Tesla's $2.67 billion Cybertruck battery agreement is now valued at only $6,776 | Carscoops

      A $2.67 billion battery contract has been drastically reduced to less than $7,000 due to a decline in EV demand, resulting in both suppliers and buyers needing to react quickly.

      Tesla entered into a $2.67 billion battery agreement for the Cybertruck in 2023, but this deal has been cut down to only $6,776 following disappointing sales figures. The Cybertruck, which was projected to sell 250,000 units annually, has instead fallen short with sales of under 20,000.

      A few years ago, Elon Musk confidently stated that Tesla would reach sales of 250,000 Cybertrucks each year. The electric truck was marketed as a game changer for the industry; however, it has not come close to those projections. This year, sales are expected to be below 20,000 units, representing less than 10 percent of the overly optimistic target.

      Although Musk would likely label the Cybertruck a success, the disappointing sales are adversely affecting suppliers. One notable example is L&F Co., a South Korean supplier of battery materials, which recently revealed that its contract with Tesla had been reduced by 99 percent, partly due to the lack of demand for the truck.

      The Contract Severely Reduced

      In February 2023, L&F had secured a significant agreement worth 3.83 trillion won (around $2.67 billion) to furnish Tesla with high-nickel cathode material for the Cybertruck’s batteries. However, this contract has now been reduced to just 9.73 million won, approximately $6,776 based on current exchange rates.

      The original deal was associated with Tesla’s 4680 battery cells, which were introduced in 2020 as a key advancement crucial to the company's plans for increasing production rapidly and eventually launching an affordable $25,000 EV. That model has yet to be released, and currently, the 4680 cells are mainly utilized in the Cybertruck.

      An unnamed source familiar with the supply agreement indicated that L&F only needed to provide minimal amounts of material as the development of the Cybertruck faced several delays. Bloomberg also reports that policy and economic factors impacted the contract, including the removal of subsidies under the Inflation Reduction Act.

      Could SpaceX Come to the Aid?

      As Tesla grapples with low Cybertruck sales, SpaceX has emerged as a potential customer. Recent reports indicate that SpaceX has already acquired over 1,000 Cybertrucks from Tesla, with the possibility that this number may rise to 2,000.

      While SpaceX has not disclosed the reason for such a large purchase of Cybertrucks, it likely relates more to excess inventory than actual need. Regardless, this development highlights the interconnected nature of Musk’s companies and suggests that Tesla may be finding ways to offload its inventory discreetly.