We’ve been tracking Tesla’s 4680 battery saga since Elon Musk unveiled it at Battery Day in 2020, promising it would enable a $25,000 EV within three years. Five years later, we have the clearest evidence yet that those promises have collapsed: a $2.9 billion supply deal reduced to $7,386. That’s not a typo. That’s a 99.9997% implosion.

South Korean battery material maker L&F disclosed in a regulatory filing Monday that its 2023 contract with Tesla for high-nickel cathode materials has been written down to essentially nothing. The materials were destined for Tesla’s in-house 4680 cells, the technology Musk once called the key to halving battery costs and democratizing EV ownership.

Original deal value: $2.9 billion (3.83 trillion won)
Current deal value: $7,386 (9.73 million won)
Contract period: January 2024 through December 2025
Reason given: “Change in supply quantity”

Neither Tesla nor L&F responded to Reuters’ requests for comment. They don’t need to. The numbers tell the story.

Reuters first reported the deal collapse on December 29, 2025.

The 4680 Dream vs. The Cybertruck Reality

Tesla currently uses its 4680 batteries in exactly one product: the Cybertruck. And that vehicle has been, in Reuters’ words, “slow-selling.”

That’s putting it mildly. We’ve been documenting the Cybertruck’s struggles throughout 2025, from 10,000 unsold units sitting in inventory representing $800 million in dead stock, to production throttling as demand failed to meet Tesla’s ambitious 250,000 annual capacity target.

The math is brutal. When Musk unveiled the 4680 at Battery Day 2020, he promised it would deliver:

Five times more energy capacity
Six times more power output
16% more range
A path to a $25,000 EV “within about three years”

Instead, five years later, the only vehicle using these cells starts at $77,990 and can’t find enough buyers. The $25,000 EV was officially canceled, with Tesla pivoting to stripped-down versions of existing models instead.

CATL’s Chairman Called It

This collapse validates what CATL founder Robin Zeng told Musk directly during their April meeting in China. As we reported in November 2024, Zeng publicly predicted the 4680 program would fail, telling Reuters that after debating battery technology with Musk: “He was silent. He doesn’t know how to make a battery.”

At the time, Tesla had just celebrated producing 100 million 4680 cells. The L&F deal collapse suggests those production milestones didn’t translate into the scale economics Tesla needed to justify massive cathode material contracts.

Musk himself admitted the challenges, acknowledging difficulties scaling up the dry electrode manufacturing process that was supposed to revolutionize battery production costs.

Part of a Broader Korean Battery Exodus

The L&F collapse isn’t happening in isolation. It’s part of a systematic retreat by Korean battery suppliers from the American EV market, triggered by the September 2025 federal tax credit expiration.

Samsung Securities analyst Cho Hyun-ryul told Reuters: “There (is) anxiety about the battery sector overall.”

The damage is staggering:

LG Energy Solution: Set to lose approximately $9.41 billion (13.5 trillion won) in expected revenue after Ford and Freudenberg Battery Power Systems terminated supply deals
SK On: Ended its joint venture with Ford this month
Ford: Taking a $19.5 billion writedown and scrapping multiple EV models

Como we reported last week, Honda is buying out LG Energy Solution’s stake in their Ohio battery plant for $2.9 billion. Korean battery makers are either retreating from America or being bought out by their automaker partners.

This pattern emerged directly from the post-subsidy collapse we’ve been documenting. America’s $28 billion Battery Belt is now littered with paused projects, empty factories, and broken contracts.

What This Means for Tesla Buyers

For current Cybertruck owners: Your vehicle’s 4680 battery supply appears secure for now. Tesla continues producing cells at Giga Texas, and this contract was for raw materials rather than finished cells. However, the collapse suggests Tesla won’t be achieving the cost reductions that would have justified significant price cuts or performance improvements.

For prospective buyers waiting for a cheaper Tesla: Stop waiting for a $25,000 model enabled by 4680 cost breakthroughs. That path is effectively dead. Tesla’s affordable vehicle strategy now relies on stripped-down versions of existing platforms, not revolutionary battery economics.

Tesla has shifted its 4680 supply strategy toward LG Energy Solution, which began ramping 4680 production in mid-2025. But that diversification doesn’t change the fundamental reality: five years after Battery Day, the technology hasn’t delivered on its promises.

EVXL’s Take

Here’s what I expect: Tesla will quietly pivot away from 4680 as the cornerstone of its cost reduction strategy. The company will continue using the cells in Cybertruck and potentially other vehicles, but the revolutionary battery economics Musk promised in 2020 will never materialize.

We’ve seen this pattern before. Tesla’s European battery promises have been delayed annually since 2020, with the company itself admitting “it is currently hardly possible to produce cells economically in Europe.”

The L&F deal collapse is the most dramatic evidence yet that Tesla’s vertically integrated battery ambitions have hit a wall. A $2.9 billion contract reduced to $7,386 isn’t a “change in supply quantity.” It’s an admission of failure.

For the broader EV market, this raises uncomfortable questions. If Tesla, with its manufacturing expertise and scale, can’t make proprietary large-format cells economically viable, what does that mean for every other automaker chasing the same dream?

The answer might be what CATL’s Zeng has been saying all along: the future of EV batteries belongs to dedicated battery manufacturers, not automakers trying to do everything in-house.

Were you waiting for 4680 technology to deliver cheaper Teslas? Let us know in the comments whether this changes your buying timeline.