SES - Earnings call transcript Q1 2022

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Operator

Good afternoon. Thank you for attending today's SES AI Corporation First Quarter 2022 Earnings Call. My name is Amber and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions-and-answers at the end. [Operator Instructions] I now have the pleasure of handing the conference over to our host Eric Goldstein, Vice President of Investor Relations with SES. Mr. proceed. please Goldstein,

Eric Goldstein

Hello, covering operator. for welcome our to year. Thank first everyone quarter call our outlook XXXX conference you, and results the and

Joining financial a press Chief just after Founder Nealiss, Qichao today Financial release me detailing P.M. and our Chief issued Officer; Jing and We Officer. X today are results. Executive Hu,

the of our section You'll release today's and Relations' find conference ses.ai. Investor press call webcast in website

business forward-looking and contain statements this and started, a the in forward-looking is and applicable information different be statements. may legislation. uncertainties company's that our achieve SEC could detailed This certain will or may over principal are performance the Before materially cause statements over we in differ get I'll then implied materially looking results these The for our XX With pass provide and the from the our securities within discussion milestones to that, well our reminder, current or of uncertainties, meaning to we we involve filings. it today to months. some are future from expectations our those cause risks or to actual are Qichao. the Such quarter. risks, results which as latest assumptions, expressed afternoon, as We'll release next results earnings in review

Qichao Hu

first and in This of cash and to position and Thank The to Ivanhoe merger industry we going you, enough the past every come. employees busy event Exchange. our I Eric. all change. and automotive the for yet density was change. MIT In world first rapid costs to fleet Boston more believe plan they journey Acquisition in Capital a major key. at batteries at entire started energy you time our of we a end cannot began climate High join time are a to call. Four New the that Korea, XX-year believe the thing. is trading total are country at culmination York headquarters, has in for basement everyone earnings been say Building is metal completed thank a best announced to the the and through is address electrify and Stock the lithium next almost Good with The early why SES very exciting on the of the $XXX year, the afternoon million quarter. of I In our of taking and carmaker resulted our merger that Giga. batteries big their Its Shanghai a Corp., thanks February, company. This

geopolitics as other well supply increases in We well live disruptions as an carmakers Applied as increasingly are six lithium global materials the and with as companies lithium raw included and great Rapid SK, Coke, LG, A-simple Honda, carmakers; chain. world. demand Materials. for [indiscernible] joint to in have and Hyundai, GM, Foxconn, agreements, Geely, Shanghai and strategic first Honda, metal next-gen Auto, and investors development General only JDAs, the Hyundai, three Motors, and in volatile created have We Lithium,

sustainable a Going crucial. innovative business supply forward, chain will model and be strategy

metal So, let's about batteries. talk first, lithium

JDAs. all our of platforms our our made with on-track three in significant have technology A-sample We progress and

Let me go through more details.

material So, Hermes, first, it's platform for a development.

OEM can to meet We're confident density, in transition the that XX storage will which one life, so us partners' we temperature, performance and generations cycle to electrolytes. ranging from complex our to months, step of the generation Boston requirements, B-samples. closer specifications new With headquarter setup several each OEM A-sample to next on. allow power, developed has get to Our meeting to we safety

our in Shanghai plants make Phase This hub of and Giga we cells CapEx and year. Phase more. RTU. cell of announce reflected to Ah lithium-ion at use stage. large for lithium is large supply engineering core lithium-ion A-sample This achieved to Giga North this will very manufacturing, excited gigawatt metal with our start plan approach. completed Shanghai eventually engineering, November power were the spending facility capable process is to world's this to for is battery. way talk Apollo, gigawatt line lithium CFO, lithium-metal U.S. in cell batteries the hour China America of Battery and we last also during chain. investment. We the power reach Ah equipment Later, why and we Manufacturability Korea, production, construction chose is This metal and A-sample hours will today Korea, cells. have building system development China, Most capability X.X next The the of SOP. World used developed manufacturing for XXX unveiled ultimately, Japan is March of cells. their the want in C-samples Ready-to-Use, and in of pave I Jing metal our in CapEx producing XXX of Ah in First announced the one X EV Second and X and large large to in to our We It's year. first that XX and lithium now about am automotive lithium-ion do mature

A-simple control. OEM prototype We our building and data with metal devices lithium We sharing partners. cells implementing lines large our JDA data collection and on production begun intelligence testing artificial AIoT have quality Things for of even and these started

