[Market Focus] L&F Plunges Over 11% as 3.8 Trillion Won Tesla Contract Effectively Terminated

The stock price of L&F, a company specializing in cathode materials for secondary batteries, plunged on December 30. This was due to the announcement made the previous day that the supply contract worth approximately 3.8 trillion won with U.S. electric vehicle company Tesla had been revised to a value of about 9 million won.

As of 9:07 a.m. on this day, L&F was trading at 93,200 won, down 12,400 won (-11.74%) from the previous trading day.

The previous day, L&F announced that the contract amount for the high-nickel cathode material supply agreement signed with Tesla in 2023, originally valued at 3.8347 trillion won, had been changed to 9,730,316 won due to changes in supply volume.

This reduction in contract value appears to be the result of changes in Tesla's supply chain and production strategy. As demand for electric vehicles (EVs) in North America declined more sharply than expected, Tesla decided to completely reassess the pace and scale of mass production for its 4680 batteries.

Anna Lee, a researcher at Yuanta Securities, stated, "Rather than maintaining the existing contract, Tesla is moving to 'terminate' it during the process of adjusting the structure or schedule of the originally planned 4680 battery project, and shift discussions to new project units that fit the changed environment. Since there has been little revenue generated from this contract recently, the impact on earnings will be limited."

She added, "Tesla has not fundamentally changed its strategy to adopt the 4680 form factor and high-nickel, single-crystal cathode materials. Rather, the delay in Tesla's long-term roadmap should be seen as stemming from technical challenges and demand issues."