10-K: CBAK Energy Reports 2025 Net Loss Amid Strategic Shifts

CBAK Energy Technology, Inc. reported a net loss of $10.4 million for fiscal year 2025, a significant decline from the prior year's net income, as it navigates product transitions and capacity expansions.

Summary

• Net revenues increased by 11% to $195.2 million in 2025 from $176.6 million in 2024.
• The company recorded a net loss of $10.4 million in 2025, compared to a net income of $9.6 million in 2024.
• Gross profit declined by 56% to $18.4 million (9.4% of net revenues) in 2025 from $41.8 million (24% of net revenues) in 2024.
• Sales of batteries for light electric vehicles (LEV) increased by 252% to $36.4 million in 2025 from $10.3 million in 2024.
• Sales of materials for lithium battery manufacturing (Hitrans segment) increased by 123% to $89.2 million in 2025 from $40.0 million in 2024.
• Sales of batteries for residential energy supply & uninterruptible power supplies (UPS) decreased by 45% to $68.8 million in 2025 from $124.6 million in 2024, primarily due to a product portfolio upgrade at Dalian facilities.
• Operating income turned into an operating loss of $18.4 million in 2025, compared to an operating income of $8.8 million in 2024.
• Research and development expenses increased by 22% to $15.8 million in 2025 from $13.0 million in 2024.
• Capital expenditures increased to $45.8 million in 2025 from $17.2 million in 2024, primarily for Dalian, Nanjing, Zhejiang, and Anhui facilities.
• The company plans to complete a Redomicile Merger to the Cayman Islands in the first half of 2026, expecting to qualify as a foreign private issuer.
• Identified material weaknesses in internal control over financial reporting as of December 31, 2025, related to accounting policies and insufficient skilled accounting personnel.
• Independent auditors expressed substantial doubt about the company's ability to continue as a going concern due to a working capital deficiency, accumulated deficit, and significant short-term debt.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative report due to the significant shift from net income to a substantial net loss, a sharp decline in gross profit margin, and the independent auditors' going concern warning. While there are positive developments in revenue growth in specific segments and strategic capacity expansions, these are overshadowed by the overall financial deterioration and operational challenges.

Positives

• Overall net revenues increased by 11% year-over-year to $195.2 million in 2025.
• Sales of batteries for Light Electric Vehicles (LEV) showed strong growth, increasing by 252% to $36.4 million in 2025.
• Sales of materials for lithium battery manufacturing (Hitrans segment) significantly increased by 123% to $89.2 million in 2025, driven by new customer acquisitions and favorable raw material pricing.
• The Dalian facility successfully transitioned to a new Model 40135 production line, which has a robust order book and is expected to be a significant revenue driver.
• Phase I of the Nanjing Project is operating at full capacity (1.5 GWh annually), and two new Phase II lines have commenced mass production, projected to reach 3 GWh by early 2027.
• Hitrans is expanding its proprietary infrastructure with a new 10,000-metric-ton cathode manufacturing plant slated for completion in September 2026 and a 37,000-metric-ton precursor plant anticipated to commence production in 2027.
• The company successfully developed and is capable of mass-producing Model 32140 sodium-ion cylindrical batteries, positioning it among a few global companies with this capability.
• R&D efforts are focused on developing next-generation large-format cylindrical battery models (60115, 60135, 60150) offering higher energy capacities and lower manufacturing costs.
• Expansion into the African market for battery pack integration contributed 9% of the company's revenue in 2025.
• The company regained compliance with Nasdaq's $1.00 minimum bid price requirement as of March 17, 2026.

