Bloomberg reported on Monday, citing a filing, that the supplier slashed the contract first announced in February 2023, citing a change in supply quantity.
- L&F Co. was contracted to supply Tesla with high-nickel cathode material which was to be used in Cybertruck batteries.
- However, only small amounts were provided due to delays in the vehicle’s development and low consumer demand, a person familiar with the matter told Bloomberg.
- L&F said in a statement to Bloomberg that the revision was inevitable in light of changes in the global electric vehicle market and battery supply conditions.
Tesla Inc’s (TSLA) South Korean supplier L&F Co. has reportedly slashed its supply contract with the EV maker down to 9.73 million won from 3.83 trillion won.
Bloomberg reported on Monday, citing a filing, that the company slashed the contract first announced in February 2023, citing a change in supply quantity. The report also noted a person familiar with the matter attributing the slash in part to issues with the Cybertruck. The supplier only ended up providing a tiny fraction of battery material that the carmaker had ordered nearly three years ago, they added.
The Tesla Cybertruck is among the company’s pricier offerings with a starting price of $79,990. Its more premium Cyberbeast model has a starting price of $114,990.
The Slashed Contract
L&F was contracted to supply Tesla with high-nickel cathode material which was to be used in Cybertruck batteries but only small amounts were provided due to delays in the vehicle’s development and low consumer demand, a person familiar with the matter told Bloomberg.
The supply contract was also affected by broader policy and economic issues, including the elimination of Inflation Reduction Act subsidies which included a $7500 federal tax credit on the purchase of select EVs, the person added.
L&F said in a statement to Bloomberg that the revision was inevitable in light of changes in the global electric vehicle market and battery supply conditions.
Weak Demand Haunts The Stainless Steel Juggernaut
Tesla started delivering the Cybertruck in November 2023 after a long wait. However, the truck was pricier than proposed during unveiling in 2019, dragging down demand and preventing reservation holders from actually placing the order. Musk had said in 2019 that the entry level variant of the truck would start at just about $40,000, while the most premium version would start at around $70,000.
The Cybertruck’s stainless steel exterior and angular design also pulled split opinions, with some deeming it ugly while others appreciated the change.
Musk has previously predicted that Tesla could sell up 500,000 Cybertrucks annually. However, in 2024, the company sold only 85,133 units of all its premium models combined, which includes the Model S, X and the Cybertruck, putting Cybertruck annual sales alone at below 30,000 units on an estimate.
How Did Stocktwits Users React?
On Stocktwits, retail sentiment around TSLA stayed within the ‘bearish’ territory while message volume fell from ‘high’ to ‘normal’ levels.
A Stocktwits user, however, reiterated their long term bullish stance on Tesla, highlighting possible upsides from the company’s autonomous driving efforts and dedicated robotaxi offering called the Cybercab.
TSLA stock has gained 15% this year and by about 11% over the past 12 months.
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