Solid Power, Inc. Q4 FY2023 earnings call

Key Points - Commissioned SP2 electrolyte facility in April 2023, phased out SP1 production and ramped up SP2 production. - Made significant cell development advances in 2023, including improved manufacturing yields, increased cell performance (cycle life, low temp performance, etc.), but faced thermal runaway issues with scaling cells. - Grew team to over 270 employees, implemented SAP enterprise software. - Deepened partnerships: with BMW (entered automotive qualification, delivered cells), SK On (deepened partnership, tech transfer and Korea line installation), and Ford (executing joint development agreement). - 2024 goals: Expand electrolyte capabilities (increase SP2 production to 2.5 metric tons per month, expand sampling program to 10-15 potential customers, develop next-gen powders), continue advancing cell designs, execute partner commitments, and further strengthen presence in Korea. - Plan to roughly double stakeholder touch points in 2024, attending investor and industry conferences.

Electrolyte Segment: In 2023, Solid Power commissioned SP2, the second electrolyte production facility. They phased out SP1 production and ramped up SP2 to 1.1 metric tons per month, falling short of the 2023 production goal due to equipment and material quality issues but confident for scaling in 2024. They sampled electrolyte to new potential customers. Cell Development Segment: Made advances in cell production with improved yields and quality on 20-amp hour builds. Delivered EV cells for automotive qualification, but faced thermal runaway issues with some cells during scaling, with root cause analysis ongoing. Revenue contribution details not explicitly given in terms of percentages, but focus on electrolyte and cell segments.

Guidance - 2024 revenue expected in the range of $20 million to $25 million, including revenue from SK On agreement and remaining BMW revenue. - 2024 total cash investment expected in the range of $100 million to $120 million, with operating cash investment $60 million to $70 million (including carryover from 2023) and CapEx $40 million to $50 million. - Revenue from government contracts in 2024 expected to be lower than 2023 due to completed contracts and selective program pursuit.

Risks - Thermal runaway issues with some cells during scaling; team focused on root cause analysis, with preliminary findings pointing to inconsistent/contaminated input materials and small manufacturing defects.

Q: Mike Shlisky asked about differences in powder for different customers and costs to onboard potential new customers.

A: John Van Scoter said powder variance requires customization but within SP2's process, no significant cost difference. Sampling process takes 18-24 months from initial sample to supply agreement.

Q: Jeffrey Campbell asked about SK On license limitation and exposure to new technology in Korea.

A: John Van Scoter said license limitation is specific to SK On site; exposure to new technology in Korea includes higher nickel content NMCs, tool set, and university/national lab developments.

Q: Jeffrey Campbell also asked about A2 cell design timeline for BMW.

A: John Van Scoter said they worked on A2 design last year, pivoted based on BMW's demo car requirements, with current scheduling for design and initial production by late 2024.

Q: Brian Dobson asked about expansion of sampling program and focus areas.

A: John Van Scoter said sampling program targets automotive OEMs and battery manufacturers in EV space, evenly split between the two, with early discussions on taking technology into other spaces.