Negatives

• The company reported a net loss of $10.4 million in 2025, a significant decline from the net income of $9.6 million in 2024.
• Gross profit sharply decreased by 56% to $18.4 million (9.4% margin) in 2025 from $41.8 million (24% margin) in 2024.
• Operating income turned into an operating loss of $18.4 million in 2025, compared to an operating income of $8.8 million in 2024.
• Sales of batteries for residential energy supply & uninterruptible power supplies (UPS) declined substantially by 45% to $68.8 million in 2025.
• The company had a working capital deficiency of $119.2 million and an accumulated deficit of $133.8 million as of December 31, 2025.
• Independent auditors expressed substantial doubt about the company's ability to continue as a going concern.
• Incurred a loss on derivatives instruments of $0.4 million in 2025.
• Research and development expenses increased by 22% to $15.8 million, and General & Administrative expenses increased by 16.1% to $16.2 million in 2025.
• Hangzhou Juzhong Daxin Asset Management Co., Ltd. refused to refund a RMB3 million ($0.5 million) security deposit, leading to ongoing legal proceedings.
• Management Shareholder Investments in Hitrans, with significant balances due by December 31, 2022, and June 30, 2024, remain unpaid as of December 31, 2025, with negotiations to extend the payment due date to May 31, 2029.
• A $5.0 million compensation received from a cancelled order in 2025, while boosting other income, indicates potential customer instability or order cancellations.

Risks

• Independent auditors expressed substantial doubt about the company's ability to continue as a going concern due to a working capital deficiency, accumulated deficit from recurring net losses, and significant short-term debt obligations.
• The PRC government exerts substantial influence over business activities, with potential for rapid changes in laws, regulations, and policies that could materially affect operations and stock value.
• Increased PRC government oversight and control over overseas offerings and foreign investment in China-based issuers could limit the ability to raise capital or cause stock value to decline or become worthless.
• Changes in U.S. and Chinese regulations or relations, including tariffs and outbound investment controls, may adversely impact business, operating results, capital raising ability, and securities value.
• Uncertainties exist regarding the interpretation and enforcement of PRC laws, rules, and regulations, which can be inconsistent and unpredictable.
• As a holding company, the company relies on dividends and other distributions from its PRC operating subsidiaries for cash needs, which are subject to PRC restrictions on fund transfers and foreign exchange controls.
• Investors may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing original actions in China based upon U.S. laws.
• There is a potential future risk of the PCAOB being unable to inspect auditors located in China, which could lead to the company's common stock being prohibited from trading in the United States under the HFCAA.
• Inherent risks are associated with new product development (e.g., Model 32140 sodium-ion cells, Series 60 batteries, battery pack integration), including uncertainty of customer acceptance, competitor reactions, and recouping R&D expenditures.
• Failure to keep up with rapid technological changes and evolving industry standards in the lithium-based battery and battery materials market may cause products to become obsolete and less marketable.
• Maintaining R&D activities and manufacturing operations requires significant capital expenditures, and the inability to obtain capital on acceptable terms could materially adversely impact market share and revenue generation.
• The company faces intense competition from other battery manufacturers and cathode material/precursor producers, many of whom have significantly greater resources.
• Dependence on a limited number of customers for a significant portion of revenues (top five accounted for 37.1% in 2025) exposes the company to substantial losses if a major customer reduces purchases.
• Reliance on a few battery and material suppliers creates risks of supply disruption, price increases, or inability to find suitable alternatives, potentially leading to breaches of sales contracts.
• Business success depends on the growth in demand for light electric vehicles, electric vehicles, and energy storage; failure to meet expected market growth could result in excess production capacity and reduced profitability.
• Risks associated with marketing, distribution, and sale of products internationally, including in new markets such as Africa, encompass currency exchange rate fluctuations, difficulty in engaging distributors, increased marketing costs, compliance with diverse legal requirements, trade barriers, geopolitical instability, and operational/logistical challenges.
• Expansion into the African market subjects the company to significant operational, regulatory, political, and economic risks, including limited infrastructure, unpredictable regulatory frameworks, political instability, currency volatility, and challenges in establishing distribution and service networks.
• Engagement in transactions with related parties presents potential conflicts of interest that could adversely affect business and results of operations.
• Significant costs may be incurred due to product warranties, with no assurance that future claims will be consistent with past history or that reserves will be sufficient.
• Lack of comprehensive product liability insurance across all operations and incomplete property insurance coverage for facilities could lead to substantial uninsured losses.
• Fluctuations in prices and availability of key raw materials (Ni, Co, Mn, Li2CO3, LiPF6, LiFePO4) could increase costs or cause delays in shipments.
• Inability to accurately plan production based on non-binding customer forecasts may result in excess product inventory or product shortages.
• Manufacturing or use of products may cause accidents, leading to significant production interruption, delays, or claims for substantial damages.
• Significant reliance on technology and systems for production, supply chain, payments, and financial reporting; any failure, inadequacy, interruption, or security breach could have a material adverse effect.
• The use of artificial intelligence presents risks relating to confidentiality, creation of inaccurate and flawed outputs, and emerging regulatory challenges.
• Substantial dependence on the continuing efforts of senior executives and other key personnel; loss of their services could severely disrupt business.
• Significant management changes could increase control risks and materially adversely affect the ability to do business and results of operations.
• Identified material weaknesses in internal control over financial reporting could lead to inaccurate financial results or fraud, adversely affecting investor confidence and share price.
• Geopolitical instability, including armed conflict in the Middle East, could disrupt global supply chains, increase costs, and adversely affect business and results of operations.
• Outbreaks of viruses or other health epidemics could materially and adversely affect business operations.
• Numerous factors, many beyond control, may cause the market price of common stock to fluctuate significantly.
• Techniques employed by short sellers may drive down the market price of the common stock.
• Failure to comply with Nasdaq's continued listing requirements could result in delisting, limiting the public market for shares and making future financing more difficult.
• Public disclosures are not subject to the scrutiny of any regulatory bodies in the PRC, potentially making it more difficult for investors to assess risks.
• Exposure to infringement or misappropriation claims by third parties could cause loss of significant rights and inability to continue providing existing product offerings.
• Adverse developments affecting the financial services industry could adversely affect current and projected business operations and access to capital.

