South Korean battery material supplier L&F Co. disclosed in a late December regulatory filing that its Tesla supply contract had been written down by over 99%. The deal, originally valued at $2.9 billion when announced in early 2023, is now worth approximately $7,386. The collapse raises serious questions about the future of Tesla's 4680 battery cell programme.

What Happened

L&F was contracted to supply high-nickel cathode materials for Tesla's proprietary 4680 battery cells. These cells, first announced at Tesla's Battery Day in September 2020, were supposed to deliver a step change in energy density, cost, and manufacturing scalability.

The near-total write-down indicates that Tesla has either cancelled or drastically reduced its cathode material orders. L&F's filing did not specify the reason, but the implication is clear: demand for 4680 cells has collapsed.

Why It Matters

The 4680 cell programme was central to several of Tesla's most ambitious promises:

  • A $25,000 electric car that would make EVs affordable for the mass market
  • Significantly lower battery costs through the dry electrode manufacturing process
  • Higher energy density enabling longer range without increasing pack size

Five years after Battery Day, none of these goals have been fully realised. The 4680 cells are currently used only in the Cybertruck, which sells approximately 20,000 to 25,000 units annually — far below the factory's 250,000-unit capacity.

European Implications

For European Tesla owners, the 4680 setback has no immediate impact. Model 3 and Model Y vehicles sold in Europe use conventional 2170 cells from suppliers including CATL and LG Energy Solution. Giga Berlin does not produce 4680 cells.

However, the broader strategic implications matter. If Tesla's in-house battery technology remains commercially unviable, the promised low-cost EV for European markets becomes harder to deliver. The Model 3 Standard at €36,990 — launched the same month — relies on conventional cells, not 4680s.

What Comes Next

Tesla has not publicly commented on the L&F write-down. The company's Q4 2025 earnings call, expected in January 2026, may provide more clarity on the 4680 programme's direction. For now, the write-down serves as a stark reminder that Tesla's battery ambitions remain significantly ahead of its execution.