Executive Summary

Q2 2025 revenue of $40.52M declined 15% year over year but improved 16% sequentially; gross margin compressed to 11.0% from 26.6% YoY, with an operating loss of $3.53M and EPS of -$0.03 .
Revenue and EPS were better than Wall Street consensus, with revenue beating by ~$6.97M and EPS two cents better than estimates; estimate depth was limited (one estimate) which tempers signal strength [Q2 2025 S&P Global]*.
Management reiterated transition from legacy 26650 to new 40135 cells at Dalian, targeted for mass production in September, and confirmed Nanjing 32140 Phase II expansion pushed to Q4; both are expected to drive recovery beginning in Q4 2025 .
The near-term narrative hinges on execution of product migration/validation and capacity additions; medium-term catalysts include Malaysian plant partnership with Anker (potential US$357M order framework) and large EV/light EV orders that broaden end-market exposure .

What Went Well and What Went Wrong

What Went Well

Solid sequential improvement: revenue rose from $34.94M in Q1 to $40.52M in Q2 (+16.0%), while gross margin held double-digit despite transition headwinds .
Strategic capacity projects and customer engagement advancing: Dalian 40135 mass production targeted for September; Nanjing 32140 Phase II to Q4; “customers already testing and validating the product and providing highly positive feedback” .
Strong commercial momentum signposts: announced Malaysian plant partnership with Anker with potential orders valued at ~$357M and signed a sizeable $11.6M 32140 order with Africa’s leading EV company, with anticipated follow-ons up to $55M .
- CEO: “Once Model 40135 enters mass production in Dalian and the additional Model 32140 capacity in Nanjing comes online by year-end, we anticipate a strong rebound in production and sales.” .

What Went Wrong

Sharp YoY pressure: revenue -15% YoY to $40.52M, gross margin down to 11.0% from 26.6%, and net income swung to a loss of -$3.07M vs $6.45M profit last year; battery segment YoY decline notable (net revenues -40.8%, gross profit -73.6%) .
Dalian transition created a demand air-pocket: residential energy customers paused for validation of 40135, compressing volumes and margins; battery business net income fell to -$2.07M from $7.89M YoY .
Phase II expansion timing slipped: Nanjing 32140 Phase II completion “postponed to Q4,” modestly deferring incremental capacity and revenue ramp .

Financial Results

Consolidated Results vs Prior Year and Prior Quarter

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$47.79	$34.94	$40.52
Gross Profit ($USD Millions)	$12.73	$4.80	$4.46
Gross Margin (%)	26.6%	13.7%	11.0%
Operating Income (Loss) ($USD Millions)	$5.95	$(2.86)	$(3.53)
Net Income Attributable ($USD Millions)	$6.45	$(1.58)	$(3.07)
Diluted EPS ($)	$0.07	$(0.02)	$(0.03)

Q2 2025 Actuals vs Wall Street Consensus (S&P Global)

Metric	Consensus	Actual	Beat/Miss
Revenue ($USD Millions)	$33.56*	$40.52	Bold beat: +$6.97M*
Primary EPS ($)	$(0.04)*	$(0.03)	Bold beat: +$0.01*
# of Estimates (Revenue / EPS)	1 / 1*	—	Limited depth*

Values retrieved from S&P Global.*

Battery Business and Application Mix (YoY)

Metric (Battery Business)	Q2 2024	Q2 2025
Net Revenues ($USD)	$35,598,124	$21,090,137
Gross Profits ($USD)	$12,917,293	$3,411,633
Gross Margin (%)	36.3%	16.2%
Net Income ($USD)	$7,892,641	$(2,071,334)

Application Net Revenues ($USD)	Q2 2024	Q2 2025
Electric Vehicles	$199,258	$142,139
Light Electric Vehicles	$1,825,501	$2,426,624
Residential Energy & UPS	$33,573,365	$18,521,374
Total	$47,793,045	$40,524,333

KPIs and OpEx

KPI	Q2 2024	Q1 2025	Q2 2025
Cost of Revenues ($USD Millions)	$35.07	$30.14	$36.06
R&D Expense ($USD Millions)	$2.96	$3.02	$3.61
Sales & Marketing ($USD Millions)	$1.37	$0.90	$0.95
G&A Expense ($USD Millions)	$3.13	$3.80	$3.35

