When a Major Customer Belongs in the Terminal Growth Assumption
September 14, 2026
Altsets
Research by Altsets Research
A major customer belongs in long-run valuation when the revenue, margin, capacity, or competitive assumptions behind terminal value would change materially if the relationship weakened. The customer percentage should expose the hidden assumption, not become the terminal growth rate.
Data used:Altsets Supply Chain Intelligence: 90k+ entities, 400k+ relationships, 20+ years of history.
Key findings
- The supplied Tesla relationship represents 19.03% of LG Energy Solution revenue, making the customer large enough that a long-run LG Energy Solution valuation should state what it assumes about the durability of that relationship.
- Major-customer research finds both relational benefits and concentration hazards, supporting scenario-based long-run assumptions rather than a mechanical valuation discount or a permanent customer percentage.
A major customer belongs in the terminal-growth discussion when the long-run valuation implicitly assumes that the relationship remains important years into the future. The customer percentage should not be inserted directly into a terminal-growth formula. It should force the investor to ask whether the revenue base supporting the terminal value is durable without that customer, and whether the relationship itself has enough strategic depth to deserve a long-run assumption.
LG Energy Solution makes the hidden assumption visible
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 asymmetry means Tesla is much more important to the supplier's revenue base than LG Energy Solution is to Tesla's displayed costs.
A five-year or ten-year valuation of LG Energy Solution that assumes sustained growth is therefore making an implicit assumption about large customers such as Tesla. If nearly one-fifth of displayed supplier revenue exposure is tied to one customer relationship, the investor cannot treat long-run revenue as though it emerges from an anonymous, perfectly diversified market.
The correct response is not to assume Tesla stays at 19.03% forever. It is to make the dependence visible inside the valuation. The base case can assume the relationship remains strategically relevant while its exact share changes. A downside case can test partial loss, weaker pricing, or lower volume. An upside case can test deeper participation in future Tesla programs.
Terminal value makes customer durability more important than next-quarter demand
Near-term forecasts can tolerate uncertainty about exactly which customer drives the next few quarters because the model has time to update. Terminal value is different. It often represents a large portion of the total valuation and rests on assumptions about a mature revenue base, normalized margins, and a sustainable competitive position.
That makes relationship durability more important, not less. A customer that is large today but easy to replace may deserve less weight in the long-run story than a smaller relationship supported by difficult qualification, joint investment, long contracts, or a strategically embedded product.
LG Energy Solution has publicly described Tesla as an ESS partner and discussed production for Tesla's Megapack 3 at its Lansing facility. That does not guarantee the relationship persists indefinitely. It does provide evidence that the commercial connection is more than a historical percentage with no current strategic context.
Customer concentration can support value and increase risk at the same time
Research on major customers does not support one universal conclusion. Studies have found both relational benefits and concentration hazards. Major customers can provide scale, stable demand, operational learning, certification, and more efficient coordination. They can also gain bargaining power and leave the supplier exposed if orders disappear.
That tension belongs directly in long-run valuation. A durable major customer can make growth easier to underwrite while simultaneously making the forecast more sensitive to one external company. The investor should therefore separate the expected path from the range of outcomes around that path.
A valuation that simply applies a lower multiple because customer concentration exists throws away useful information. A better model asks which assumptions depend on the customer and how those assumptions change if the relationship strengthens, weakens, or becomes less exclusive.
The relationship should leave terminal value only when the business can stand without it
The most important question is not whether the current percentage remains unchanged. It is whether the supplier has enough alternative demand, customer diversification, product strength, and bargaining position that losing part of the relationship would not destroy the long-run economics embedded in the valuation.
For LG Energy Solution, Tesla's 19.03% displayed supplier-revenue exposure is large enough that a serious long-run model should state what it assumes about the relationship. If the valuation still works after a substantial reduction in Tesla dependence, the terminal thesis is more robust. If it requires Tesla to remain an unusually large customer indefinitely, that dependency is part of the valuation risk.
The conclusion is to make major customers explicit in long-run assumptions
A major customer belongs in terminal-value analysis when the long-run revenue, margin, capacity, or competitive assumptions would change materially if that relationship changed. Tesla representing 19.03% of LG Energy Solution revenue is large enough to make that test necessary. Supply-chain data does not provide the terminal growth rate. It reveals which outside relationships the terminal growth rate is quietly depending on.
The external-company DCF scenario guide explains when a counterparty deserves its own valuation case. The dependency valuation guide explains why the adjustment belongs in financial assumptions rather than a universal supply-chain multiple.
For relationship definitions and evidence limits, read the Altsets methodology.