10-K: SES AI Reports Strong Revenue Growth, Strategic Shifts in 2025

SES AI Corporation's 2025 annual report highlights significant revenue growth driven by ESS sales and service contracts, alongside strategic shifts towards AI-enhanced battery technology and joint venture manufacturing.

Summary

• Net loss for the year ended December 31, 2025, decreased to $73.0 million, compared to $100.2 million in 2024.
• Total revenue from customers increased by 929.4% to $21.0 million in 2025, up from $2.0 million in 2024.
• Service revenue grew by $11.6 million to $13.6 million, primarily due to a full year of service-related contracts with OEMs and other manufacturers.
• Product revenue increased by $7.3 million to $7.4 million, mainly from Energy Storage System (ESS) sales following the acquisition of UZ Energy in Q3 2025.
• Gross profit rose to $11.3 million in 2025 from $1.3 million in 2024, though gross margin decreased to 53.8% from 63.1% due to a changing revenue mix.
• Total operating expenses decreased by 15.0% to $93.9 million in 2025, driven by reductions in research and development (R&D) and general and administrative (G&A) costs.
• R&D expenses decreased by $5.1 million (7.1%) to $67.0 million, primarily due to reduced personnel costs and lab expenses, partially offset by a $9.1 million increase in AI infrastructure costs.
• G&A expenses decreased by $11.5 million (30.0%) to $26.9 million, mainly due to reduced headcount and professional services.
• The acquisition of UZ Energy, a China-based battery energy storage system manufacturer, was completed on September 15, 2025, for approximately $25.8 million (RMB 183.5 million).
• A joint venture with Hisun New Energy Materials Ltd. Co. was announced in November 2025 to manufacture newly discovered materials at commercial scale, with supply expected to begin in the second half of 2026.
• Plans are underway to develop National Defense Authorization Act (NDAA)-compliant manufacturing capacity for drone cells in Korea.
• The company remediated a previously reported material weakness in its internal control over financial reporting related to the valuation of Sponsor Earn-Out liabilities as of December 31, 2025.
• Cash and cash equivalents stood at $29.5 million and short-term investments at $170.1 million as of December 31, 2025, totaling $199.6 million in liquidity.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive report, reflecting strong revenue growth and strategic advancements, but tempered by continued losses and the inherent risks of an early-stage technology company in a capital-intensive industry.

Positives

• Revenue from customers increased significantly by 929.4% to $21.0 million in 2025, demonstrating strong commercial traction.
• Net loss decreased by $27.2 million to $73.0 million in 2025, indicating improved financial performance and cost management.
• Operating expenses decreased by 15.0% ($16.6 million) year-over-year, reflecting successful cost reduction efforts, particularly in personnel and professional services.
• The acquisition of UZ Energy in September 2025 has accelerated entry into the ESS market and contributed $7.4 million in product revenue in 2025.
• The joint venture with Hisun New Energy Materials Ltd. Co. is expected to enable commercial-scale manufacturing of novel battery materials, reducing capital intensity and accelerating time-to-market.
• The company successfully remediated a material weakness in its internal control over financial reporting, enhancing financial reporting reliability.
• Cash and marketable securities totaling $199.6 million as of December 31, 2025, are projected to meet working capital and capital expenditure requirements for at least 12 months.
• Increased focus and investment in AI infrastructure, with a $9.1 million increase in AI infrastructure costs, supports the company's strategic shift towards AI-enhanced material discovery and battery management.

Negatives

• The company continues to incur net losses, with an accumulated deficit of $371.9 million as of December 31, 2025, and expects to sustain losses for the foreseeable future.
• Gross margin decreased to 53.8% in 2025 from 63.1% in 2024, primarily due to a shift in revenue mix towards product sales.
• Interest income decreased by $5.7 million (37.9%) in 2025, attributed to lower average short-term investment balances and declining market interest rates.
• Miscellaneous expense, net, increased by $0.7 million, primarily due to a $1.3 million loss on the disposal of property and equipment.
• Net cash used in operating activities was $58.4 million in 2025, indicating continued cash burn from operations.
• Net cash used in investing activities was $39.2 million in 2025, a significant shift from $108.2 million provided in 2024, largely due to reduced proceeds from short-term investment maturities.
• The market for Urban Air Mobility (UAM) and Li-Metal technology in UAM applications is still emerging and may not achieve the expected growth potential.
• Challenges exist in developing NDAA-compliant manufacturing capacity for drone cells, and demand for such cells may not develop as anticipated.
• The company currently lacks long-term supply arrangements for raw materials, components, and equipment, posing a risk as volume demand grows.
• The price of Class A common stock has been volatile, fluctuating between $0.27 and $10.01 since the business combination.
• Public warrants, with an exercise price of $11.50, may expire worthless given the Class A common stock closing price of $1.66 as of March 2, 2026.
• The SES Founder Group's concentrated ownership (57.6% of total voting power) means the company is a controlled company, potentially leading to conflicts of interest with other stockholders.

