A supplier to Tesla Inc. ended up providing a tiny fraction of battery material the carmaker ordered almost three years ago, in part due to issues with the Cybertruck, according to a person familiar with the matter.
South Korea’s L&F Co. disclosed this week that its 3.83 trillion won ($2.67 billion) supply contract with Tesla, first announced in February 2023, had been slashed to just 9.73 million won.
In a filing, L&F said the reason for the 99% reduction was a change in supply quantity.
The high-nickel cathode material that L&F was contracted to supply from January 2024 through this month was meant to be used in Cybertruck batteries, said the person, who asked not to be identified discussing sensitive business transactions.
Scant material was provided as the vehicle’s development was repeatedly postponed and consumers opted for other vehicles, including Tesla’s Model 3 sedan and Model Y sport utility vehicle, the person said.
The supply contract was also affected by broader policy and economic issues, including the elimination of Inflation Reduction Act subsidies, the person added. Tesla representatives didn’t respond to an emailed request for comment.
L&F said in a statement that the revision was inevitable as schedules were adjusted in line with changes in the global electric vehicle market and battery supply conditions.
“There have been no changes to shipments or customer supply of the company’s flagship high-nickel product,” L&F said, adding that shipments to major Korean cell manufacturers are proceeding smoothly.
Shares of L&F, which also supplies battery makers including LG Energy Solution Ltd., dropped 11% in Seoul on Tuesday. The stock has risen around 16% this year, trailing the 76% surge in the benchmark Kospi Index.
Shin writes for Bloomberg.
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