After repeated delays of the Cybertruck, Tesla drastically reduced orders for high-nickel battery materials, with the supply contract from South Korea's L&F shrinking by 99%
Due to the delay of the Cybertruck project and Tesla's production strategy adjustments, the contract signed by its supplier, South Korea's L&F Company, for high-nickel cathode materials worth 3.83 trillion KRW has been reduced to only 973 million KRW, a decrease of about 99%. This material was originally planned for use in the Cybertruck battery, but the delay in the model and the shift in consumer preferences have led to a sharp decline in actual demand. In addition, policy changes such as the Inflation Reduction Act have also affected Tesla's procurement plans
The continuous delays in Tesla's Cybertruck project have impacted its supply chain. South Korean battery materials supplier L&F announced on Monday that its supply contract with Tesla, signed in February 2023 for 3.83 trillion won, has been significantly reduced to 973 million won, a decrease of 99%, due to changes in supply volume.
On December 29, Bloomberg cited informed sources stating that this batch of high-nickel cathode materials was originally planned for use in Cybertruck batteries, with a supply period from January 2024 to this month. However, due to repeated delays in the development of this model, coupled with consumers shifting towards other models such as the Model 3 sedan and Model Y SUV, L&F's actual supply volume is very limited.
Since the beginning of the year, L&F's stock price has risen over 36%, lagging behind the 76% increase in the Korea Composite Stock Price Index (KOSPI).
Dual Pressure from Policies and Markets
The company originally planned to supply high-nickel cathode materials to Tesla over the next two years, as these materials are key components for enhancing battery energy density. L&F stated in a press release that due to changes in the global electric vehicle market and battery supply conditions, production plans need to be adjusted, making this contract revision unavoidable.
The company emphasized that the shipment volume and customer supply of its flagship high-nickel products have not changed, and the shipment progress to major South Korean battery manufacturers, including LG Energy Solution, is proceeding smoothly. Informed sources further indicated that this contract adjustment is influenced not only by product development progress but also by broader policy and macroeconomic factors, including changes in the Inflation Reduction Act subsidy policy
