The advanced battery tech that was supposed to make EVs extremely affordable has fallen short, leaving Tesla’s partner with massive losses.
For several years, Tesla CEO Elon Musk confidently claimed that the 4680 lithium-ion battery cells, built with high-nickel cathodes, would revolutionize the electric vehicle market. In 2023, South Korea’s L&F signed a major $2.9 billion contract with Tesla to supply large volumes of these batteries.
However, on December 29, Electrek reported, citing sources, that the supply chain had effectively collapsed.
According to the report, L&F confirmed that its contract with Tesla was cut by more than 99%. The final value reportedly dropped to $7,386 — a figure so low it seems like a typo, but it is official: the contract was slashed from $2.9 billion to roughly $7,400. L&F did not provide a detailed explanation for the drastic reduction, citing only changes in supply volume. Investigative reporting by Electrek, however, uncovered the likely reason.
Currently, Tesla uses the 4680 battery exclusively in the all-electric Cybertruck. The battery was originally developed specifically for that vehicle, with plans to scale it to other models later. But recent reports indicate that the Cybertruck has been selling extremely poorly, particularly after various U.S. EV incentives were canceled. As a result, there simply isn’t a need to produce these batteries at scale. Tesla has not commented officially, but all signs point to this explanation.
Back in March of last year, data already showed weak Cybertruck sales — so much so that Tesla was offering large discounts and 0% financing to move inventory. The massive Texas factory has a production capacity of up to 250,000 trucks per year, yet sales hover around 20,000–25,000 units, placing Tesla in a highly unprofitable position. For L&F, this cut translates into a loss of nearly $3 billion in expected revenue.