Tesla Slashes LG Battery Contract By 99 Percent Amid Cybertruck Struggles
Tesla has initiated a drastic reduction in a key supply chain agreement that raises serious questions about its future production targets. LG Energy Solution recently disclosed a massive modification to their existing contract with the electric vehicle manufacturer. This specific deal involved the supply of cathode materials essential for battery production. The financial terms of the agreement have been slashed by nearly the entire original value.
Regulatory filings submitted in South Korea highlight the severity of this sudden adjustment. The original contract value was estimated at roughly 785 million dollars when it was signed earlier this year. That figure has surprisingly dropped to just about 11 million dollars in the updated filing. This change represents a staggering 99 percent decrease in the projected purchase amount.
The cathode materials in question were specifically intended for the new 4680 battery cells. These advanced cells serve as the primary power source for the controversial Cybertruck. LG Energy Solution has also announced a significant delay in their manufacturing timeline. Mass production of these specific materials will not occur until 2026 instead of late this year.
This supply chain contraction strongly suggests that demand for the angular pickup is much softer than anticipated. Industry observers have pointed to growing stockpiles of unsold vehicles as clear evidence of this trend. Recent drone footage over the Texas factory revealed large parking lots filled with idle trucks. The company appears to be producing vehicles faster than customers are taking delivery of them.
Pricing strategies have also shifted in ways that might severely limit sales volume. Tesla recently ceased taking orders for the cheaper rear-wheel-drive model that was supposed to cost around 61,000 dollars. Buyers are effectively forced to choose the ‘Foundation Series’ which commands a price tag over 100,000 dollars. This high cost of entry significantly reduces the total addressable market for the vehicle.
Market analysts have been skeptical about the truck since its chaotic release. Investment research firm Bernstein previously forecasted that the company would halt production before building 50,000 units. They argued that the vehicle solves no practical problems for traditional truck owners. The reduction in battery orders aligns perfectly with those negative predictions regarding total sales volume.
Quality control issues continue to plague the few units that have actually reached customers. The vehicle has been subject to multiple recalls regarding safety components like the accelerator pedal and windshield wipers. Social media is full of reports regarding stainless steel panels that are difficult to keep clean. These practical headaches make the six-figure price tag even harder for consumers to justify.
The reduction of the LG contract serves as a major warning sign for the electric truck sector. It indicates that early adopter enthusiasm may have completely evaporated. Tesla must now decide how to proceed with a product that is expensive to build and increasingly hard to sell. The coming months will reveal if this is a temporary stumble or a permanent failure.
Please discuss whether you believe the Cybertruck project is failing or just facing standard manufacturing delays in the comments.