Future Outlook

The company expects gross profit margins to gradually recover upon the upgrade from Model 26650 to Model 40135, anticipating this transition will serve as a significant revenue driver for the Dalian plant. The Nanjing facility's Phase II lines are projected to achieve maximum capacity utilization by early 2027, bringing the total Nanjing campus capacity to approximately 20 GWh. Hitrans is constructing new cathode and precursor plants, expected to be operational in the first half of 2027 and 2027, respectively. The company anticipates that optimized capacity expansion will drive sustained margin expansion and profitability. Management believes that government new energy policies will encourage the production of new energy vehicles and foster strategic development, expressing confidence in securing additional orders. The company plans to renew bank loans and raise additional funds through bank borrowings and equity financing to meet future cash demands. Total capital expenditures in fiscal year 2026 are estimated at approximately $50 million. The Redomicile Merger to the Cayman Islands is expected to be completed in the first half of 2026, with the company qualifying as a foreign private issuer by June 30, 2026.

Management Comments

• "We strive to continue to penetrate the market for batteries used in light electric vehicles, especially the international market such as India, Vietnam and Africa. We believe that our sales campaign in the international market has contributed to a rebound in our sales volume in this sector."
• "We believe the governments new energy policies will, in the long run, encourage the production of new energy vehicles, optimize the industrys structure, enhance technical standards and strengthen the industrys competitiveness, which ultimately will foster strategic development of new energy vehicles."
• "In addition, our latest development of Model 32140 and 40135 battery and our planned investment in the R&D of Series 60 batteries will help us regain competitiveness in the energy storage, LEV and EV markets with the appropriate products."
• "With the demand for new energy growing, we are confident in our ability to secure additional orders from the expanding market."
• "Moving forward, we anticipate this highly optimized capacity expansion will drive sustained margin expansion and profitability across our battery segment."
• "We remain focused on leveraging Hitranss capabilities and exploring opportunities to enhance its contribution to our overall business."
• "Given that our core operations are in manufacturing and involve limited network-related activities, we believe that our existing cybersecurity measures are adequate."
• "The Companys Board of Directors and senior management are committed to continuously evaluating and upgrading our cybersecurity prevention, detection, and mitigation strategies in line with the evolution of our business needs and cybersecurity risks."