Risks

• 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 uncertainty regarding availability on attractive terms, potentially leading to dilution or scaling back operations.
• Challenges in successfully integrating UZ Energy's operations, which could divert management attention, lead to loss of key employees, or result in material impairments.
• The market for Urban Air Mobility (UAM) and Li-Metal technology in UAM applications is still emerging and may not achieve the expected growth potential.
• Potential challenges in developing National Defense Authorization Act (NDAA)-compliant manufacturing capacity for drone cells, and uncertainty regarding demand for such cells.
• Risk of batteries failing to perform as expected, which could harm the ability to develop, market, and sell products, potentially leading to repairs, recalls, and design changes.
• Difficulty in successfully engaging target Original Equipment Manufacturer (OEM) customers and converting contacts into meaningful orders.
• Inability to establish new or maintain sufficient existing supply relationships for necessary raw materials, newly discovered materials, components, or equipment, or being required to pay higher costs, which could delay product introduction.
• Dependence on the ability to build, operate, and staff facilities successfully, as well as to obtain sufficient contract manufacturing capacity, for manufacturing batteries at scale.
• Adverse impact from unsuccessful joint development agreements (JDAs), service contracts, joint ventures, and other strategic alliances, or inability to enter into new ones.
• The battery market is highly competitive and evolving, with certain other battery manufacturers possessing significantly greater resources.
• Inability to accurately estimate future supply and demand for batteries or battery materials, potentially resulting in business inefficiencies, additional costs, or delays.
• Safety risks posed by certain components of batteries, which may cause accidents, product recalls, product liability claims, and substantial liabilities exceeding resources.
• Inability to develop and commercialize newly discovered materials through the Molecular Universe platform.
• Reputational harm and competitive harm from the use of artificial intelligence (AI) in products and services, including risks of flawed algorithms, insufficient datasets, or illegal/harmful information generated by AI.
• Legal and regulatory risks associated with the use of artificial intelligence and machine learning, including intellectual property ownership uncertainty and evolving regulatory landscapes (e.g., EU AI Act, U.S. executive orders).
• The market for AI for Science services, such as Molecular Universe, is still emerging and may not achieve the expected growth potential.
• The economic benefit of ESS products to customers depends on the cost of electricity from alternative sources, including local electric utility companies, which is subject to change.
• ESS products' performance may not meet customers' expectations or needs, impacting future sales and customer relationships.
• Dependence on third parties for component and product manufacturing and logistical services, many located outside the U.S., exposing the company to business interruptions and diminished control.
• Patent applications may not result in issued patents, or patent rights may be challenged, invalidated, or limited in scope, materially affecting the ability to prevent competition.
• Heavy reliance on the intellectual property portfolio, including unpatented proprietary technology, with risks of unauthorized use harming business and competitive position.
• Potential need to defend against intellectual property infringement claims, which can be time-consuming and costly.
• Risks related to protecting intellectual property in various countries, particularly China, due to differing legal protections and potential government appropriation.
• The international nature of business exposes the company to business, regulatory, political, operational, financial, and economic risks associated with doing business outside the United States, including tariffs, trade tensions, and data localization requirements.
• Volatility in the price of Class A common stock.
• Public warrants may never be in the money and may expire worthless.
• Control or substantial influence by Dr. Qichao Hu and affiliated entities (SES Founder Group), whose interests may conflict with other stockholders, and concentrated ownership of dual-class common stock could prevent other stockholders from influencing significant decisions.
• Provisions in the Certificate of Incorporation and Delaware law may inhibit takeover attempts, potentially limiting the price investors might be willing to pay for common stock and entrenching management.
• The Charter's exclusive forum provision for certain stockholder litigation matters could limit stockholders' ability to obtain a favorable judicial forum.
• Risk of securities litigation due to stock price volatility, which is expensive and could divert management's attention.
• As a smaller reporting company, reduced reporting requirements may make securities less attractive to investors.
• Potential for new material weaknesses in internal control over financial reporting, despite remediation of a prior one, which could adversely impact the value of Class A common stock.
• Implementation of labor laws and regulations in China may adversely affect business and results of operations.
• Government incentives are conditional upon achieving or maintaining certain performance obligations and are subject to reduction, termination, or clawback.
• Changes in U.S. and foreign government policy, including the imposition of or increases in tariffs and changes to existing trade agreements (e.g., termination of IRA tax credits by OBBBA), could have a material adverse effect.
• Developments in alternative technology or other fossil fuel alternatives may adversely affect the demand for battery products.
• Risk of batteries installed in EVs not meeting certain motor vehicle standards.
• Exposure to litigation, environmental, health and safety, and other legal compliance risks, with compliance being expensive and failure potentially resulting in monetary damages and fines.
• Subject to U.S. and foreign anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions, and similar laws and regulations, with potential for criminal liability and serious consequences for violations.
• Governmental trade controls, including export and import controls, sanctions, customs requirements, and related regimes, could subject the company to liability, limit technology transfer, or affect ability to hire qualified personnel.
• Changes in U.S. and foreign tax laws could have a material adverse effect on business, cash flow, results of operations, or financial conditions.
• Certain U.S. state tax authorities may assert a state nexus and seek to impose state and local income taxes.