Our global salary, when the top OEMs now single it from facility lot other our No our reopened, will down Shanghai a JDAs world Shanghai team more they interest volunteered currently for can have lockdowns, two Recently Giga cut go for left. of to eat, facility. but have battery immediately month, Two this be years appreciation. team of because in metal expressed sleep, during COVID forming was lithium and a production. JDAs sourced out and the A-sample the Giga Shanghai A-sample work in other that match than of factory. in a Shanghai ago, person Giga everyone's peak facility We of OEM and we a back deserves not when

We also to end expect started by of Ready-to-Use achieve construction this SES the RTU Korea year. and of

You'll have Giga a build as smaller partnered but initially scale. grow ion vendor to at to of our equipment We scale China to equipment leverage longtime cells. manufacturer with similar similar lithium and a eventually process ability capabilities lithium metal fully the

out serve SES we A-sample OEM to and serve expect time one over JDA Now, of additional JDAs. OEM Korea

also Our through partner. other spring holidays and test for OEM build our and festival JDA Korea to cells A-sample prototype team works

battery is monitoring. for AI Third software health avatar,

predict that health goal battery to and the thermal, Our mechanical monitoring, mossy by manufacturing Boston due defects predict lithium headquarter The can team data. developed several electrochemical, and to algorithms monitor is accurately of failure. and cycling new growth

partnered algorithm also leading platform a AI management implementation. We AIoT data a data company, and with blockchain for company, collection and world an company

make XXX% Avatar. While our and AI the that's energy safer to and XXX% monitor especially And safe, through safe our materials, ones it's growth mossy high goal metal, any to that lithium user is kg XXX impossible and XX/X software, failure. density lithium that's Apollo battery Hermes. predict engineering, make inherently experience like XXX Ah, Cell

supply chain. the about talk let's Second,

next transition expect to XX to B-samples the We months. in from A-samples

lithium biggest is of As we chain, already the been all, focused their rush what geopolitics. on has industry's prepare the most, until producing away we mines if the around is for junior offtake have from the mature and many least XXXX. also that impacted not which lithium concern, supply world transition, are eight estimated production. mines at committed global years And It are the by

the supply secure we do challenges are we independent and to how So, chains regional build how questions. key supply meet geopolitical can

We commercial geopolitical independent in two efficiency are supply chains and building participating concerns. balancing with

metal has complete battery EV to built battery leverage manufacturability is cost to Shanghai Giga biggest So, XXXX, and in China XXXX and Shanghai for is and talent in our supply talent the first chain Tesla approach. facility expanded supply CATL market. and from and priority Giga the our chain. the most core pool. it world's chain number inclusive and this not efficient is and We EVs aside, far low pool China EV a one Since Shanghai the to Politics today systems supply lithium the

with global will Shanghai. develop are OEMs supported in A-samples partners OEM by several We and our to continue

to lithium suppliers over thin our key the lithium plan for and materials strategic next for especially salt our metal with foil also year, We partnerships proprietary establish electrolyte.

North choice, battery chain, Korea Second build chain. equipment supply build to European is and the a most the started best in for We efficient we for is working Outside are our the Korean American world's partnering A-sample complete investors SES China-free started supply to our with with China, XXXX of and vendor development. especially especially, free in supply chain. XXXX. EV January second regional Korea, with strategic markets, and a partners China and

JDA OEM global partners. one by advanced supported and and currently equipment materials are We partner, several

including Korea learnings manufacturing, to We to battery battery chain build an North recycling. and also our EV plan and America, materials, vehicle supply mining, integration, transfer battery China in in

While be are our and and And will North China A-sample lines likely C-sample in in production alternative startup third, Korea, strategies. America.

addressing a of confident complex as And capabilities to and our we lithium business B-samples. key We're issues. data summary, silver that and strategy number in investors. the continue three approaches. we And combination no mossy recycling There'll deliver chains one, within Avatar with done with establish problem software. in strategic A-samples to begin materials. be A-samples two, previously mentioned, There's partners of exploring such will also AI addition for will will our requires a next the chain be finally, which to alternative partners. transition supply for for as our leverage that models JDA number to In approach. to OEM developing dealing started three, chain Number supply analytics from and bullet we new capability the are XX months, These system strategies battery-as-a-service, collaboration a supply optimize

now goal CFO the these will North way in production first targeted our to the of plant the pave to achieve Jing America. who our through build will Nealiss, financials. I'll our All milestones call pass to us commercial take help

