L&F Co, the battery supplier for Tesla’s (TSLA) Cybertruck, slashed the value of its contract with the automaker to just a fraction of its initial value underscoring the lackluster demand for Tesla’s electric pickup truck.
The South Korean battery material supplier said in a regulatory filing that its $2.9 billion contract to supply high-nickel cathode materials directly to Tesla (TSLA) is now worth just $7,386, attributing the dramatic reduction to a “change in supply quantity.”
Tesla (TSLA) contracted with L&F in 2023 to supply the material for its 4680 battery cells, used almost exclusively for the Cybertruck. But with demand for the vehicle falling below initial production expectations, the adjustment in the contract’s value suggests that Tesla (TSLA) has cancelled the contract with L&F.
According to electrek, the 4680 battery cell was considered the “holy grail” that would enable Tesla (TSLA) to manufacture a $25,000 EV with 54% more range and 56% reduction in cost-per-kilowatt hour at the vehicle level.
However, scaling production of the cells remains challenging due to the complexity of the dry electrode process, a problem compounded by weak demand for the Cybertruck. While the 4680 battery cell is also slated for use in the Cybercab, production of that vehicle cannot begin until the company achieves Level 4 autonomous driving capability.
Separately, Israeli Prime Minister Benjamin Netanyahu recently spoke with Tesla (TSLA) CEO Elon Musk towards furthering the development of autonomous driving and artificial intelligence.
“We discussed the continuation of collaborations with Tesla and the promotion of the law pertaining to autonomous vehicles. I spoke at length with Musk about promoting and developing artificial intelligence technologies in Israel, and I said in our conversation: We intend to catapult Israel and turn it into a global leader in the field, just as we did in cyber and other technologies,” Netanyahu said in a post on X.
Tesla (TSLA) shares are down 1.7% on Monday.