Future Outlook

The company expects to continue incurring operating and net losses for the foreseeable future, anticipating several more years before generating sufficient revenues to cover expenditures. Management believes current cash and marketable securities will meet working capital and capital expenditure requirements for at least 12 months, but acknowledges that additional funding may be required for merger and acquisition opportunities, further battery and Molecular Universe development, or expansion of commercial operations. The company plans to negotiate long-term supply contracts as volume demand increases and expects to begin supplying materials from the Hisun joint venture in the second half of 2026. Capital expenditures are projected to remain consistent in 2026, with a continued focus on AI-related infrastructure rather than manufacturing equipment. The company also plans to upgrade its energy solutions with the latest technology, including lighter modules, advanced cooling, sophisticated safety management software, and more efficient manufacturing processes.

Management Comments

• We expect to sustain substantial operating expenses, without generating sufficient revenues to cover expenditures, for a few more years.
• We believe that our cash on hand and marketable securities will be sufficient to meet our working capital and capital expenditure requirements for a period of at least 12 months from the date of this Annual Report on Form 10-K.
• We believe that the acquisition of UZ Energy strengthens our capabilities in the ESS market and will provide opportunities for revenue generation.
• We believe that the commercialization of the Molecular Universe platform represents a significant opportunity to drive future revenue growth and margin expansion, as it should enable us to offer differentiated AI-driven solutions to customers.
• Our strategic shift away from in-house manufacturing of certain battery materials, and the announcement of a joint venture with Hisun to produce novel materials at commercial scale, is expected to reduce capital intensity and accelerate time-to-market for new products.
• Our plan to develop NDAA-compliant manufacturing capacity for drone cells is intended to position us to capture new business from [U.S. government and defense-related customers], which we believe could be a driver of future revenue growth.
• We expect capital expenditures to remain consistent in 2026 compared with 2025 as we continue to spend on AI related infrastructure rather than invest in manufacturing equipment.
• We have concluded that, as of December 31, 2025, we have remediated the above-mentioned material weakness related to management review control associated with the valuation of the Sponsor Earn-Out liabilities.

Industry Context

StockSavvy.ai notes that SES AI's significant revenue growth in 2025, particularly from ESS and service contracts, positions it favorably within the rapidly expanding battery and AI-enhanced materials markets. The strategic acquisition of UZ Energy and the Hisun joint venture align with broader industry trends towards integrated energy solutions and advanced material development, while also addressing the increasing demand for specialized applications like UAM and NDAA-compliant drones. The company's focus on AI for material discovery and battery management reflects a critical industry shift towards leveraging advanced analytics for performance and safety, a trend also seen in competitors like C3.ai in AI software and various battery manufacturers investing in similar R&D.