Industry Context

StockSavvy.ai notes that the new energy battery market, particularly for EVs, LEVs, and energy storage, is characterized by rapid technological change and intense competition. The company's strategic shift towards larger cylindrical batteries (Model 40135, Series 60) and sodium-ion cells aligns with industry trends seeking higher energy density, lower costs, and specialized performance (e.g., low-temperature resilience). The expansion of manufacturing capacity in China and entry into the African market for battery packs reflects a broader industry push for global market penetration and vertical integration to control supply chains. The reduction in China's export tax rebates for battery products, effective April 1, 2026, and complete elimination by January 1, 2027, signals a strategic shift by the PRC government towards high-quality growth and may impact the company's export competitiveness, potentially affecting its ability to pass through costs to international customers.

Comparison to Industry Standards

• The company faces intense competition from high-power lithium battery makers such as Gotion Hi-tech, EVE Battery, Shandong Goldencell, EVPS, Power Long Battery, Great Power, Do-Fluoride, Greenway, and Ampace.
• In the materials market, competitors include Beijing Easpring, Ronbay Technology, and Huayou Cobalt.
• The company claims to have higher consistency and safety in product quality compared to other Chinese battery makers.
• Its R&D team developed Model 32140 and 40135 lithium cells, which are stated to be among the best large cylindrical battery models globally.
• The successful development of Model 32140 sodium-ion cells positions the company as one of only a few worldwide capable of mass-producing such batteries.
• In-house testing demonstrates Model 32140 sodium-ion cells maintain an 85% capacity retention rate at -40°C and can charge to 90% capacity in just 10 minutes, offering a distinct competitive advantage in extreme environments.
• The Model 26650 battery, originally introduced in 2006, is nearing the end of its lifecycle, indicating a need for continuous product innovation to maintain market share against evolving industry standards.

Management Changes

Corporate Governance

Legal Proceedings

• CBAK Power initiated legal proceedings against Hangzhou Juzhong Daxin Asset Management Co., Ltd. to recover an outstanding RMB3 million ($0.5 million) security deposit, which Juzhong Daxin refused to refund, as of December 31, 2025.
• In December 2020, Haoneng filed a lawsuit against CBAK Power for failure to pay $1.5 million (RMB10,257,030) for equipment. An agreement was reached in August 2021 to extend the purchase contract term to December 31, 2024, requiring CBAK Power to purchase at least $2.4 million (RMB15,120,000) in equipment or pay 15% of the unpurchased amount. Haoneng withdrew the lawsuit, but as of December 31, 2025, the equipment was not received, and the cost of $2.2 million (RMB15,120,000) is included under capital commitments.

Related Party Transactions

• Ms. Xiuzhu Li, a major shareholder (Gimli Group Limited, 11.75% ownership as of Dec 3, 2025), is also a major shareholder (46.32%) of Shenzhen BAK New Material Technology Co., Ltd., a supplier.
• An immediate family member of Ms. Xiuzhu Li has major interests in several entities that are suppliers and customers of the company.
• Purchases of batteries from Zhengzhou BAK: $6,628,052 in 2025 ($7,049,867 in 2024).
• Purchases of batteries from Fuzhou BAK: $302,809 in 2025 ($69,133 in 2024).
• Purchases of materials from Zhejiang Shengyang: $5,452,798 in 2025 ($4,352,197 in 2024).
• Sub-contracting services provided by Fuzhou BAK: $1,783,617 in 2025 (nil in 2024).
• Purchases of materials from Shenzhen BAK New Material Technology Co., Ltd: $798,972 in 2025 (nil in 2024).
• Purchases of materials from SZ BAK Medical: $370,224 in 2025 (nil in 2024).
• Sales of cathode raw materials to Zhengzhou BAK: $15,196,930 in 2025 ($18,661,537 in 2024).
• Sales of cathode raw materials to Zhengzhou BAK Electronics Co., Ltd: $908,156 in 2025 ($388,430 in 2024).
• Deposit paid for acquisition of long-term investments in BAK SZ: $16,503,014 as of December 31, 2025 ($15,864,318 in 2024).
• Dividend payable to non-controlling interest of Hitrans: $1,271,109 as of December 31, 2025 ($1,221,915 in 2024).
• Advances from former CEOs Mr. Xiangqian Li ($100,000) and Mr. Yunfei Li ($157,236) were unsecured, non-interest bearing, and repayable on demand as of December 31, 2025.
• Mr. Yunfei Li and his wife Ms. Qinghui Yuan provided guarantees for several bank facilities.

