Business context and reporting period
Solid Power, Inc. filed this Form 10-K for the fiscal year ended December 31, 2022. It is developing sulfide-based solid-state battery electrolyte and cell technology for electric vehicles and other markets. Its intended model is to sell electrolyte and license cell designs and manufacturing processes, rather than mass-produce cells. Products remain in development and have not generated material revenue from the company’s principal business activities.
The company produced prototype cells on two pilot lines and installed an EV cell line in 2022. It works under non-exclusive development agreements with BMW, Ford, and SK On. The financial statements reflect a reverse recapitalization completed in December 2021; 2021 comparisons may therefore not be fully comparable.
Financial performance and position
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $11.8 million | $2.7 million |
| Operating expenses | $70.9 million | $29.3 million |
| Operating loss | $59.1 million | $26.5 million |
| Net income (loss) | $(9.6) million | $18.1 million |
| Operating cash flow | $(33.8) million | $(25.4) million |
- Revenue increased 335%, primarily from greater activity under development agreements and government contracts, along with additional product sales. Revenue remains concentrated: four customers accounted for 82% of 2022 revenue.
- Research and development expense was $38.6 million, up 126%; general and administrative expense was $19.0 million, up 237%. Higher labor, materials, facilities, and public-company costs contributed to the increases. No clear gross-margin figure is provided; operating losses substantially exceeded revenue.
- 2022 net loss contrasts with 2021 net income, which included a $51.2 million gain from warrant-liability fair-value changes. The 2022 results also included a $40.9 million warrant fair-value gain, largely non-cash; this and other non-operating items mean net income is not a direct measure of operating performance.
- At year-end, total liquidity was $496.1 million: $50.1 million cash and equivalents, $273.0 million marketable securities, and $173.0 million long-term investments, down from $589.3 million a year earlier. Current assets were $327.8 million and current liabilities $20.7 million.
- Net cash used in investing activities was $430.0 million, including $58.3 million of property and equipment purchases and net investment purchases. Financing cash flow was $0.5 million, mainly from stock-option exercises.
- Traditional debt was minimal: $7,000 remained at year-end. The balance sheet also included $9.2 million of operating lease liabilities and $0.9 million of finance lease liabilities. Shares outstanding were 176.0 million at year-end.
Material changes versus the prior comparable period
- Revenue rose, but operating loss more than doubled as the company expanded R&D, manufacturing capacity, and public-company infrastructure.
- Cash and cash equivalents fell from $513.4 million to $50.1 million; the company shifted substantial funds into marketable securities and long-term investments. Total liquidity declined by $93.3 million.
- Capital investment increased substantially, including construction of the electrolyte facility and installation of the EV cell line. Property, plant and equipment, net, rose to $82.8 million from $22.1 million.
- Unrealized losses on marketable securities of $3.2 million were recorded in other comprehensive loss.
Outlook, management commentary, and risks
- Management expects 2023 combined operating and capital expenditures of $50 million to $60 million and stated that available liquidity should fund operations for at least the next 12 months. It anticipates continuing losses until meaningful cell-technology licensing or electrolyte sales begin.
- The electrolyte pilot facility was expected to begin production in the first quarter of 2023, with anticipated capacity of up to 30 metric tons annually versus approximately 2 metric tons at the time of filing. The company targeted EV-cell A-sample testing in 2023; these are plans, not reported achievements.
- Manufacturing yields for larger 20 Ah cells were below expectations. Safety-test results for some 20 Ah cells were inconsistent with results for 2 Ah cells, and resolving this was identified as a 2023 objective. Extensive safety and automotive qualification testing remains outstanding.
- Solid Power and SK On were revising their development roadmap; the company no longer expected to meet previously indicated SK On-related 2023 and 2024 target dates. BMW and Ford EV-cell delivery targets for 2023 were still stated, while partner milestones and timing remain subject to change.
- BMW agreed to pay $20 million between December 2022 and June 2024, subject to milestones, for an R&D-only license and development activities. Solid Power recognized $2 million of BMW revenue in 2022 and recorded $4 million of deferred revenue. Commercial electrolyte supply and licensing terms with partners remain unsettled.
- In January 2023, the company received a $5.6 million U.S. Department of Energy ARPA-E grant for research on nickel- and cobalt-free cells.
- Key risks include uncertain technical performance, safety, yield, scale-up costs and commercialization timing; no established market for sulfide-based electrolyte; non-exclusive partner relationships and customer concentration; dependence on lithium-sulfide supply; competition and EV adoption; and potential need for additional capital. The company also disclosed an interim CEO following the former CEO’s retirement.
- The auditor issued unqualified opinions on the financial statements and internal controls. A material weakness identified in 2021 was reported remediated by year-end 2022. The filing reports no current legal proceedings likely to have a material adverse effect; a prior business-combination-related fee demand was settled in March 2022.
Important facts for investors to verify
- Whether the electrolyte facility began operating on schedule and achieves planned capacity, quality, and cost targets.
- Progress on 20 Ah safety results, manufacturing yields, EV-cell A-sample testing, and subsequent automotive qualification milestones.
- Updated development schedules with BMW, Ford, and SK On, and whether milestone payments or agreements change, are delayed, or are terminated.
- Cash burn, capital spending, and remaining liquidity relative to the stated 2023 spending range and commercialization timeline.
- Whether commercial supply and licensing agreements are secured on economically viable terms, given revenue concentration and the absence of established commercial terms.