's 4680 batteries and a slowdown in EV demand growth could have affected the reduction in orders from L&F. "There (is) anxiety about the battery sector overall," he added.
Some battery suppliers have reported order cancellations and ended or scaled down joint ventures with General Motors and Ford Motor following the end of US federal subsidies for electric vehicles in September.
In recent weeks, South Korea's battery industry has come under mounting pressure as automakers scale back EV plans amid policy uncertainty and weakening demand.
LG Energy Solution is set to lose about 13.5 trillion won ($9.41 billion) in expected revenue due to the termination of battery supply deals from Ford and Freudenberg Battery Power Systems, more than half of its 25.62 trillion won in revenue last year.
Another South Korean battery maker, SK On, said this month it has decided to end its joint venture with Ford for their battery factories in the US.
Ford said it would take a $19.5 billion writedown and scrap several electric vehicle models, a dramatic example of the auto industry's retreat from battery-powered models in response to the Trump administration's policies and weakening EV demand.
Published By : Vatsal Agrawal
Published On: 29 December 2025 at 21:44 IST