Tesla supplier L&F wins $6.8 bn cell materials deal in Europe

L&F Co., a South Korean electric vehicle battery materials supplier to Tesla Inc., has won a $6.8 billion contract to sell cathodes to a major cell producer in Europe, the world’s third-largest EV market, as the Asian manufacturer works to expand its customer base amid an industry-wide EV slowdown.

L&F said on Thursday it signed a deal to supply 176,000 tons of cathodes from January 2025 to December 2030 to a European client without identifying its name in a regulatory filing. The South Korean company is believed to have inked the contract with Northvolt AB, Europe’s largest EV battery maker, as such a volume is enough for 1.76 million EVs, industry sources in Seoul said.

“Northvolt is the only company in Europe that can produce that amount of battery cells,” said one of the sources.

The Swedish manufacturer, which supplies batteries to European automakers such as Volkswagen AG, last year agreed to buy copper foil in a 1.4 trillion won ($1 billion) deal from South Korea’s SK Nexilis Co.

L&F and Northvolt were scheduled to ink a 9 trillion won supply contract late last year but the deal was postponed due to the sustained weakness in the global EV market, industry sources in Seoul said.

ADDITIONAL DEAL

L&F plans to sign an additional deal with Northvolt, ramping up the value of its cathode supply to the European battery maker to 20 trillion won.

Last October, the South Korean company said it is set to sell cathodes – not only main products but also next-generation items – in Europe through an estimated $15 billion long-term business deal as it secured quality certification for a supply deal with Northvolt.

L&F is scheduled to initially supply its flagship high-nickel nickel, cobalt, manganese and aluminum (NCMA) cathodes, which contain about 90% nickel, and provide mid-nickel and manganese-rich cathodes in stages.

The company uses recycled materials from its waste battery subsidiary JH Chemical Industry Co. to conform to environmental regulations in Europe.

“Europe requires manufacturers to reduce carbon emissions and use recycled materials in battery materials production at certain degrees,” said an L&F official in Seoul. “We aim to increase our market share by complying with European ESG regulations,” said the official, referring to environmental, social, and governance rules.

L&F aims to cut its reliance on LG Energy Solution Ltd., the world’s third-largest EV battery maker, and Tesla, the world’s No. 2 EV manufacturer. The two companies made up 77% of the battery materials producer's supplies last year.

L&F aims to generate 50% of its total sales from supplies to LG Energy, 30% from global EV industries and 20% from SK On Co., the world’s No. 5 battery maker, in 2025.

Write to Hyung-Kyu Kim at khk@hankyung.com
 

Jongwoo Cheon edited this article.