Solid Power, Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; comparisons are with 2022. Amounts below are in U.S. dollars unless noted. Solid Power is a research-and-development-stage company developing sulfide-based solid-state battery electrolyte and cells. Its intended model is to sell electrolyte and license cell designs and manufacturing processes rather than operate commercial cell factories. Products remain in development, and the company has not generated material revenue from its principal business activities.
Financial performance and position
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | $17.4 million | $11.8 million |
| Direct costs | $27.7 million | $9.6 million |
| Research and development | $54.7 million | $38.6 million |
| Selling, general and administrative | $25.6 million | $22.7 million |
| Total operating expenses | $108.0 million | $70.9 million |
| Operating loss | $(90.6) million | $(59.1) million |
| Net loss | $(65.5) million | $(9.6) million |
| Basic and diluted loss per share | $(0.37) | $(0.05) |
| Cash used in operating activities | $(58.3) million | $(33.8) million |
- Revenue increased 48%, mainly from additional work under development agreements and government contracts. Two customers represented 89% of 2023 revenue, indicating significant concentration.
- Direct costs exceeded revenue; the filing does not present a conventional gross margin. Operating expenses rose 52%, driven by greater development activity, materials, staffing and stock-based compensation.
- Net loss widened substantially. Nonoperating income included $20.3 million of interest income and a $4.9 million gain from the decline in warrant liabilities. The comparable 2022 warrant-liability gain was $40.9 million, making that year’s net loss much smaller despite a higher operating loss.
- At year-end, cash and cash equivalents were $34.5 million, marketable securities $141.5 million, and long-term investments $239.6 million: total liquidity of $415.6 million, down from $496.1 million. Current liabilities were $15.9 million. Total liabilities were $29.5 million, including lease liabilities; the balance sheet showed no material conventional borrowings.
- Net cash used in investing activities was $42.5 million provided, reflecting investment purchases and maturities as well as $34.5 million of property and equipment purchases. Financing activities provided $0.2 million. Year-end accumulated deficit was $84.6 million.
Material changes and business developments
- Solid Power commissioned its SP2 electrolyte facility, with stated annual capacity of 30 metric tons. It began production in April 2023, qualified SP2 material for use in EV cells, and used it in A1 cell manufacturing.
- The company delivered its first A1 EV cells to BMW in late 2023, entering automotive qualification. Manufacturing yields and consistency improved, but cells still require further development and qualification.
- Development spending and operating cash use increased, while total liquidity declined. The company reported 179.0 million shares outstanding at year-end 2023 and 181.1 million as of February 26, 2024.
- John Van Scoter became CEO in June 2023. Management reported more than 270 full-time employees as of February 2024.
Outlook, agreements and risks
- Management expects combined 2024 capital and operating expenditures of $100 million to $120 million, including approximately $1.6 million of contractual cash obligations identified at year-end. It expects to fund near-term needs from cash and other liquid assets and stated liquidity should cover at least the next 12 months. Spending and development timelines may change; additional financing could be needed if conditions or plans materially change.
- 2024 development priorities include improving A2 cell performance and safety, targeting A2 deliveries to BMW and EV-cell deliveries to Ford. Ford’s development agreement was extended through December 31, 2024. The company noted that SK On development milestones and dates had slipped and that the parties were revising their roadmap.
- Agreements with SK On signed January 10, 2024 are subsequent events. They provide for milestone-based payments of $20 million for a research-and-development license, approximately $22.3 million for designing and installing a cell line, and electrolyte purchases. The license is limited to research and development, not commercial cell production. The filing gives differing timing for the minimum eight metric tons of electrolyte purchases: the business discussion refers to purchases through 2030, while the subsequent-events note says at least eight metric tons by December 31, 2028. The company expects at least $10 million in electrolyte-sale revenue, subject to the agreement’s terms and validation.
- A $50 million share repurchase program was approved in January 2024 and runs through December 31, 2025. Authorization does not mean shares will necessarily be repurchased; purchases would use funds otherwise available for operations and investment.
- Safety remains a material development risk: a small number of cells experienced thermal runaway during testing in late 2023 and early 2024. The company is investigating root causes; extensive additional safety testing is required before EV deployment.
- Other key risks include uncertain commercialization and customer adoption, technical and manufacturing scale-up, partner dependence and non-exclusive agreements, lack of settled commercial pricing or licensing terms, concentrated revenue, competition, Li2S and other supply constraints, and potential delays or cost overruns. The company also notes exposure to environmental, export-control, cybersecurity and government-contract risks.
- The financial statements received an unqualified audit opinion. Management concluded disclosure controls and internal control over financial reporting were effective at year-end 2023. The auditor identified valuation of private-placement warrant liabilities as a critical audit matter because it depends on judgmental model assumptions.
Important facts for investors to verify
- Progress against A2/A3 performance and safety requirements, the cause and remediation of thermal-runaway incidents, and the timing of automotive qualification.
- Whether BMW, Ford and SK On milestones are achieved, and whether the SK On arrangements lead to the anticipated payments, line installation and electrolyte purchases; clarify the filing’s conflicting purchase-period disclosures.
- Conversion of development and government-contract revenue into commercial electrolyte sales or licensing revenue, including the timing, pricing, margins and customer concentration of any commercial arrangements.
- Cash burn, planned 2024 spending and liquidity runway, including how any share repurchases affect funds available for research, facilities and commercialization.
- Electrolyte production yields, costs and customer acceptance, plus access to Li2S and other critical materials as production scales.