Which Outside Company Deserves Its Own Scenario in a DCF?
September 14, 2026
Altsets
Research by Altsets Research
Give a counterparty its own scenario when a plausible change in that relationship can materially alter revenue, margins, capacity, or long-run growth. The outside company does not need to be owned; it needs to matter to the target company's economics.
Data used:Altsets Supply Chain Intelligence: 90k+ entities, 400k+ relationships, 20+ years of history.
Key findings
- The supplied Tesla-LG Energy Solution relationship places 19.03% of LG Energy Solution revenue against Tesla, making the customer large enough to affect several assumptions in an LG Energy Solution valuation scenario.
- Customer-concentration research links concentrated corporate customer bases with supplier risk and financing costs, but the correct valuation response is scenario analysis around durability and economics rather than a universal concentration discount.
Give an outside company its own DCF scenario when the relationship is important enough that a plausible change in that counterparty can alter a major revenue, margin, capacity, or long-run growth assumption. The counterparty does not need to be owned. It needs to be economically important enough that the valuation already depends on an assumption about what that outside company will do.
Tesla is large enough to belong inside an LG Energy Solution scenario tree
The supplied Altsets data shows Tesla representing 19.03% of LG Energy Solution revenue in the displayed relationship, while LG Energy Solution represents 3.41% of Tesla's cost base. That is a clear example of a relationship whose importance is asymmetric. Tesla occupies a much larger share of LG Energy Solution's economics than LG Energy Solution occupies of Tesla's displayed costs.
For an investor valuing LG Energy Solution, that makes Tesla more than a name in a customer list. A DCF that assumes future revenue growth, utilization, and margins is implicitly making assumptions about the durability and development of major customer relationships. When one displayed customer accounts for roughly one-fifth of supplier revenue, it is reasonable to make those assumptions visible rather than bury them inside one aggregate revenue-growth rate.
The scenario should model the customer relationship, not Tesla's stock price
A Tesla scenario for LG Energy Solution does not mean linking LG Energy Solution's valuation to Tesla's share price. The relevant variables are commercial: order volumes, product programs, relationship durability, pricing, production location, technology mix, and whether the supplier wins additional business or loses part of the relationship.
LG Energy Solution's public materials add current strategic context. The company identifies Tesla as an ESS partner and says batteries for Tesla's Megapack 3 are planned to be produced at its Lansing facility beginning in 2027. That does not mean the entire Altsets relationship estimate comes from Megapack 3. It does show that the commercial connection remains strategically active and that future product and manufacturing decisions can matter to the valuation case.
A separate scenario is useful when one assumption can move several DCF lines
A major customer can affect more than revenue. Higher committed volume can improve plant utilization and fixed-cost absorption. Product mix can affect margins. A customer-specific manufacturing investment can change capital expenditures and working capital. Losing a large customer can therefore alter several DCF assumptions simultaneously.
That is why a separate counterparty scenario can be cleaner than applying a generic customer-concentration discount to the valuation multiple. The investor can build a base case for a stable relationship, an upside case for deeper commercial expansion, and a downside case for lower volume, weaker pricing, or partial loss of the customer. The relationship data tells the investor which outside company deserves that treatment. It does not dictate the scenario probabilities.
Concentration should influence the range of valuation outcomes, not create a universal discount
Academic research has associated greater corporate customer concentration with higher supplier financing costs and greater business risk. Other research finds that concentrated customer relationships can also create operating benefits and relational rents. That tension is exactly why a fixed "customer concentration discount" is too crude.
The correct valuation question is how dependent the forecast is on the relationship and how durable the relationship appears. A concentrated relationship with high switching costs, long-term commitments, and strong customer economics can support a valuable growth path. The same numerical concentration with weak differentiation and easy supplier substitution can deserve a much wider downside range.
The conclusion is to make hidden counterparty assumptions explicit
An outside company deserves its own DCF scenario when a realistic change in that relationship can materially alter the target company's revenue, margins, capacity, or long-run growth path. In the supplied Altsets data, Tesla's 19.03% share of LG Energy Solution revenue is large enough that an LG Energy Solution valuation should not pretend the Tesla relationship is merely background information. The graph identifies the dependency. The DCF makes the financial consequence explicit.
The dependency valuation guide explains how customer and supplier relationships can change assumptions inside a valuation without creating a universal multiple. The LG Energy Solution and Tesla relationship study provides the underlying asymmetry in more detail.
For relationship definitions and evidence limits, read the Altsets methodology.