3.8 Trillion Won Contract Slashed to 97 Million Won... L&F Significantly Reduces Tesla Deal

"Changes in the Global Market Environment"
"Little Impact on Performance"

The 3.8 trillion won supply contract between L&F, a company specializing in secondary battery cathode materials, and Tesla has been effectively terminated.

L&F Daegu Guji 3 Factory located in Daegu. L&F

On December 29, L&F announced that the 3.8347 trillion won supply contract had been reduced to 9,730,316,000 won. L&F explained, "This was an unavoidable outcome that occurred as schedules were adjusted amid changes in the global electric vehicle market and battery supply environment." The company added, "There are no changes to the shipment or customer supply of our main product, the NCMA95 high-nickel product," and emphasized, "Shipments to major Korean cell manufacturers are also proceeding stably."

L&F had previously announced in February 2023 that it had signed a 3.8347 trillion won high-nickel cathode material supply contract with Tesla, an American electric vehicle manufacturer. The product supply period was set for two years, from early 2024 to the end of 2025.

Within the industry, this reduction in the contract amount is being interpreted as an effective contract termination. However, an L&F representative stated, "We are engaged in various discussions with the client, so this is not a contract termination," and added, "Since the sales proportion up to now has been minimal, there will be little impact on our performance."

Over the past two years, L&F has experienced an adjustment phase across the secondary battery industry due to drastic fluctuations in raw material prices. Nevertheless, in the third quarter of this year, the company achieved a record-high shipment volume of high-nickel cathode materials and succeeded in turning its performance around. Currently, L&F is expanding its product portfolio to target various markets, focusing on high-nickel products with nickel content increased to 95%, single-crystal high-nickel materials for cylindrical batteries, and lithium iron phosphate (LFP) cathode materials for mid- to low-priced electric vehicles and the energy storage system (ESS) market.

Industry concerns are mounting that the battery sector will face increasing difficulties in securing orders due to the cancellation of subsidies in the United States and changes in European electric vehicle policies. Previously, LG Energy Solution terminated a 9.6 trillion won contract with Ford on December 17, and on December 26, also canceled a 3.9 trillion won contract with FBPS in the United States.