On the 30th morning, shares of N&F, the bellwether for secondary batteries, are plunging more than 7%. Investor sentiment froze after a filing said the size of the cathode supply contract with U.S. Tesla was slashed from the previous 3.8 trillion won to about 9.7 million won.
As of 9:14 a.m. that day, L&F is trading on the Korea Exchange at 97,600 won, down 8,000 won (7.58%) from the previous session. In the after-market (After-Market, 3:40 p.m.–8 p.m.) the day before, the share price also plunged more than 11%.
In the background is a change in the contract amount L&F disclosed after the market closed the day before. Earlier, in Feb. 2023, L&F announced a correction filing on its high-nickel cathode supply contract signed with Tesla.
With this filing, the cathode supply contract for Tesla's Cybertruck 4680 batteries, which had been worth 3.8347 trillion won, was terminated leaving only about 9.73 million won in revenue from sample volumes generated so far. As assessments came out that this was effectively a contract cancellation, investor sentiment deteriorated sharply.
Still, some say the impact on earnings will be limited. Ian-na of Yuanta Securities Korea said, "The reduction in the contract amount is a result of changes in the customer's (Tesla's) supply chain and production strategy," adding, "With the project restructuring, the existing contract is being concluded for now, and there is a move to shift discussions to new project units in line with the changed environment."
L&F said, "This was unavoidable as schedules were adjusted amid changes in the global electric-vehicle market and battery supply environment," adding, "There is no change whatsoever in the shipments and customer supply of our flagship NCMA95 high-nickel products. Shipments to major Korea cell makers are also proceeding stably."