Microvast Holdings Inc

Previous wording

Microvast Holdings, Inc., an advanced battery technology company, is headquartered in Stafford, Texas, and publicly traded on the NASDAQ. We design, develop and manufacture battery components and systems primarily for electric commercial vehicles and utility-scale energy storage systems (“ESS”).

Current wording

Microvast Holdings, Inc., an advanced battery technology company, is headquartered in Stafford, Texas, and publicly traded on the NASDAQ. We specialize in the design, development, and manufacturing of high-performance lithium-ion battery systems and components, primarily for electric commercial vehicles ('EVs') and utility-scale energy storage systems ('ESS'). Since our inception in 2006, our mission has been to drive the transition to clean energy by accelerating the adoption of electric vehicles and renewable energy solutions through innovative battery technology.

Previous wording

Our most recent innovation is our high-energy nickel manganese cobalt (“NMC”) 53.5 ampere-hour battery cell (the “53.5Ah”), whose performance characteristics make it an ideal solution for electric vehicles. To bring this product to market we made significant investments in capacity expansion in Huzhou, China, and this facility now employs fully-automated production equipment for the 53.5Ah cell.

Current wording

Our flagship product is the 53.5Ah high-energy nickel manganese cobalt (NMC) battery cell, which is designed specifically for electric vehicles. The 53.5Ah cell combines fast charging capabilities, high energy density, and long cycle life, making it an ideal solution for demanding commercial applications. To bring this product to market, we have made significant investments in our fully automated production facilities in Huzhou, China, which now supports large-scale production of the 53.5Ah cell.

Previous wording

Since 2009, when we launched our first ultra-fast battery system, we have sold and delivered approximately 5,142.4 megawatt hours (“MWh”) of battery systems for electric vehicles. Our revenue for the three months ended June 30, 2024, increased $8.7 million to $83.7 million, a 12% increase compared to the same period ended June 30, 2023. As of June 30, 2024, we had an order backlog of approximately $278.6 million for our battery systems for electric vehicles (the equivalent of approximately 1,257.1 MWh), over 63% of which is attributable to Europe and the U.S. We expect to fulfill a majority of our electric vehicle battery backlog within 2024 and 2025.

Current wording

Since the launch of our first ultra-fast charging battery system in 2009, we have delivered approximately 5,576.4 megawatt hours (“MWh”) of battery systems for electric vehicles. For the quarter ended September 30, 2024, we reported a 27% increase in revenue, reaching $101.4 million compared to $80.1 million in the same period in 2023. Our order backlog as of September 30, 2024, stands at $277.7 million for EV battery systems, representing approximately 1,144.1 MWh, with over 58% of these orders attributable to Europe and U.S. markets. We expect to fulfill a majority of our electric vehicle battery backlog within 2024 and 2025.

Previous wording

We originally intended to produce 53.5Ah cells from our Clarksville, Tennessee facility for our ESS and EV product and had made significant investments in our capacity expansion there. However, due to market demand, regulation policies, our competitors lowering their selling prices, we now believe lithium iron phosphate (“LFP”) cells are a better battery fit for our ESS solutions and intend to produce LFP cells from the Tennessee facility instead of 53.5Ah cells. As such, we expect that all our production of 53.5Ah cells will be from our facilities in China, and in the United States we will focus on LFP production for our energy storage solutions to customers worldwide. We believe this strategic shift towards LFP technology in the U.S. leverages cost benefits, safety features, regulatory compliance, and lower environmental impact for the following reasons:

Current wording

We originally intended to produce 53.5Ah cells from our Clarksville, Tennessee facility for our ESS and EV products and had made significant investments in our capacity expansion there. However, due to market demand, regulation policies, and our competitors lowering their selling prices, we believe lithium iron phosphate (“LFP”) cells are a better battery fit for our ESS solutions and intend to produce LFP cells from our Tennessee facility instead of 53.5Ah cells. As such, we expect that all of our production of 53.5Ah cells will be from our facilities in China, and in the United States we will focus on LFP production for our energy storage solutions to customers worldwide. We believe this strategic shift towards LFP technology in the U.S. leverages cost benefits, safety features, regulatory compliance, and lower environmental impact for the following reasons:

