🧠 Food for thought

Implications, context, and why it matters.

Contract reduction coincides with Tesla’s battery strategy shift; no cause disclosed

• L&F disclosed a reduction from $2.9 billion to $7,400 without explanation. An analyst estimated the original contract at about 70,000 tons of high‑nickel cathode, enough for 44–47 GWh or up to 550,000 Model Y units 1.
• A prior L&F filing set supply from Jan. 1, 2024 to Dec. 31, 2025, with contract value tied to exchange rates or raw‑material prices 2. L&F has not given a reason for the cut.
• Tesla has raised use of lithium iron phosphate (LFP) cells 34. In 2025 it signed a $4.3 billion agreement with LG Energy Solution (a South Korean battery maker) for Megapack, Tesla’s utility‑scale energy storage system, through 2030 34. It also plans to build a US battery supply chain with more steps in‑house 34.
• These shifts give context, but linking them to L&F’s cut would be guesswork, since neither company has given a cause.

Potential implications for North American cathode suppliers

• If Tesla keeps high‑nickel chemistries for longer‑range models, Inflation Reduction Act (IRA)‑compliant North American cathode and precursor producers could win supply.
• Ascend Elements (a US‑based battery‑materials recycler) says its recycled precursor cathode active material (pCAM) and cathode active material (CAM) can match virgin performance while cutting mining‑related emissions 5.
• Closed‑loop supply chains are an industry focus, with peer‑reviewed studies cited by Ascend Elements finding recycled materials can perform on par with virgin sources 5.
• Analysts see Tesla’s Texas battery output reaching 100 GWh, with about 30% of vehicles there using Tesla’s own cells, context for where supplier bids could cluster 1.