Tesla’s Billion-Dollar Battery Deal Shrinks While Cybertruck Struggles Persist

Tesla faced another challenge in its quest to expand the reach of its Tesla 4680 batteries. The South Korean firm L&F, which had previously clinched a substantial deal with Tesla, slashed the amount nearly to zero. At the beginning of 2023, L&F announced a contract worth $2.9 billion for supplying high-nickel cathode material directly to Tesla. Now, this $2.9 billion has turned into… $7,386. There’s no typo here: the deal shrank by six orders of magnitude.

In simpler terms, initially, Tesla planned to purchase a substantial amount of material from L&F to manufacture its power cells, and eventually bought only a pittance. Let us recall that Tesla 4680 cells are currently used only in the Cybertruck. And the pickup sales have not exceeded even 60,000 units so far, although Tesla promised to sell 250,000 annually.

Cho Hyun-ryeul, a senior analyst from Samsung Securities, stated that performance issues with Tesla 4680 batteries and the slowed growth in electric vehicle demand might have influenced the reduction of orders from L&F.

Additional Challenges in the EV Market

The electric vehicle industry is facing a crucial phase where actual demand is not matching projections made during enthusiastic early days. This gap might further influence strategies not just for Tesla but other automotive manufacturers dealing with advanced battery technologies.

Such abrupt changes can ripple through the supply chain, impacting smaller suppliers dependent on anticipated high-volume orders from larger manufacturers like Tesla.

It remains to be seen how Tesla will strategize to meet its ambitious targets while managing supply constraints and shifting market demands.