Electric vehicle manufacturing tycoon Tesla’s shares (NASDAQ: TSLA) are trading lower today, and reportedly fell 2.6% in today’s afternoon session. Tesla’s stock decline has been attributed to reports of a 7.7% drop in 2025 deliveries and the collapse of a major battery supply deal with South Korea’s LG Energy. Tesla’s stock movement has been dropping recently; the latest reports confirm that it has fallen roughly 5.6% over the last week, amid its long-term positive performance.
Tesla’s stock went down primarily due to broader market weakness. High-beta stocks like Tesla fall more sharply when investors reduce risk and the overall market slides. The U.S. stock benchmarks, including the S&P 500 and Nasdaq, retreated from recent highs, putting enormous pressure on big names like Tesla. Tesla’s stock had rallied substantially earlier in this year, lifting the company’s valuations and expectations. After strong gains, traders are now locking in profits, especially around the end of 2025; the latest market data indicates that profit-taking following the recent rally is a key driver of short-term pullbacks.
Along with the broader market weakness and profit taking, the scaling back of a battery deal with South Korea’s LG Energy played a pivotal role. LG Energy, Tesla’s battery material provider, has reduced the deal from its earlier estimated size, creating a negative impact on Tesla’s supply chain outlook. Reuters reported that South Korean battery materials manufacturer L&F said on Monday that the value of its 2023 supply deal with Tesla had been reduced to $7,386, down sharply from an earlier projection of $2.9 billion. L&F did not clarify the reasons for the cut, but rumours say that potential vulnerabilities in the tech company’s ambitious 4680 battery program are the primary reason for the slashing of the deal.
Ark Invest, an American asset management firm founded by Cathie Wood, has shifted its focus and made strategic shifts away from EV giant Tesla. The investment firm has reduced its position in Tesla (TSLA) and increased its stake in the gene-editing and autonomous mobility sectors. Ark Invest reportedly reduced its position in Tesla by 60,715 shares, valued at approximately $30 million. It shows that large investors are now relocating capital from tech giants like Tesla. When influential figures like Ark Invest make choices like this, other traders follow it, causing amplified downward moves.
L&F Co. and Tesla Battery Deal Worth $2.9 Billion Explained
L&F Co., a leading South Korean battery materials supplier, signed a $2.9 billion deal with Tesla, the tech giant and largest electric vehicle manufacturer, in 2023, to provide high-nickel cathode materials directly to them. The supply agreement was to provide the electric vehicle (EV) battery cathode materials, not entire battery packs, from January 2024 through December 2025. Recent news confirms that the South Korean battery manufacturers have executed a 99% write-down and reduced the deal to a mere $7,386.
In the deal, L&F Co. planned to supply the key materials for Tesla’s in-house batteries, originally known as 4680 cells. The 4680 cells are a less expensive battery, which would allow the EV manufacturing firm to make a fully autonomous $25,000 electric car within a three-year period of time. Tesla CEO Elon Musk introduced this plan back in 2020, and the drop in EV demand backfired on the initiative; Tesla struggled with the production and development of the 4680 cells. Weak demand left Tesla in a dilemma, as the company required fewer battery materials from the South Korean supplier than originally planned. Currently, Tesla uses the 4680 batteries in its slow-selling Cybertruck EVs.
Production challenges with Tesla’s 4680 batteries, combined with weak EV demand, have impacted L&F Co.’s supply and led to reduced orders. According to the latest reports, the cancellations and slowed-down collaboration have seriously affected L&F Co. Cho Hyun-ryul, a senior analyst at Samsung Securities, has commented on the issue, stating that “There is anxiety about the battery sector overall.”
Tesla shareholder TeslaZoa posted on X that L&F explained the change as a result of adjustments in supply volumes and scheduling, citing shifts in the global EV market and battery supply environment.
The company emphasised that shipments of its core NCMA95 high-nickel products remain unaffected, and supply to major Korean battery cell makers continues stably. Overall, the sharp reduction in L&F’s Tesla contract is presented as a symbolic case reflecting weakening demand across the EV and battery supply chain.
