CBAK Energy Technology, Inc. Q1 FY2025 earnings call

• Net revenues declined 41% year-over-year to $34.9 million. - Battery business net revenue was $20.36 million, down 54.6% from the prior year. - Electric vehicle business up 11.9%, light electric vehicle up 88.4%, storage down 60.4%. - Dalian facility is upgrading from Model 26650 to Model 40135, with manufacturing line construction expected to complete in the second half of 2025. - Nanjing operations focus on Model 32140, running at full capacity. - Exploring overseas manufacturing facility in Southeast Asia, with agreement in principle reached with a customer for a full-year high-volume purchase. - Plan to have Southeast Asian facility produce both Model 32140 and 40135.

Net revenues for the first quarter of 2025 were $34.9 million, a year-over-year decline of 41%. The battery business recorded net revenue of $20.36 million, a 54.6% decrease from the prior year. The electric vehicle business achieved an 11.9% increase, and the light electric vehicle segment experienced a significant growth of 88.4%, but this was offset by a 60.4% decline in the storage business. The battery business contributed approximately 58.3% of the total net revenues (20.36 / 34.9).

• Southeast Asian facility expected to begin mass production by mid-next year. - Anticipate significant recovery beginning next year once agreements are finalized and facilities are operational. - Committed to maintaining a healthy gross margin to support net income recovery.

• Tariff challenges affecting business operations. - Delays in manufacturing line upgrades at Dalian facility. - Uncertainties related to market acceptance of new products like Model 40135.

Q: Could you confirm the expansion goals, specifically regarding 2.3 gigawatts at Dalian and 3 gigawatts at Nanjing?

A: The plan for Dalian facilities didn't change; the newly deployed manufacturing line for 40135 has a capacity of 2.3 gigawatt hour, with construction expected to be completed by the end of June. For Nanjing, one assembly line will be relocated to Southeast Asia, reducing Nanjing's capacity to 1.5 gigawatt hour and Southeast Asia's to 1.5 gigawatt hour.

Q: Are customers confident in sticking with cylindrical cells for storage, or are there concerns about prismatic or other cell types?

A: Cylindrical and large cylindrical cells are favored for certain applications like high voltage in home energy storage and 48-voltage in e-scooters due to design flexibility and structural stability. Prismatic cells may not be as suitable for these specific applications.

Q: Have portable energy customers been pulling forward demand due to paused tariffs?

A: Customers are seeking solutions, and the decision to move to Southeast Asia is client-driven. A deal with major customers like Jackery is close to being finalized, with hopes of good news in the coming month or next.