10-Q: SES AI Reports Q2 2025 Results, Highlights Cash Burn

SES AI Corporation reported increased revenue but continued significant losses and cash burn for Q2 2025, while pursuing strategic acquisitions and facing substantial capital needs.

Summary

• Generated revenue of $3.5 million for Q2 2025 and $9.3 million for the six months ended June 30, 2025, primarily from service-related contracts with OEMs and other manufacturers.
• Net loss for Q2 2025 was $22.7 million, and $35.1 million for the six months ended June 30, 2025, a slight improvement from $35.5 million in the prior year period.
• Research and development expenses increased by 47.6% to $39.6 million for the six months ended June 30, 2025, driven by a $8.5 million increase in AI infrastructure costs (GPU, Molecular Universe) and $8.0 million in lab equipment purchases.
• General and administrative expenses decreased by 27.4% to $13.8 million for the six months ended June 30, 2025, primarily due to headcount reductions and lower professional services.
• Cash and cash equivalents significantly decreased to $11.8 million as of June 30, 2025, from $128.8 million at December 31, 2024, with short-term investments increasing to $217.1 million.
• Net cash used in operating activities increased to $33.7 million for the six months ended June 30, 2025, compared to $31.1 million in the prior year period.
• Entered into an agreement on July 25, 2025, to acquire Shenzhen UZ Energy Co., Ltd., a China-based battery energy storage system manufacturer, for approximately $25.48 million, expected to close in Q3 2025.
• The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, terminating certain IRA tax credits for EV purchases and charging infrastructure, which will phase out by September 30, 2025, and June 30, 2026, respectively.
• Regained compliance with NYSE's $1.00 minimum share price listing standard by the end of July 2025, after receiving a non-compliance notice in March 2025.
• Identified a material weakness in internal control over financial reporting related to the valuation of Sponsor Earn-Out liabilities, with remediation efforts ongoing.

Sentiment

Score: 3

Explanation: The sentiment is cautious to negative. While revenue generation has begun and strategic R&D is ongoing, the company continues to incur significant losses and cash burn, explicitly stating a need for substantial future capital. Key risks include the untested nature of its core technology in actual EVs, the emerging market for its AI services, and the negative impact of new legislation on EV incentives. The recent NYSE delisting notice, though resolved, highlights underlying stock price weakness and market skepticism.

Positives

• Began generating revenue from principal business activities in October 2024, reporting $9.3 million for the first six months of 2025.
• Achieved a slight reduction in net loss for the six months ended June 30, 2025, to $35.1 million from $35.5 million in the prior year.
• Successfully transitioned to B-Sample battery development with key OEM partners like Hyundai and Honda, indicating progress in product maturity.
• Strategic acquisition of Shenzhen UZ Energy Co., Ltd. diversifies the business into battery energy storage systems.
• Reduced general and administrative expenses by 27.4% due to headcount reductions and lower professional services, demonstrating cost management efforts.
• Regained compliance with NYSE listing requirements, mitigating immediate delisting risk.

Negatives

• Cash and cash equivalents significantly decreased to $11.8 million as of June 30, 2025, from $128.8 million at December 31, 2024.
• Net cash used in operating activities increased to $33.7 million for the six months ended June 30, 2025, indicating higher cash burn.
• Continued to incur substantial net losses, with $35.1 million for the six months ended June 30, 2025.
• Research and development expenses increased by 47.6% to $39.6 million, contributing to the overall operating loss.
• The One Big Beautiful Bill Act (OBBBA) terminates certain EV tax credits, potentially reducing demand for EVs and impacting future sales.
• Identified a material weakness in internal control over financial reporting related to the valuation of Sponsor Earn-Out liabilities.
• The GM A-Sample JDA concluded in September 2024, and GM is no longer considered a related party, potentially indicating a shift in a key partnership.

