As 2025 comes to a close, automakers are preparing to release their fourth-quarter and full-year sales figures. In an unusual move, Tesla shared Wall Street’s fourth-quarter delivery estimates and projections for the next few years before officially publishing its own numbers.
Tesla provided the “company-compiled delivery consensus of sell-side analysts,” which included estimates from 20 financial firms like Wedbush Securities, Morgan Stanley, Barclays, Wells Fargo, and HSBC. These projections show a tough year for Tesla, the leader in the EV market.
L&F Co. Takes a Hit
One supplier feeling the impact of the Cybertruck’s struggles is L&F Co., a South Korean battery materials supplier. According to Bloomberg, L&F revealed that a major supply contract with Tesla, initially worth $2.9 billion, has been slashed by nearly 99%. What was supposed to be a significant deal for L&F now ends with only $6,800 in revenue.
L&F supplied a high-nickel cathode for the 4680 battery, meant for next-generation products like the Cybertruck. However, the 4680 program has faced many challenges, leaving L&F in a tough position.
Struggles with the 4680 Program
Tesla’s 4680 battery was designed to offer higher energy density and reduce costs. Unfortunately, the program has experienced delays and setbacks, impacting production and expectations. Tesla’s internal battery program has faced difficulties, and geopolitical issues have complicated the global supply chain. These problems, combined with underwhelming Cybertruck sales, have put L&F at risk.
While Cybertruck demand played a role in the contract reduction, L&F also faced broader challenges. L&F acknowledged that global changes in the EV supply chain and the end of certain subsidies under the Inflation Reduction Act affected the deal. Additionally, L&F noted that Tesla’s shifting schedules were a factor in the revision of the contract.
L&F’s Financial Fallout
The loss of the Tesla contract has been a major blow to L&F’s finances. The company was counting on the Tesla deal to boost its revenues, but its stock has dropped more than 11% this week and 64% since the contract was first announced in early 2023. What seemed like a major win for L&F has turned into a financial setback.
Tesla’s Perspective
For Tesla, this situation with L&F is not a significant issue. The Cybertruck remains in production, and Tesla continues to focus on future developments. However, this incident serves as a reminder to suppliers of the risks involved in working with Tesla. Despite its success in the EV market, Tesla’s plans can change quickly due to production delays, market shifts, or unforeseen factors.
Tesla’s business model relies on constant innovation and flexibility. Suppliers like L&F may see their fortunes rise and fall based on Tesla’s changing needs. Working with Tesla offers great opportunity, but it comes with uncertainty.
The Road Ahead for Tesla and Suppliers
Tesla’s path forward will depend on overcoming challenges in autonomous vehicles and introducing new models that attract buyers. The company’s success will hinge on these breakthroughs. But for suppliers like L&F, the unpredictability of Tesla’s needs presents a constant risk. Suppliers must be prepared for changes that can impact contracts and their future business.
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While Tesla pushes forward with its plans for the Cybertruck and other future projects, the experience of L&F shows how quickly things can change for suppliers. Building a business around Tesla’s vision can be bold and rewarding, but it also comes with inherent uncertainty.
