Microvast Holdings, Inc.

Location · Country · Approximate Size · Function · Owned / Leased

Stafford, Texas · United States · 9,300 sq. ft. · Corporate headquarters, administrative offices · Leased

Lake Mary, Florida · United States · 75,000 sq. ft. on 7 acres · Research and development, administrative offices · Owned

Clarksville, Tennessee · United States · 577,000 sq. ft. on 82 acres · Manufacturing, testing, energy storage container assembly, warehouse, sales, after-sales service, administrative offices · Owned

Berlin · Germany · 185,000 sq. ft. on 9 acres · European headquarters, administrative offices, manufacturing (module), testing, warehouse, sales, after sales-service · Leased

London · United Kingdom · 4,990 sq. ft. · Warehouse, service office, after sales service · Leased

Huzhou · China · 1,400,000 sq. ft. on 72 acres · Asia Pacific headquarters, manufacturing (components, cell, module and pack), testing, warehouse, sales, after-sales service, research and development, administrative offices, and canteen services · Owned

Huzhou · China · 61,000 sq. ft. · Manufacturing (other), testing, warehouse, sales, after-sales service, research and development, administrative offices, and canteen services · Leased

• Because substantially all of our revenues are currently derived from outside of the U.S. and the significant costs and restrictions associated with the repatriation of cash from our non-U.S. operations, we may not have sufficient cash flow to cover our liabilities, which may result in a material adverse effect on the Company’s business.
• With a limited operating history and ongoing losses, achieving or sustaining profitability remains uncertain.
• Our business and our ability to complete the Clarksville expansion could be adversely affected by mechanics liens filed by contractors that we do not have sufficient funds to pay.
• Our future growth depends upon the willingness of commercial-vehicle and specialty-vehicle operators and consumers to adopt EVs, and the availability of alternative technology.
• We may not be able to substantially increase our manufacturing output in order to fulfill orders from our customers.
• Some battery components pose safety risks, potentially causing accidents that could lead to liability, manufacturing delays and negatively impact market acceptance.
• Our revenue heavily depends on a limited customer base, a trend likely to continue.
• The unavailability, reduction or elimination of, or uncertainty regarding, government and economic incentives or subsidies available to end-users and OEMs in the U.S., China, Europe and other jurisdictions could have a material adverse effect on our business, financial condition, operating results and prospects.
• The demand for batteries in transportation and other markets depends on the attractiveness of fossil fuel alternatives. Extended periods of low oil prices could adversely affect demand for electric and hybrid electric vehicles.
• We primarily produce and sell lithium-based battery systems. Should a viable alternative to lithium-based batteries emerge and gain market acceptance, it could significantly harm our business, financial health, and operational results. Furthermore, our failure to keep up with rapid technological changes and evolving industry standards within the lithium-based battery market may cause our products to become obsolete and less marketable, resulting in loss of market share to our competitors.
• We may not be able to maintain our competitive position if we face intense competition from other battery manufacturers, many of which have significantly greater resources.
• Failing to anticipate customer preferences and develop appealing products could prevent us from maintaining or growing our revenue and profitability.
• Our future depends on the needs and success of our customers, as well as the demand for our customers’ products or services.
• We may be subject to declining average selling prices, which may harm our revenue and gross profits.
• Our products might fail to qualify as “domestic origin” for purposes of “Buy America” requirements imposed on the recipients of U.S. government grants.
• We may experience significant delays in the design, production and launch of our new products, which could harm our business, prospects, financial condition and operating results.
• Our failure to cost-effectively manufacture our batteries in quantities which satisfy our customers’ demand and product specifications and their expectations for product quality and reliable delivery could damage our customer relationships and result in significant lost business opportunities for us.
• Our working capital requirements involve estimates based on the demand expectations and may decrease or increase beyond those currently anticipated, which could adversely impact our operating results and financial condition.
• Inaccurate manufacturing planning may lead to surplus inventory or shortages.
• We rely on complex machinery for our operations and our production involves a degree of risk and uncertainty in terms of operational performance and costs.
• We rely on third parties to manufacture chargers and charging poles and to build charging stations that are necessary for using our products, and our ability to market our products depends on the establishment of charging station networks that meet the needs of our products.
• We currently purchase certain key raw materials and components from third parties, some of which we only source from one supplier or from a limited number of suppliers primarily located in Asia.
• If rising prices or availability of raw materials continues to persist, our business and results of operations may be adversely affected.
• If we are unable to integrate our products into vehicles manufactured by our OEM customers, our results of operations could be impaired.
• Under certain circumstances, our customers can modify or terminate their contracts.
• Losing our senior executives or key personnel could severely disrupt our business.
• The success of our business depends on our ability to attract, train and retain highly-skilled employees and key personnel.
• Our management has limited experience in operating a public company.
• We may acquire or invest in other companies or technologies, which could divert our management’s attention, result in dilution to our stockholders and otherwise disrupt our operations and adversely affect our business.
• Our planned expansion into new applications and new markets as we continue to expand our global presence poses additional risks which could adversely affect our business, financial condition and results of operations.