Risks

• Significant challenges in developing a commercializable Lithium-Metal (Li-Metal) battery for EVs, UAM, and other applications, with unpredictable development pace and potential delays.
• Expectation to continue incurring losses for the foreseeable future, with no assurance of achieving or maintaining profitability.
• Need for substantial additional capital in the future to fund business operations, with potential inability to meet future capital requirements, impairing financial position.
• Li-Metal technology is untested in actual EVs and may ultimately prove unworkable.
• The market for Urban Air Mobility (UAM) and Li-Metal technology in UAM applications is still emerging and may not achieve expected growth potential.
• Batteries failing to perform as expected could harm the ability to develop, market, and sell products.
• Inability to predict user behavior when driving EVs with Li-Metal technology.
• Delays in the pre-manufacturing development of battery cells could adversely affect business and prospects.
• May not be able to successfully engage target Original Equipment Manufacturers (OEMs) customers and convert contacts into meaningful orders.
• Inability to integrate products into EVs manufactured by OEM customers could impair results of operations.
• Inability to establish new, or maintain existing, supply relationships for necessary raw materials, components, or equipment, or being required to pay higher costs for them.
• Ability to manufacture Li-Metal batteries at scale depends on building, operating, and staffing facilities successfully and obtaining sufficient contract manufacturing specificity.
• Joint development agreements (JDAs), services contracts, and other strategic alliances could have an adverse impact if unsuccessful or if new ones are not entered into.
• The EV battery market is highly competitive, with certain other battery manufacturers possessing significantly greater resources.
• Inaccurate estimation of future supply and demand for batteries could result in inefficiencies, hinder revenue generation, or incur additional costs/delays.
• Components of batteries pose safety risks, potentially leading to accidents, product recalls, and product liability claims exceeding resources.
• Use of artificial intelligence and machine learning may result in legal and regulatory risks.
• The market for AI-based services is still emerging, and AI programs may not achieve expected growth potential.
• Patent applications may not result in issued patents, or patent rights may be challenged, invalidated, or limited in scope.
• Heavy reliance on intellectual property portfolio, including unpatented proprietary technology; inability to protect rights would harm business.
• International business exposes the company to business, regulatory, political, operational, financial, and economic risks outside the United States.
• Changes in U.S. and foreign government policy, including tariffs and trade agreements, could materially adversely affect global economic conditions and business.
• The price of Class A common stock has been and may continue to be volatile.
• Public warrants may never be in the money and may expire worthless.
• Control or substantial influence by Dr. Qichao Hu and affiliated entities, whose interests may conflict with other stockholders.
• Failure to satisfy certain New York Stock Exchange (NYSE) listing requirements may result in delisting, adversely affecting the trading market.
• History of material weaknesses in internal control over financial reporting, and failure to remediate or identification of new ones could adversely impact stock value.
• The unavailability, reduction, or elimination of government and economic incentives or subsidies available to the company, end-users, or OEMs could have a material adverse effect on business, financial condition, operating results, and prospects, specifically mentioning the termination of IRA tax credits by the OBBBA.

Future Outlook

The company expects to continue incurring substantial operating expenses and net losses for a number of years, consistent with its early-stage growth and commercialization strategy. It believes current cash and marketable securities are sufficient for at least 12 months and through full commercialization, but acknowledges that additional funding may be required for further growth opportunities, acquisitions, or unexpected delays. Capital expenditures are expected to decrease in 2025 as the focus shifts to AI-related infrastructure classified as R&D expense rather than manufacturing equipment investment.

Management Comments

• "We believe that our cash on hand and marketable securities resulting from these proceeds will be sufficient to meet our principal working capital and capital expenditure requirements and ongoing costs, such as research and development relating to our Li-Metal batteries and Molecular Universe material discoveries, for a period of at least 12 months from the date of this Quarterly Report, as well as to full commercialization."
• "However, additional funding may be required during or after this period to finance certain needs beyond our principal working capital and capital expenditure requirements and ongoing costs, including additional opportunities to purchase data and equipment, develop and train our AI models, and/or develop commercial operations in the United States, acquisitions or other strategic transactions, and unexpected delays in the development of our Li-Metal battery cells."
• "If we need additional funding beyond these existing shortto medium-term sources of liquidity, or if following commercialization, we are not able to fund our operations from cash flows generated from anticipated product sales, we expect that we will need to raise additional funds."
• "We expect capital expenditures to decrease in 2025 compared with 2024 as we continue to spend on AI related infrastructure classified as research and development expense rather than invest in manufacturing equipment."
• "Notwithstanding the identified material weaknesses, management, with the participation of the principal executive officer and principal financial officer, believes the condensed consolidated financial information included in this Quarterly Report on Form 10-Q fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP."

