Tesla – battery cathode order to L&F fizzles out: Instead of $2.9 billion, only $7,000.
Tesla’s Cybertruck needs 4680-format battery cells. But who needs Cybertrucks? Suppliers, for example in Korea, are left to deal with the consequences.
New battery cells, promising more power at lower costs, were expected to revolutionize the electric car market starting in 2023. Tesla CEO Elon Musk announced this at the “Tesla Battery Day” in 2020. While there was no mass-market car in 2023, Tesla did secure an order for the necessary cathodes for the new 4680-format battery cells. The Korean company L&F was supposed to supply cathodes worth $2.9 billion by the end of 2025. In reality, Tesla only purchased cathodes worth $7,386.
L&F announced this between Christmas and New Year’s. The failed contract is a painful blow for the Koreans, as it would have meant a fivefold increase in annual revenue. L&F does not expect any further revenue from the contract.
Tesla has so far only used the cylindrical battery cell in its Cybertruck. This vehicle has proven to be a flop. Tesla’s Gigafactory in Texas could produce 250,000 units per year, but organic sales currently amount to less than a tenth of that capacity. According to Electrek, other companies managed by Elon Musk, SpaceX and xAI, have recently taken delivery of more than 1,000 Cybertrucks; that hardly makes a significant difference.
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It’s possible that Tesla has found other, cheaper, or better suppliers for the high-nickel cathodes, and that’s why L&F isn’t buying any. However, Tesla doesn’t use these inexpensive battery cells in any other vehicle type, and sales to third parties have likely remained just an announcement so far. It’s probable that the energy-saving and therefore cheaper dry coating of the films has proven more difficult to mass-produce than Musk anticipated in 2020.
Incidentally, anyone interested in the differences between Tesla’s cylindrical 4680 cells and the flat cells used by competitor BYD can delve into a comparison . While the Tesla cells have a higher energy density, they produce significantly more waste heat that must be reliably dissipated. This suggests higher internal resistance.
Not only Tesla and L&F
The North American electric vehicle market is sluggish , partly due to political reasons . Tesla has also been put on the defensive in other parts of the world. On the one hand, the competition, especially from China, has caught up; on the other hand, Musk’s political activities have caused the Tesla brand image to plummet. The Cybertruck, in particular, has fallen far short of Musk’s promises.
The general economic downturn is also affecting other manufacturers. Following General Motors, Ford has also scaled back its electric vehicle plans and is writing off billions. This also impacts a South Korean supplier: LG Energy Solutions (LGES). This company was supposed to supply batteries for a total of 75 gigawatt-hours, or around $7.1 billion (exchange rate at the time of contract signing in October 2024), from the beginning of 2027 to the end of 2032. But Ford will not be building the vehicles for which these batteries were needed. For LGES, it was all for nothing.
A joint venture between LGES and Honda for the joint production of batteries for the North American electric vehicle market is also in jeopardy. To “improve operational efficiency,” the Japanese company is buying the joint venture’s factory in Ohio. The joint venture will then lease back the building, which has a book value of $2.9 billion.
Freudenberg Battery Power Systems closes
The German Freudenberg Group, in turn, is ceasing its lithium-ion battery production in Michigan. There, Freudenberg subsidiary Xalt has been using cells supplied by LGES in batteries for the electric commercial vehicle market since March 2024. However, the growth expectations for this market are unlikely to materialize in the near future, which is why Xalt has to close down.
LG Energy Solutions was supposed to deliver modules worth a total of 19 gigawatt-hours, or $2.8 billion, to Freudenberg by the end of 2031. They only received $110 million; the Koreans lost out on the rest.
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Tesla – battery cathode order to L&F fizzles out: Instead of $2.9 billion, only $7,000., source
