In a significant shift, South Korean supplier L&F Co. has drastically reduced the value of its contract with Tesla from $2.9 billion to a mere $7,386. This adjustment reflects a severe decline in demand for Tesla's in-house 4680 battery cells, particularly affecting the production of the Cybertruck, which is currently the sole vehicle utilizing these cells.
The announcement comes amid ongoing concerns regarding the Cybertruck's market performance. Despite a manufacturing capability of 250,000 units per year at Giga Texas, actual sales are estimated at only 20,000 to 25,000 units annually. Earlier this year, reports indicated that Tesla was struggling to sell the Cybertruck, prompting the company to offer financing incentives and ultimately discontinue its least expensive version.
L&F cited a "change in supply quantity" as the reason for the contract's dramatic reduction, though the specifics remain unclear. The high-nickel cathode materials were intended for Tesla’s 4680 cells, which have faced production challenges since their announcement during Battery Day five years ago. The future of the 4680 program now appears uncertain, as diminished production of the Cybertruck leads to decreased need for these battery components.