Jing Nealiss

afternoon first will first research year $X.X reported our operating $X.X expenses. transaction development In Good of results were expenses stock-based $X.X you, cover million, million discuss We for quarter and compensation quarter, and financial non-recurring our our the which related $XX.X and of Thank I million operating expenses budget Qichao. capital and includes full XXXX. million. of Today, everyone.

by offset million, R&D JDA our JDA partners was partners. in treat $X.X However, $XX.X We R&D payments as million expenses. the was our quarter from those received our spend and from reimbursed which contra gross

million $XX fair which $XX, trenches. million loss was fair is are divest beginning the There sponsor $XX, XX% other while out $X.X now With mark-to-market $X.X to million July. $XX derivative liability, includes trenches earn trading sponsor and in for earn-out when shares million, our as expense four share over related XXXX days, quarter. the which accounted divest for but value equal five our shared value. in consecutive changes shares. $X.X quarter early August, XXXX, are at rest five $XX the out separate in are measured respectively, XX net Our in a the for of non-cash will P&L of recorded our every early XX trades a of to in

we the additional without XXX issued at million outstanding the items, end Some housekeeping had quarter. restrictions of shares and first

for first outstanding Idaho, since shares in the were average the closed weighted merger with early lower quarter February. Our

needs certain X, recorded Additionally, the market warrants the a holders such stockholders strike $XX On the agreement, be were warrants $XX.X it February approved warrants and to million with in Idaho equity, quarter. warrants approximately hold every longer XXXX, the per marked price outstanding, to we have that share. to of amendments

first pilot was we which in hour lithium supports one amp sample our of power our a the lithium up facilities. on of development to Giga end approximately we the with Shanghai batteries. to power the million $X.X is operations level Giga scale spending expectations gigawatt to of basis, our was focused producing annually. a On similar our year to amp of QX quarter of million, At of and capital cells be facility in believe hours in CapEx metal toward our was CapEx our gigawatt our March. battery Before $XX the ready expect facility, practical of of OEM range we completing capable as our investment with and the ion lithium use Shanghai to approach typical in XX% a cash went XXXX, which entering $XX quarter, line XX X.X million at quarter, phase the XXX facility first end metal partners

We be the million toward expect range $XX of which will facilities total in $XX in to XXXX CapEx largely million, Asia. to our go

million this year, on Acquisition $XXX cash we pipe entered financing, sheet. In February cash. million merger of the completion Looking at Idaho and liquidity, our following added we with with our $XXX XXXX of of balance the Corporation of

ended quarter million, believe very to of in and position. balance cash funding XXXX the We Our is with which get $XXX equivalents us strong a sufficient we sheet to of commercialization. cash first is

operations quarter expenditures first cash was capital Our net $XX.X and used in million.

For million and of and expect use our over to with us $XXX should leave XXXX. million. of between cash This liquidity full total we year XXXX, $XX million be $XXX well entering

to and on investing a Lastly, are like as culture focused would we emphasize, as possible. I your maintaining capital startup efficiently

We that strong shareholders. some will returns to about Qichao Hu we of that, the for ahead remarks. are us excited With back for believe huge our opportunities drive will hand ultimately closing I and it

Qichao Hu

operations. manufacturing, global supply a sheet on and a Thanks, and in capabilities across engineering, in deep software end quarter Jing. $XXX our science, chain With balance million cash

stronger to visitors and Headquarters, never Eric. to as a to Korea. transparent been possible about a and opportunities pass want be We call welcome Shanghai as Boston back With have that, and I'll the in challenges We Giga, position.

