Following recent supply chain adjustments like L&F's contract reduction, Tesla has slashed its 4680 battery cathode deal with LG Energy Solutions from $2.9 billion to $7,000, per Reuters. Weak Cybertruck demand undermines the cell's high-volume economics, threatening plans for Texas Gigafactory output and the upcoming Cybercab.
According to a Reuters report on December 29, 2025, Tesla reduced its cathode material contract with LG Energy Solutions, effectively pausing 4680 cell production ramps.
The 4680 relies on Cybertruck volumes for cost advantages, but sales lag far behind targets. Tesla planned 250,000 units annually at Giga Texas, yet 2024 projections are around 40,000 and 2025 just 20,000, blocking economies of scale.
This impacts broader ambitions: 4680 integration was eyed for Cybercab, and low utilization endangers Giga Texas efficiency and Tesla's vertical integration.
Industry-wide, U.S. subsidy expirations prompt caution. LG faces earnings hits from terminated deals, while SK On scrapped a U.S. project with Ford. The shift favors demand-led investments over speculative builds.
For Tesla, the cuts preserve cash short-term but stall 4680 progress, prompting potential battery strategy shifts.
