The failure of the Tesla Cybertruck was costly for the South Korean supplier
Tesla's contract for the supply of battery materials for the Cybertruck, initially valued at $2.67 billion, was cut to almost zero. The South Korean company LF Co. reported that the deal volume decreased by approximately 99%, amid low demand for the electric pickup truck.
What is known
Elon Musk previously stated that Tesla could sell up to 250,000 Cybertrucks a year. However, actual sales were significantly lower. It is estimated that the company will sell less than 20,000 pickups this year, which is less than 10% of the originally stated goal. This directly affected component suppliers.
One such supplier was LF Co., a manufacturer of cathode materials for batteries. In February 2023, the company signed a contract with Tesla worth 3.83 trillion South Korean won, equivalent to approximately $2.67 billion. The agreement provided for the supply of high-nickel cathode material for Cybertruck batteries. Now the contract amount has been reduced to 9.73 million won, or about $6,776 at the current exchange rate.
The agreement was originally related to the 4680 format battery cells, which Tesla introduced in 2020 as a key technology for scaling production and the future mass-produced electric vehicle costing $25,000. This project has not yet been implemented, and the 4680 cells are currently mainly used in the Cybertruck.
According to a source familiar with the terms of the deal, LF initially supplied only small volumes of material because the development and launch of the Cybertruck were repeatedly delayed. According to Bloomberg, political and economic factors, including changes in the electric vehicle subsidy system in the United States, also influenced the contract revision.
Source: Bloomberg
