South Korean battery material supplier L&F Co. has reduced the value of its 2023 supply contract with Tesla from $2.9 billion to just $7,386, citing changes in supply quantity. The deal involved high-nickel cathode materials for Tesla's 4680 battery cells, primarily used in the Cybertruck. This move highlights ongoing demand challenges for the electric pickup truck.
In a regulatory filing on December 29, 2025, L&F Co. disclosed that its contract with Tesla, originally valued at 3.83 trillion South Korean won (approximately $2.9 billion), has been slashed to 9.73 million won (about $7,386). The agreement, announced in February 2023, was set to supply high-nickel cathode materials from January 2024 through December 2025 for Tesla's in-house 4680 battery cells.
The 4680 cells, unveiled by Tesla CEO Elon Musk at Battery Day in 2020, were touted as a breakthrough to halve battery costs and enable a $25,000 electric vehicle. However, production has faced challenges, including difficulties scaling the dry electrode process, and the cells are currently used only in the Cybertruck. L&F did not specify reasons for the cut but attributed it to a "change in supply quantity," with sources pointing to delays in Cybertruck development and lower-than-expected demand.
Tesla began Cybertruck deliveries in November 2023, but sales have underperformed. Despite a production capacity of 250,000 units annually at Giga Texas, the vehicle is selling at a run rate of 20,000 to 25,000 units per year. In 2024, Tesla's premium models—including Model S, Model X, and Cybertruck—totaled 85,133 units sold, suggesting Cybertruck sales below 30,000. The starting price of $79,990 exceeds Musk's 2019 promise of $40,000 for the base model, contributing to hesitation among reservation holders. Tesla discontinued the cheapest variant in September 2025 and offered incentives like discounted financing in March and 0% APR in June to clear inventory.
Broader factors include the elimination of U.S. Inflation Reduction Act subsidies, such as the $7,500 federal tax credit, and a global slowdown in EV demand. L&F stated the revision was inevitable amid changes in the electric vehicle market and battery supply conditions. The Cybertruck's angular stainless steel design has divided opinions, with some praising its uniqueness and others criticizing it as unappealing.
Analysts note production yield issues with the 4680 cells and shifting buyer preferences toward higher-volume models like the Model 3 and Model Y. While Musk predicted up to 500,000 annual Cybertruck sales, the program's struggles have rippled through the supply chain, affecting partners like L&F.