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dalian Model 40135 mass production start	2H 2025	“Second half of 2025” (validation underway)	September 2025; customer validation in progress	Clarified timing (more specific)
Nanjing Model 32140 Phase II expansion	2025	“Expected operational by end-2025”	Completion postponed to Q4 2025	Timing refined (to Q4)
Battery segment revenue recovery	4Q 2025	Directional recovery post-validation	Gradual recovery beginning in Q4 2025	Timing added
Southeast Asia plant (Malaysia/SEA) mass production	2026	“Mass production by mid next year” (from Q1 call)	Malaysian project to commence production by end-2025 for 32140/40135; SEA flexibility discussed on Q1 call	Roadmap advanced via Malaysian project
Capital return	Through May 20, 2026	N/A	Share repurchase authorization up to $20M	New program

Note: No formal numeric guidance provided on revenue, margins, OpEx, OI&E, or tax rate in Q2 materials .

Earnings Call Themes & Trends

(Full Q2 transcript not available; Q4 2024 and Q1 2025 calls inform trend narrative.)

Topic	Previous Mentions (Q4 2024)	Previous Mentions (Q1 2025)	Current Period (Q2 2025)	Trend
Product transition (26650→40135)	Upgrade at Dalian with 2.3 GWh 40135 line by end-2025	Validation underway; recovery post-line completion	Mass production scheduled for September; validation feedback positive	Advancing to production
32140 demand/capacity	32140 flagship; demand > capacity; +3 GWh expansion by end-2025	Nanjing fully booked; equipment prepayments made	Phase II completion postponed to Q4; capacity fully booked	Capacity timing refined
Tariffs/geopolitics & localization	Exploring SEA/US expansion due to tariffs	SEA facility client-driven; flexible lines for 32140/40135	Malaysian project announced with Anker partnership	Localization accelerated
End-market mix	Residential energy strength in 2024	LEV growth +88.4%; residential down -60.4% YoY	Residential still soft (-44.8% YoY); LEV +33% YoY	Mix shifting to LEV/portable power
Large orders/customer breadth	Backlog across PowerOAK/Anker/Jinpeng	Major 4-year order near finalization	$11.6M Africa EV order; Anker partnership ~$357M potential	Commercial momentum building

Management Commentary

CEO (Zhiguang Hu): “Our Dalian facilities are scheduled to begin mass production of Model 40135 in September… We expect a gradual recovery at Dalian beginning in Q4… [Nanjing] Phase II expansion… postponed to Q4… Once Model 40135… and additional Model 32140 capacity… come online by year-end, we anticipate a strong rebound in production and sales.”
CFO (Jiewei Li): “We are undergoing a strategic upgrade… introducing Model 40135—while also facing significantly higher-than-expected demand for… Model 32140… we are confident that our financial performance will experience a gradual and solid recovery in the near term… close to finalizing agreements with several internationally renowned customers.”

Q&A Highlights

(Q2 call transcript not available; highlights from Q1 call)

Capacity plan confirmation: Dalian 40135 at 2.3 GWh; Nanjing plan adjusted to allocate 1.5 GWh to SEA due to tariff risks, preserving 1.5 GWh at Nanjing .
Technology preference: Cylindrical/large cylindrical formats better suited for high-voltage home storage and e-scooters than prismatic/pouch in certain designs, supporting product roadmap .
Tariff mitigation and customer actions: Major portable power customers pushing suppliers to relocate; SEA facility decision client-driven; favorable commercial terms (prepayments); near-term deal closure indicated .

Estimates Context

Q2 2025 revenue beat vs consensus ($40.52M actual vs $33.56M estimate); EPS beat by $0.01 (actual -$0.03 vs -$0.04 estimate); limited estimate depth (one estimate each) suggests caution in extrapolating beats into broad sell-side revisions [Q2 2025 S&P Global]*.
Next quarter (Q3 2025) consensus suggested -$0.04 EPS and $39.27M revenue vs actual $60.92M; the Q3 revenue upside reflects capacity/validation progress and mix, which may prompt upward revisions where coverage exists [Q3 2025 S&P Global]*.