Tesla's 4680 Battery Dream Crumbles: $2.9B Supply Deal Slashed to $7,400

You know that feeling when a company’s grand vision comes crashing down in a single number? Tesla just experienced that moment, and it’s spectacular in the worst possible way.

South Korean battery supplier L&F announced today that it’s writing down a $2.9 billion supply contract with Tesla by over 99%—leaving the deal worth just $7,386. That’s not a typo. The company is essentially canceling what was once heralded as a cornerstone agreement to fuel Tesla’s battery revolution.

The 4680 Dream Dies on the Spreadsheet

Back in early 2023, this deal seemed like validation of Tesla’s master plan. L&F was going to supply high-nickel cathode materials for the legendary 4680 battery cell—the technology Elon Musk promised would halve battery costs and unlock a $25,000 electric vehicle. The industry watched and nodded. This was how you secure the future.

Today’s writedown tells a very different story.

L&F didn’t explicitly state why demand collapsed, but the math is merciless. The high-nickel cathode was destined for 4680 cells. The only vehicle currently using those cells is the Cybertruck. And the Cybertruck, reports suggest, is drowning.

When the Only Customer Stops Buying

Here’s where the narrative gets grim. Tesla built Giga Texas with a capacity to produce 250,000 Cybertrucks annually. The truck is currently selling at a run rate of roughly 20,000 to 25,000 units per year—a gap so wide it’s hard to call it a miss.

What to watch for:

• Whether Tesla abandons or significantly scales back 4680 production
• The Cybertruck’s quarterly delivery numbers in coming reports
• Plans for the upcoming Cybercab and whether it faces similar demand issues
• Competitor battery programs using 46XX format cells from Samsung and LG

Throughout 2025, the warning signs piled up. In March, Tesla began offering discounted financing just to move inventory. By June, the company was desperate enough to launch 0% APR incentives as Cybertrucks sat in lots across the country. In September, Tesla discontinued the cheapest Cybertruck variant altogether—not because it was selling too well, but because nobody wanted it.

If you’re not building Cybertrucks, you don’t need 4680 cells. If you don’t need the cells, your suppliers have nothing to sell.

From ‘Holy Grail’ to Cautionary Tale

Five years ago, Battery Day was supposed to be the moment everything changed. The 4680 was going to be standardized across the industry. Competitors were supposed to use it. Range was supposed to jump 54%. Battery costs were supposed to drop 56% per kilowatt-hour. Tesla was supposed to build a $25,000 mass-market car.

None of that happened.

Instead, only the Cybertruck uses Tesla’s 4680 cells, and it’s become a commercial failure. The dry electrode manufacturing process that was supposed to revolutionize production remains difficult to scale. Competitors like BMW and Rivian are actually beating Tesla to market with 46XX format cells from Samsung and LG, paired with structural battery pack designs that Tesla promised but hasn’t delivered broadly.

What’s Next?

The only other vehicle on the horizon using 4680 cells is the Cybercab, Musk’s autonomous taxi without a steering wheel. It’s supposed to launch in early 2026, but Tesla hasn’t solved level 4 autonomous driving yet. Even if it launches, a steeringless robotaxi will have even lower production volumes than the Cybertruck—making it an even worse foundation for a major battery supply chain.

This writedown isn’t just bad news for L&F. It’s a public admission that Tesla’s most ambitious battery program has failed to deliver on its promises. A 99% contract reduction essentially means the deal is dead, and with it, the hopes that the 4680 would become the workhorse of Tesla’s future vehicle lineup.

The company bet billions on a technology that would change everything. Five years later, it’s a ghost haunting a struggling pickup truck.