LG Energy Solution will no longer use cathode materials supplied by affiliate LG Chem in the batteries it provides to Tesla, citing LG Chem’s inability to meet the electric vehicle maker’s revised energy density requirements. Tesla has accelerated its transition to nickel-rich cathodes, targeting material formulations with 95% nickel content to boost range and reduce costs. These ultra-high-nickel cells—over 20% more energy dense than existing 90% nickel variants—are slated for deployment across Tesla’s Model Y Long Range, Cybertruck and Optimus humanoid robot.
Increasing nickel content enhances energy density and performance while lowering reliance on costly cobalt. However, nickel levels above 95% pose significant production challenges, including unstable crystal structures, higher fire risk and the need for advanced single-crystal processing to maintain yield and safety. LG Chem has so far concentrated on cathodes containing up to 90% nickel and reportedly has not yet achieved the necessary yield and quality benchmarks for the 95% formulations Tesla now requires.
As a result, competitors such as L&F have stepped in to fill the gap. Since late last year, LG Energy Solution has been sourcing L&F’s high-nickel cathodes for Tesla’s latest Model Y Long Range and other models. Industry observers warn that as Tesla boosts its share of ultra-high-nickel batteries, material suppliers unable to secure performance and cost competitiveness will face declining volumes—even if they belong to the same corporate group.
Tesla’s shift to ultra-high-nickel cathodes is part of a broader trend: premium electric models are adopting nickel-dense batteries, while mid- and entry-level vehicles increasingly use lithium iron phosphate cells. Analysts predict that the race for higher energy density will intensify further, extending into the humanoid robot market, where compact, high-efficiency batteries are critical.
Market participants see a clear divide: companies with early investments in advanced nickel-rich processing—like L&F and Ecopro BM—are gaining ground but must overcome financial and customer-network constraints. Meanwhile, larger players such as LG Chem and POSCO Future M possess capital strength but are playing catch-up on ultra-high-nickel mass production technology. The coming “chasm period” of subdued demand will likely determine which suppliers emerge strongest when the next phase of EV and robot adoption begins.
Source: Business Korea