Eric Goldstein

Thanks, Qichao Hu.

today's begin that with will receiving investors. from We Q&A some we've been questions

background lithium during dangerous? less testing? First between Can you you mossy batteries question, on provide can distinction typically why about Is lithium the our dendrites? fail and mossy talk more

Qichao Hu

Typically, battery lithium will dendrites then fact, they and refer you and shorts die, mossy to to the your lithium. in and But lithium some dendrites don't like something mossy structures because ion typically they is battery lithium definitely mossy sharp these have that battery, of in will needle pancake And ion at flat referred these to Sure. structures most cause to want like that is die to when most something due they start point. incidents. formation form typically lithium

have developed delay and really case, So and monitor. formation to of mossy control materials and to in we also algorithm our lithium the

Eric Goldstein

Great.

price any are inflation? experiencing question, supply being are we raw we issues? by material Next how impacted And chain

Qichao Hu

Yeah.

us, and lithium is way. not especially very material, nickel just raw a impacting major the whole So in the impacting but industry

and impact of half of the cattle and address nickel price For of you to example, catch needs lithium. expanding did lithium supply in year the to have us contact our the terms shows a just that few in because past industry vendors we raise price, and in increase of industry all, to this. is then and on up, the a it Bu strategist

Eric Goldstein

Okay.

Can as has the Next indicated sufficient can to question. to you reach there? you classifies And clarify timeline Jing, SES what funding have about potential commercialization. we that commercialization? talk get

Jing Nealiss

Eric. question, the for Thanks

our with in is OEM. a mind, the process So is starting point commercialization the a samples

from We expect sustainable to free to previous of end considered at to and fully positive commercialized. get we to that a flow need day, stage generating in margin XXXX, discussion. be which have the gross cash hasn't our changed the But business

Eric Goldstein

ready we the Operator, open questions. Please lines for are Thanks. now Okay. take to Q&A.

Operator

open. Water comes Of from your course. Instructions] first Thank [Operator question with Shawn, you. Severson is Shawn Tower line now Our Research.

Shawn Severson

I approaching securing Or advance? the things contracts? Great. you and chain like or how Thanks. Qichao, that commercial far locking in that about securing you've strategy I talked production. some supply chain take the are forward. had pay a are actually mean, supply supply in going I know question these about

Qichao Hu

Yes.

also So, shareholders lithium, few them in two the Tianqi Lithium, other off-take copper, another of on producers, is is the major some and with agreement Ivanhoe, one of companies. working mining actually materials. of and our are partner largest world's shareholders, and to SPAC make are We'll our and One we and announcements nickel producer secure months. next leading lithium key

Shawn Severson

your that you of with derivative lithium that metal there interest LFP rising option? what with in costs? the think that and pairing -- question about Kind more do partners? from Is how Great. a fitting from JDA commodity that, Is in now,

Qichao Hu

more actually carbonate of the went of price which hydroxide, means up lithium the the than up So price LFP more Yes, than went cathode. lithium the price price high-nickel of of

types have is So those OEMs, so low expensive. metal that's LFP smaller. high-nickel we more that's is range, your than high-nickel four and but then pair lithium-ion LFP still is for to then cheaper lithium-ion point these economy it's because LFP with batteries, In hugely of But cathode, gap lithium-ion premium. lithium-ion for lithium the about is cars, and then the LFP high-nickel, And actually right? lithium-ion that then attractive

lithium same energy you lithium-ion. Now, with high-nickel if in metal, as LFP pair can density achieve you

So free same achieve really high-nickel can that's to nickel you as because metal, with cathode now in lithium-ion, essentially, the OEMs, so a the exciting LFP, range but lithium exciting. very

Shawn Severson

are any And need B hurdles, then over call the through my these is either there or -- trying major you process? roadmap to technology go you from question the last as going any hurdles understand samples? Are these and there technology I'm real that to C just it to that to technology modest evolution? get issues A are

Qichao Hu

Yes.

but So we that's of challenges, do showstoppers. nothing have lots fundamental. No

we Once building that the also earlier showstoppers. the to the cell amp it's power cells we performance large And the things, year, quite lots just that performance we have powers one, cells were these the then the challenges really is of part integrate lots module the the performance the performance cells really -- This second level. the to at engineering level. but can dissemble match performance at modules, we For see line XXX XX in that of to of year, we we amp of show smaller into cells. good. and match And cell these those small cells this a are performance that's actually But X large the is challenges. smaller get one. format, cells smaller No then demonstrated just performance the example, smaller the worse when and cells, we last than new power the amp to basically, it’s started large to be a because much but expected optimize new started first

Shawn Severson

the back Great. in queue. Thanks. step I'll

Operator

If that there further There further questions Thank are Instructions] conclude today's will no [Operator are questions you. in call. no queue.

please have Investor questions free you any contact If you participation. Relations additional with have. may for any Thank questions, to you feel your

disconnect now You may your lines.

SES AI (SES) 12 May 222022 Q1 Earnings call transcript