South Korea's L&F sees Tesla contract value slashed to almost zero

Seoul [South Korea], December 30 : South Korean battery materials manufacturer L&F Co. announced on Monday that its major contract to supply cathode materials to Tesla has been reduced to nearly zero. The total value of the deal dropped from 3.83 trillion won (USD 2.68 billion) to just 9.73 million won (USD 6,808), effectively ending the agreement between the two companies.

As per a report by Pulse, the English service of Maeil Business News Korea, the original contract was signed in February 2023. At that time, L&F agreed to provide high-nickel cathode materials to the American electric vehicle maker for two years. This deal was expected to run from January 2024 until the end of December 2025. The initial value of the contract was very high, representing almost four times the annual revenue L&F earned at that period.

High-nickel cathode materials are important parts used to make batteries for high-performance electric cars. These materials contain more than 90 per cent nickel, which helps batteries store more energy. L&F is known for its advanced technology in this field and already supplies these materials to other large Korean battery makers like LG Energy Solution and SK On.

L&F explained that the massive reduction in the contract was something they could not avoid. The company stated that schedules had to be changed because of shifts in the global electric vehicle market and the battery supply environment. Citing industry sources, the report said the cut happened because Tesla slowed down its plans to make its own batteries in-house. The small amount of money left in the contract covers only the cost of the first sample shipments.

"The shipment and supply of our flagship NCMA95 high-nickel products remain unchanged," the report quoted L&F, adding that it will continue to strengthen technological competitiveness while responding flexibly to changes in customers' business conditions and market demand to ensure stable medium- to long-term supply.

"Following the disclosure, L&F shares plunged 9.1 percent from the previous session to 94,000 won as of 6:50 p.m. in after-hours trading on NEXTRADE." the report said.

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