Tesla’s 4680 Battery Program Faces Major Setback as Supply Deal Collapses

A critical link in Tesla’s 4680 battery supply chain has effectively collapsed. South Korean battery materials supplier L&F Co. announced that its $2.9 billion supply deal with Tesla has been slashed by over 99%, reducing its value to just $7,386.

This drastic cut signals a severe drop in demand for Tesla’s in-house battery cells, raising serious questions about the future of the 4680 program and its flagship product, the Cybertruck.

In early 2023, L&F secured the $2.9 billion contract to supply high-nickel cathode materials for Tesla’s 4680 cells, which were supposed to drastically reduce EV battery costs. However, the deal’s near-total cancellation suggests Tesla is scaling back or abandoning its 4680 production plans.

Currently, the Cybertruck is the only vehicle using these cells, and its disappointing sales have likely forced Tesla to halt expansion.

The Cybertruck, despite a 250,000-unit annual production capacity, is selling at a mere 20,000-25,000 units per year. Tesla has already discontinued its cheapest variant due to weak demand, and aggressive 0% financing offers have failed to boost sales.

With no other vehicles using 4680 cells, Tesla has no need for large-scale battery production, leaving suppliers like L&F with no buyers.

At Battery Day 2020, Elon Musk promised that 4680 cells would halve battery costs, enable a $25,000 Tesla, and deliver 500+ miles of range. Over five years later, none of these goals have been met. The dry electrode manufacturing process remains difficult to scale, and the Cybertruck’s range falls short of expectations.

Competitors like BMW and Rivian are already using 46XX-format cells from Samsung, LG, and CATL with structural battery packs, while Tesla’s 4680 program remains limited to a struggling truck. 

Then, the Cybercab robotaxi, also expected to use 4680 cells, faces uncertainty due to Tesla’s unproven autonomous driving tech.

With China dominating battery materials and Tesla’s Cybertruck failing commercially, the company’s battery strategy is in crisis. Unless Tesla finds new applications for 4680 cells, the program could be abandoned in the future.

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