Stakeholder Impact

• Shareholders face significant risks due to the going concern doubt, net loss, declining gross margins, and potential delisting from Nasdaq. The Redomicile Merger aims to reduce costs and align with international strategy, potentially benefiting shareholders long-term, but the immediate financial performance is concerning. Dilution risk from future equity financing is also present.
• Employees may see continued opportunities from growth and expansion plans in new production lines and R&D, but the overall financial instability and going concern doubt could pose risks to job security. Management changes and internal control weaknesses could affect employee morale and operational efficiency.
• Customers may benefit from product portfolio upgrades (e.g., Model 26650 to 40135) and new product developments (sodium-ion, Series 60) aimed at meeting evolving demands. Expansion into new markets like Africa indicates a broader reach. However, production delays or financial instability could impact product supply and reliability.
• Suppliers, particularly key raw material providers, face potential risks if the company's financial instability affects its ability to fulfill payment obligations. The company's hedging strategies for raw material prices could offer some stability.
• Creditors face concerns regarding the company's ability to repay debts, given the significant short-term debt obligations and a working capital deficiency, as highlighted by the going concern opinion. Many bank loans are secured by company assets.

Next Steps

• Complete the Redomicile Merger to the Cayman Islands in the first half of 2026.
• Qualify as a foreign private issuer under SEC rules as of June 30, 2026.
• Achieve full capacity of 3 GWh from Nanjing Phase II lines by early 2027.
• Achieve total production capacity of 3.3 GWh at the Dalian facility by early 2027.
• Complete construction of Hitrans' new 10,000-metric-ton cathode manufacturing plant by September 2026, with full operation in the first half of 2027.
• Commence production at Hitrans' new 37,000-metric-ton precursor plant in 2027.
• Continue R&D for next-generation large-format cylindrical battery models (60115, 60135, 60150) and high-nickel low-cobalt materials.
• Remediate identified material weaknesses in internal control over financial reporting, including hiring skilled accounting personnel and providing U.S. GAAP training.
• Negotiate extension of payment due date for remaining unpaid Management Shareholder Investments in Hitrans to May 31, 2029.
• Address the legal proceedings against Juzhong Daxin to recover RMB3 million ($0.5 million).
• Manage the impact of reduced and eliminated PRC export tax rebates for battery products starting April 1, 2026, and January 1, 2027, respectively.
• Expend approximately $50 million in capital expenditures in fiscal year 2026 for new plants and production lines.

Key Dates

Recommendation

The company's shift from a net income of $9.6 million in 2024 to a substantial net loss of $10.4 million in 2025, coupled with a drastic 56% reduction in gross profit margin, signals severe operational and financial challenges. The independent auditors' 'going concern' warning, significant working capital deficiency, and accumulated deficit underscore a precarious financial position. While strategic expansions and new product developments are underway, their benefits are not yet realized and are overshadowed by immediate financial distress and execution risks, particularly in new markets like Africa. The identified material weaknesses in internal controls further erode investor confidence. Given these fundamental concerns, a seasoned investor would likely recommend selling the stock to mitigate further downside risk.

Keywords

Lithium-ion batteries, Sodium-ion batteries, EV batteries, LEV batteries, Energy storage, Cathode materials, Precursors, New energy, China manufacturing, SEC filing, 10-K, Financial results, Capacity expansion, R&D, Going concern, Internal controls, Related party transactions, Geopolitical risk, Nasdaq, Redomicile Merger