Quick Takeaways
- Tesla’s in-house 4680 battery roadmap is facing a material demand reset driven by weaker-than-expected vehicle volumes.
- A sharp downward revision of a key cathode supply contract highlights execution and scaling challenges in Tesla’s battery strategy.
On December 29, South Korean battery materials manufacturer L&F disclosed in a regulatory filing that the value of its 2023 supply agreement linked to Tesla 4680 battery cells demand has been sharply revised downward. The contract value has fallen to USD 7,386 from an earlier estimate of USD 2.9 billion, pointing to a significant slowdown in demand for Tesla’s in-house 4680 battery cells.
Tesla 4680 Battery Cells Demand Signals Weaker Production Outlook
The agreement, signed in early 2023, covered the supply of high-nickel cathode materials to Tesla and its affiliates from January 2024 through December 2025. These materials were intended for the 4680 battery cells, which Tesla positioned as a lower-cost solution to support affordable and high-volume electric vehicle production.
Original 4680 Cell Strategy and Market Expectations
Tesla first introduced the 4680 battery cell concept in 2020, highlighting it as a breakthrough designed to reduce costs and enable a compact electric vehicle priced around USD 25,000. The cells were also expected to support advanced autonomous capabilities within a few years, forming a core part of Tesla’s long-term product roadmap.
Cybertruck Performance Weighs on Tesla 4680 Battery Cells Demand
At present, Tesla deploys the 4680 batteries primarily in the Cybertruck. However, sales performance has fallen well below initial expectations.
Uncertainty Around Future Vehicle Programs
The upcoming Cybercab, scheduled for production at Gigafactory Texas in the first half of 2026, was also expected to rely on the 4680 cells. Recent developments suggest this plan may be under review. Tesla has previously acknowledged challenges in scaling its dry electrode manufacturing process, a critical step in producing the 4680 cells efficiently and at volume.
Tesla 4680 Battery Cells Demand Signals Weaker Production Outlook
The agreement, signed in early 2023, covered the supply of high-nickel cathode materials to Tesla and its affiliates from January 2024 through December 2025. These materials were intended for the 4680 battery cells, which Tesla positioned as a lower-cost solution to support affordable and high-volume electric vehicle production.
Original 4680 Cell Strategy and Market Expectations
Tesla first introduced the 4680 battery cell concept in 2020, highlighting it as a breakthrough designed to reduce costs and enable a compact electric vehicle priced around USD 25,000. The cells were also expected to support advanced autonomous capabilities within a few years, forming a core part of Tesla’s long-term product roadmap.
Cybertruck Performance Weighs on Tesla 4680 Battery Cells Demand
At present, Tesla deploys the 4680 batteries primarily in the Cybertruck. However, sales performance has fallen well below initial expectations.
- Despite an installed production capacity of approximately 250,000 units per year at Gigafactory Texas, actual sales are estimated at an annualized rate of just 20,000 to 25,000 units, limiting near-term battery cell requirements.
Uncertainty Around Future Vehicle Programs
The upcoming Cybercab, scheduled for production at Gigafactory Texas in the first half of 2026, was also expected to rely on the 4680 cells. Recent developments suggest this plan may be under review. Tesla has previously acknowledged challenges in scaling its dry electrode manufacturing process, a critical step in producing the 4680 cells efficiently and at volume.
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