Tesla supplier L&F to ink $15 bn materials deal in Europe
L&F is likely to supply high-nickel NCMA cathodes and next-generation products for five years from 2025
By Oct 23, 2023 (Gmt+09:00)
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L&F Co., a South Korean electric vehicle battery materials supplier to Tesla Inc., is set to sell products in Europe through an estimated $15 billion long-term business deal at a time when the industry is suffering slower growth in the global eco-friendly automobile sector.
“The deal is significant since we will supply not only flagship products but also next-generation items,” said an L&F official.
L&F and the potential customers have almost concluded the terms and conditions for the deal, although the company did not provide details including the names of buyers and values citing a non-disclosure agreement.
The South Korean company is likely to supply cathodes for five years from 2025 in the estimated 20 trillion won ($14.8 billion) deal, industry sources in Seoul said.
LONG-TERM GROWTH
After the announcement, L&F shares ended up 3.1% in the South Korean stock market, far outperforming a 0.7% drop in the junior Kosdaq where the stocks are traded.
L&F is set to secure a stable earnings source for long-term growth through the deal. The battery materials producer has been recently hit by slowing growth in EV sales and falling mineral prices.
The order is also predicted to allow L&F to reduce the risks of volatile earnings through customer diversification. The company made 80% of its revenue from sales to LG Energy Solution Ltd., the world’s second-largest battery maker, and 15% from its smaller rival SK On Co.
L&F aims to cut the reliance on LG Energy to 50% but raise its sales proportion to global automakers to 30%.
Write to Mi-Sun Kang and Hyung-Kyu Kim at misunny@hankyung.com
Jongwoo Cheon edited this article.
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