Tesla Supplier Sees Major Cut to Battery Contract as Cybertruck Plans Shift

A major battery materials supplier to Tesla has delivered only a negligible portion of what was once a multibillion-dollar order, underscoring how shifting product plans, policy changes, and cooling electric vehicle demand are reshaping the global EV supply chain.

South Korea’s L&F Co. confirmed on Monday that its long-term supply agreement with Tesla Inc., initially valued at 3.83 trillion won and announced in February 2023, has been reduced by nearly 99%, leaving the final contract value at just 9.73 million won. The company disclosed the revision in a regulatory filing, attributing the sharp reduction to changes in the agreed supply volume.

Cybertruck Delays at the Center

According to a person familiar with the arrangement, the high-nickel cathode materials covered under the contract were primarily intended for Tesla’s Cybertruck batteries. However, repeated delays in the vehicle’s development and rollout meant that Tesla ultimately required far less material than originally planned.

The source said consumer demand also shifted during this period, with buyers favoring established models such as the Model 3 sedan and Model Y SUV over the long-awaited Cybertruck. As a result, Tesla scaled back procurement linked to the pickup’s battery program.

Tesla did not respond to emailed requests for comment.

Policy and Market Headwinds

Beyond product-specific challenges, broader economic and policy factors also weighed on the deal. The source pointed to changes in the U.S. policy environment, including the rollback of certain Inflation Reduction Act (IRA) incentives, which reduced financial support for parts of the EV supply ecosystem. Such shifts have forced manufacturers and suppliers alike to reassess production schedules and long-term commitments.

In a statement, L&F said the contract revision was unavoidable given evolving conditions in the global electric vehicle market and battery supply dynamics. The company emphasized that the adjustment does not signal operational trouble.

“There has been no disruption to shipments of our core high-nickel cathode products,” L&F said, adding that deliveries to major Korean battery cell producers are continuing as planned.

Market Reaction and Industry Implications

Investors reacted sharply to the news. Shares of L&F fell 11% in Seoul trading on Tuesday. Despite the drop, the stock is still up about 16% so far this year, though it has significantly underperformed South Korea’s benchmark Kospi Index, which has gained roughly 76% over the same period.

Analysts say the episode highlights the volatility suppliers face when tied closely to single flagship products. “Battery material companies are increasingly exposed to automakers’ shifting model strategies and policy-driven demand swings,” said an industry analyst familiar with the Asian EV supply chain.

A Signal for the EV Supply Chain

The downsizing of the Tesla–L&F contract reflects a broader recalibration underway in the electric vehicle industry. After years of aggressive expansion, automakers are becoming more cautious amid uneven demand growth, changing subsidies, and rising competition.

For suppliers, the lesson is clear: diversification across customers and vehicle segments may be critical as the EV market enters a more mature, and less predictable, phase.