Comparison to Industry Standards

• SES AI's gross margin of 53.8% in 2025, while lower than 2024's 63.1%, remains competitive for an early-stage technology company, especially considering the shift in revenue mix towards product sales from the UZ Energy acquisition. This compares to established battery manufacturers who may have higher margins due to scale, but also to other emerging battery tech companies like QuantumScape or Solid Power which are still pre-revenue or in early commercialization with varying gross margins.
• The company's substantial R&D investment of $67.0 million in 2025 is typical for an early-stage technology developer in the highly competitive battery sector, where companies like QuantumScape and Solid Power also incur significant R&D costs to advance novel battery chemistries and scale production.
• The strategic shift to joint venture manufacturing with Hisun for materials is a common approach for scaling production in the battery industry, allowing companies to leverage partner expertise and capital, similar to partnerships seen with major automotive OEMs and battery cell producers globally, such as LG Energy Solution's joint ventures with General Motors.
• The pursuit of NDAA-compliant drone cells addresses a specific, high-value niche, differentiating SES AI from general battery manufacturers and aligning with national security procurement trends, a segment where companies like Amprius also compete for high-performance, specialized battery solutions for defense and aerospace applications.

Management Changes

Corporate Governance

Legal Proceedings

• The company may be subject to claims arising in the ordinary course of business or become involved in litigation or other legal proceedings, but management expects any such liabilities not to have a material effect on financial condition, results of operations, or cash flows.
• No material cybersecurity incident was experienced during fiscal 2025.

Related Party Transactions

• General Motors Company and its affiliates (GM) were considered related parties due to board representation and a Director Nomination Agreement. This agreement was mutually terminated on October 29, 2024, and GM is no longer considered a related party.
• Joint Development Agreements (JDAs) were in place with Hyundai Motor Company, GM Global Technology Operations LLC, and Honda Motor Company, Ltd. The JDAs with Hyundai and the OEM partner concluded in December 2025, and the JDA with GM Technology concluded in September 2024. A B-sample services agreement with Honda replaced the JDA in January 2025, with a term through June 2026.

Stakeholder Impact

• Shareholders face potential dilution from future capital raises, stock price volatility, and the risk of public warrants expiring worthless. The concentrated ownership by the SES Founder Group may limit the influence of other stockholders.
• Employees have experienced reduced headcount in R&D and G&A due to strategic shifts, but the company's success depends on attracting and retaining highly skilled personnel. Labor laws in China could impact employment practices and costs.
• Customers stand to benefit from AI-enhanced battery technology, ESS products, and new materials, but face risks if batteries fail to perform as expected or if supply chain disruptions occur.
• Suppliers may benefit from future long-term supply contracts as demand grows, but face risks from disruptions in the supply chain, price fluctuations of raw materials, and geopolitical conditions.
• Creditors could be impacted by the company's ongoing net losses and potential future debt financing needs.

Next Steps

• Continue to incur significant expenses in research and development efforts.
• Raise additional funds through various methods if cash flows generated from anticipated product sales are insufficient to fund operations.
• Successfully integrate UZ Energy's operations into the business.
• Develop NDAA-compliant manufacturing capacity for drone cells in Korea.
• Negotiate long-term supply contracts for raw materials, components, and equipment as volume demand grows.
• Begin supplying materials manufactured through the Hisun joint venture in the second half of 2026.
• Upgrade or adapt energy solutions with the latest technology, including lighter weight modules, advanced cooling methods, more sophisticated safety management software, more efficient manufacturing processes, and advanced battery chemistry.
• Monitor compliance with conditions attached to the Korean government grant, including minimum investments and job creation.
• Finalize the purchase price allocation for the UZ Energy acquisition no later than one year from the acquisition date (September 15, 2025).
• Evaluate the impact of newly issued accounting pronouncements (ASU 2024-03, ASU 2025-05, ASU 2025-06) on financial statements and disclosures.
• Seeking to hire a director of cybersecurity to oversee the information security program.

Key Dates

Recommendation

SES AI demonstrates significant revenue growth and a clear strategic direction towards AI-enhanced battery technology and ESS, which are high-growth sectors. The reduction in net losses and operating expenses indicates improved efficiency. However, the company remains in an early-stage, capital-intensive phase, with continued reliance on external funding and exposure to competitive and regulatory risks. The volatility of the stock price and the out-of-the-money warrants suggest caution. A 'Hold' recommendation allows investors to observe the successful execution of its strategic initiatives and the path to profitability without taking on excessive risk at this stage.

Keywords

Lithium-Metal batteries, Li-ion batteries, AI-enhanced batteries, Energy Storage Systems (ESS), Urban Air Mobility (UAM), drones, robotics, electric vehicles (EVs), Molecular Universe, battery materials, SEC 10-K, financial results, UZ Energy acquisition, Hisun joint venture, NDAA-compliant, corporate governance, risk factors, stock performance, intellectual property, financial reporting, supply chain