Tesla’s vanishing order hastens fall of an US$800 million fortune
Analysts say L&F’s core business remains intact
TESLA once propelled a little-known South Korean family into the ranks of the ultra-rich on a landmark supply deal. But as the contract fell short of expectations, it became a drag on a fortune that was already under pressure, with the full extent only now becoming clear.
Shares in L&F, a producer of high-nickel cathodes used in electric-vehicle batteries, have fallen more than 70 per cent from their 2023 peak, which was fuelled by a massive Tesla order then valued at US$2.9 billion. On Monday (Dec 29), the company disclosed that the contract value had been restated to just US$7,386 – a 99 per cent reduction.
For chairman and chief executive officer Hur Jae Hong and his family, the revision caps a long downward track in their personal wealth linked to slowing EV demand globally. Their listed holdings, which surged to more than US$800 million when the deal was first announced, are now worth roughly US$134 million, according to the Bloomberg Billionaires Index.
While the Tesla deal was hailed as a transformational moment, establishing L&F as a direct supplier to the EV giant, the order volume evaporated as the model they were destined for, the angular Cybertruck, faced repeated delays and consumers gravitated toward other options.
The stock had already been retreating from its peak as global EV demand cooled and investors grew wary of L&F’s heavy reliance on its main client, LG Energy Solution.
The reduced scale of the Tesla deal highlights the uncertainties tied to newer vehicle models, though some analysts caution against viewing the filing as a total severance of ties with Elon Musk’s company.
L&F had likely not been supplying Tesla with any cathodes since last year as the order was destined for some Cybertruck models, which were hit by sluggish demand, KB Securities analysts including Changmin Lee wrote in a note.
Because the market had already excluded it from earnings forecasts, the disclosure’s impact on future performance “will likely be extremely limited,” Lee wrote.
The analysts said L&F’s core business remains intact. The company’s primary revenue source is high-nickel cathodes supplied to Tesla via LG Energy Solution, which accounts for about 80 per cent of total sales. This indirect supply chain, which fuels high-volume models like the Model Y, “appears to be progressing smoothly, regardless of yesterday’s disclosure,” Lee added.
L&F declined a Bloomberg News request for comment.
For L&F, the failure to monetise the 2023 Tesla contract is nonetheless a setback to its diversification strategy.
In 2021, L&F signed a deal with US battery recycling company Redwood Materials, headed by Tesla’s former chief technology officer, JB Straubel.
That partnership, and the subsequent Tesla order, was once seen as a path to reduce reliance on LG Energy Solution to 50 per cent by 2025. Now, that target faces renewed scrutiny.
Despite the setback, things could pick up for L&F – and the sector as a whole – next year, said Anna Lee, an analyst at Yuanta Securities Korea in Seoul.
The company is scheduled to start full-scale production for automaker Rivian Automotive in 2026 after securing the contract in March, she said. The South Korean company also supplies mid-nickel cathodes to SK On used in Hyundai Motor EV batteries.
“A short-term damper in investor sentiment is inevitable, but there is an increasing possibility that the sector will regain attention in 2026, specifically centring on energy storage systems for AI data centres,” said Lee. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