• Our battery packs rely on software and hardware that are highly technical, and if these systems contain errors, bugs or vulnerabilities, or if we are unsuccessful in addressing or mitigating technical limitations in our systems, our business could be adversely affected.
• We may be subject to financial and reputational risks due to product recalls and product liability claims, and we could face substantial liabilities which exceed our resources.
• If we have quality issues with our BMS and ESS container, our sales, profit, and cash flows could decrease and our relationships with our customers and our reputation may be harmed.
• The reduction, elimination, or expiration of government incentives for, or regulations mandating the use of, renewable energy could reduce demand for our ESS container and harm our business.
• If renewable energy technologies are not suitable for widespread adoption or sufficient demand for our offerings does not develop or takes longer to develop than we anticipate, our sales may decline, and we may be unable to achieve or sustain profitability.
• Existing electric utility industry policies and regulations, and any subsequent changes, may present technical, regulatory, and economic barriers to the purchase and use of our ESS container that may significantly reduce demand for our products or harm our ability to compete.
• The U.S. Congress, the Trump Administration, or any new administration may make substantial changes to fiscal, tax, and other federal policies that may adversely affect our business.
• Restrictions on the ability of U.S. companies to invest in the PRC may impact our business.
• As components of electric vehicles, our products as installed in the products of our customers are subject to motor vehicle standards and the failure of the vehicles to satisfy such mandated safety standards could have a material adverse effect on the demand for our products, our business and our operating results.
• We may fail to comply with certain health and production safety laws and regulations governing hazardous materials.
• Environmental regulation compliance is costly; non-compliance could lead to fines, damage our reputation, and negatively impact our business.
• Our operations expose us to litigation, environmental and other legal compliance risks, including increased climate change legislation restricting GHG emissions.
• Our general liability insurance may not be sufficient to cover potential liability from product liability claims.
• Our insurance coverage strategy may not be adequate to protect us from all business risks.
• If currency exchange rates fluctuate substantially in the future, our financial results, which are reported in U.S. dollars, and the value of our securities could be adversely affected.
• Our debt covenants agreements contain covenant restrictions that may limit our ability to operate our business.
• Additional funds may not be available to use for when we need or want them.
• We may be negatively impacted by an early obsolescence of our manufacturing and other equipment.
• U.S. tax law changes on international activities could significantly affect our finances and operational results.
• We may face unforeseen tax liabilities that could affect our financial health.
• International operations could lead to complex and unfavorable tax outcomes.
• The uncertainty in global economic conditions and obligations arising under economic, financial or trade sanctions laws and regulations or export controls, such as those associated with the ongoing conflicts in the Middle East, including hostilities with Iran, the war between Russia and Ukraine, and other current or future conflicts, could negatively affect our operating results.
• Our batteries and our website, systems, and data we maintain may be subject to intentional disruption, other security incidents, or alleged violations of laws, regulations, or other obligations relating to data handling that could result in liability and adversely impact our reputation and future sales.
• We are legally obligated to take back used batteries from clients and the cost of doing so may differ materially from our estimates.
• We may have difficulties transferring and communicating technology globally, especially if communications and visa processes between the U.S. and other countries worsen.
• Our $200 million grant from the DOE was withdrawn and there is no certainty that the Company will qualify or have access to future awards or grants in the United States.
• Our financial results may vary significantly from period to period due to fluctuations in our operating costs and other factors.
• We may fail to meet our publicly announced guidance or other expectations about our business, which could cause our stock price to decline.
• Our information technology systems or data, or those of our service providers or customers or users could be subject to cyber-security attacks or other security incidents, which could result in data breaches, intellectual property theft, claims, litigation, regulatory investigations, significant liability, reputational damage and other adverse consequences.
• Artificial Intelligence presents risks and challenges that can impact our business, including by posing security risks to our confidential information, proprietary information and personal data.
• Our business may be adversely affected by any disruptions caused by union activities.
• Any failure by us to comply with a variety of U.S. and international privacy and consumer protection laws may harm us.
• Adverse changes in the PRC’s political, economic, and other policies could materially affect China’s economic growth and negatively impact our business growth and competitiveness, as well as adverse trade relations with the United States.
• PRC government regulations significantly impact our Chinese operations, with changes potentially increasing costs or limiting activities. We could become subject to regulations issued by the CAC and the requirements of the PRC government’s cyber or data security laws, which could impact our activities in China.
• Any future revocation of approvals or any future failure to obtain approvals applicable to our business or any adverse changes in foreign investment policies of the PRC government may have a material adverse impact on our business, financial condition and results of operations.
• If labor costs in the PRC increase substantially, our PRC subsidiaries' business and our costs of operations may be adversely affected.
• The PRC government may exert substantial influence over the manner in which we conduct our business operations in China.
• China's legal and judicial system may not adequately protect our business and operations and the rights of our investors.