Tesla Under Pressure: Deliveries Slide and Multibillion-Dollar Battery Deal Falls Apart

Automaker Tesla is facing another challenging period. The latest forecasts point to a sharp decline in vehicle deliveries, while at the same time a key supplier has revealed that its battery-materials contract with Tesla has been reduced to a fraction of its original value.

Analysts Expect a Double-Digit Drop in Deliveries According to data published by Tesla itself, analysts expect the company to deliver around 422,850 vehicles in the fourth quarter (October–December). That would represent a year-over-year decline of roughly 15%. A slightly more optimistic estimate from Bloomberg analysts puts deliveries at 445,061 vehicles, but even that scenario still implies a drop of about 10% compared with last year. Notably, Tesla’s investor relations team has tracked such forecasts for years, but this is the first time the company has publicly posted them on its official website, making them visible to investors and the broader public.

Second Consecutive Year of Declining Sales The full-year outlook is also far from encouraging. Tesla is on track for a second straight year of declining deliveries. Analysts now estimate total deliveries of around 1.6 million vehicles for the year, which would be more than 8% lower than last year’s result. Sales took a hit early in the year when Tesla temporarily halted production at several factories to retool assembly lines for the refreshed Model Y — its best-selling vehicle. Around the same time, CEO Elon Musk’s involvement in issues tied to the Trump administration sparked controversy, adding further pressure on the brand. The third quarter did offer a brief bright spot. Deliveries surged to record levels as U.S. buyers rushed to purchase electric vehicles before the federal $7,500 tax credit expired at the end of September. After those incentives disappeared at the start of the current quarter, Tesla attempted to soften the blow by introducing simplified versions of the Model Y SUV and Model 3 sedan, both priced below $40,000.

Shares Rise, but Lag the Market Despite weaker sales trends, Tesla shares are still up about 14% year to date. However, that performance lags the broader U.S. equity market, as the S&P 500 has gained roughly 17% over the same period.

Battery Supply Deal Nearly Wiped Out Further concerns have emerged on the supplier side. South Korean company L&F Co. disclosed that its contract with Tesla has been almost entirely scaled back. The agreement was originally worth 3.83 trillion won (approximately $2.67 billion), but has now been reduced to just 9.73 million won — a cut of around 99%. The company said the change was driven by adjustments to delivery volumes. Repeated delays to the Cybertruck program meant that very little of the planned material was ultimately needed. Customers also continued to favor other Tesla models, primarily the Model 3 and Model Y. The end of certain incentives under the U.S. Inflation Reduction Act also played a role. In a statement, L&F said the revision was unavoidable due to shifts in the global electric vehicle market and changes in battery supply chains. It added that its core shipments of high-nickel products remain unaffected and that deliveries to major Korean battery cell manufacturers continue as normal. The company also supplies customers beyond Tesla, including LG Energy Solution. Investors reacted swiftly. L&F shares fell 11% in Seoul on Tuesday. While the stock is still up about 16% for the year, that gain pales in comparison with South Korea’s Kospi index, which has surged roughly 76% over the same period.

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