Industry Context

The company operates in the highly competitive and evolving EV battery market, focusing on advanced Li-Metal and AI-enhanced battery technologies. The industry is characterized by rapid technological advancements, significant R&D investment, and reliance on OEM partnerships. The recent enactment of the One Big Beautiful Bill Act (OBBBA) in the U.S., which terminates certain EV tax credits, represents a significant shift in government policy that could reduce demand for EVs and impact the broader battery market. The company's diversification into Energy Storage Systems (ESS) through the UZ Energy acquisition aligns with broader trends in energy transition and grid-scale storage solutions.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or detailed results to benchmark against industry standards. It notes that the EV battery market is highly competitive and that certain other battery manufacturers have significantly greater resources.

Corporate Governance

Legal Proceedings

• Not currently a party to any litigation or legal proceedings that are likely to have a material adverse effect on the business. However, the company may be subject to claims arising in the ordinary course of business.

Related Party Transactions

• General Motors Company and its affiliates (GM) were considered related parties until October 29, 2024, due to board representation and a joint development agreement. GM is no longer considered a related party during 2025 following the termination of the Director Nomination Agreement and GM's board representation.

Stakeholder Impact

• Shareholders: Face significant dilution risk due to the explicit need for substantial additional capital and the existing at-the-market equity offering program. Stock price volatility and past NYSE delisting risk also impact shareholder value.
• Employees: Headcount reductions in R&D and G&A functions have occurred, impacting personnel costs and stock-based compensation.
• Customers (OEMs): Continued development of B-Sample batteries and new service agreements (e.g., Honda) indicate ongoing collaboration, but the conclusion of the GM A-Sample JDA and the termination of EV tax credits could impact future demand and partnerships.
• Suppliers: Potential for increased costs or delays if the company is unable to establish or maintain supply relationships for raw materials and components.
• Creditors: The company's continued losses and cash burn, coupled with the need for future capital, may impact its creditworthiness, though current liquidity is deemed sufficient for 12 months.

Next Steps

• Continue research and development activities to improve battery performance, quality, and cost, focusing on scale-up, module and pack design, AI software and BMS, advanced materials and coatings, cathode materials and design, and Li-Metal recycling.
• Close the acquisition of Shenzhen UZ Energy Co., Ltd., expected in the third quarter of 2025.
• Evaluate the financial impact of the One Big Beautiful Bill Act (OBBBA) and recognize any such impact in the Form 10-Q filed for the period ending September 30, 2025.
• Continue designing updated processes and controls and maintain sufficient and appropriate review documentation for the assessment of all key assumptions related to the valuation of Sponsor Earn-Out liabilities to remediate material weaknesses in internal control over financial reporting.
• Monitor compliance with NYSE listing requirements, given past volatility.

Key Dates

Recommendation

The company is in a highly speculative, early commercialization phase with significant financial challenges. It continues to incur substantial net losses and increased cash burn from operations. The explicit need for 'substantial additional capital' in the future, coupled with an existing $150 million at-the-market equity offering program, signals high potential for future shareholder dilution. The core Li-Metal battery technology is 'untested in actual EVs and may ultimately prove unworkable,' representing a fundamental technological risk. Furthermore, the termination of key EV tax credits by the OBBBA could negatively impact market demand. While revenue generation has begun and strategic R&D is ongoing, the overall risk profile, including past NYSE delisting concerns, suggests a high probability of further downside for investors.

Keywords

Lithium-Metal Battery, EV Battery, AI-enhanced Battery, Energy Storage Systems, Urban Air Mobility, Battery Technology, SEC Filing, 10-Q, Battery Management System, Material Discovery, Electric Vehicles, Corporate Governance, Risk Factors, Financial Performance