Previous wording

Our financial performance is driven by development and sales of new products with innovative technology. Our ability to develop innovative technology has been and will continue to be dependent on our dedicated research team. As part of our efforts to develop innovative technology, in October 2021, we expanded our R&D footprint in Orlando by purchasing a 75,000 square foot facility dedicated to R&D. We plan to continue expanding our R&D presence in the U.S. We also plan to continue leveraging our knowledge base in our overseas locations, including China and to continue expanding our R&D efforts on a global basis. We expect our results of operations will continue to be impacted by our ability to develop new products with improved performance and reduced ownership cost, as well as the cost of our R&D efforts.

Current wording

Our financial performance is driven by development and sales of new products with innovative technology. Our ability to develop innovative technology has been and will continue to be dependent on our dedicated research team. As part of our efforts to develop innovative technology, in October 2021, we expanded our R&D footprint in the U.S. We also plan to continue leveraging our knowledge base in our overseas locations, including China and to continue expanding our R&D efforts on a global basis. We expect our results of operations will continue to be impacted by our ability to develop new products with improved performance and reduced ownership cost, as well as the cost of our R&D efforts.

Previous wording

Our growth depends on being able to meet anticipated demand for our products. As of June 30, 2024, we had a backlog of approximately $278.6 million for our electric vehicles battery systems, equivalent to approximately 1,257.1 MWh. To increase our manufacturing output, address our backlog and capture growing market opportunities, we have made significant investment in capacity expansions in both Huzhou, China and Tennessee, United States.

Current wording

Our growth depends on being able to meet anticipated demand for our products. As of September 30, 2024, we had a backlog of approximately $277.7 million for our electric vehicles battery systems, equivalent to approximately 1,144.1 MWh. To increase our manufacturing output, address our backlog and capture growing market opportunities, we have made significant investment in capacity expansions in both Huzhou, China and Tennessee, United States.

Previous wording

The Tennessee expansion was originally scheduled to be completed in the fourth quarter of 2023 and was intended for production of 53.5Ah cells for our ESS solutions. However, we now believe LFP cells are a better battery fit for our ESS solutions and intend to produce LFP cells from the Tennessee facility instead of 53.5Ah cells. As such, we expect that all our production of 53.5Ah cells will be from our facilities in China, and in the United States we will focus on LFP production for our energy storage solutions to customers worldwide. Additionally, our ESS products previously assembled in Colorado are now planned to be assembled at our Tennessee facility. In order to complete the Tennessee expansion, we need to secure financing to meet the remaining capital expenditure needs, and the timing of when this project will be in operation remains uncertain. We are in the process of evaluating the amount of capital expenditures needed to complete the Tennessee expansion in light of the intended production shift from NMC cells to LFP cells.

Current wording

The Tennessee expansion was originally scheduled to be completed in the fourth quarter of 2023 and was intended for production of 53.5Ah cells for our ESS solutions. However, we believe LFP cells are a better battery fit for our ESS solutions and intend to produce LFP cells from the Tennessee facility instead of 53.5Ah cells. As such, we expect that all our production of 53.5Ah cells will be from our facilities in China, and in the United States we will focus on LFP production for our energy storage solutions to customers worldwide. Additionally, our ESS products previously assembled in Colorado are now planned to be assembled at our Tennessee facility. In order to complete the Tennessee expansion, we need to secure financing to meet the remaining capital expenditure needs, and the timing of when this project will be in operation remains uncertain. We are in the process of evaluating the amount of capital expenditures needed to complete the Tennessee expansion in light of the intended production shift from NMC cells to LFP cells.

Previous wording

We derive revenue from the sales of our electric battery products, including LpTO, LpCO, MpCO, HpCO and HnCo battery power systems. While we have historically marketed and sold our products primarily in China and the wider Asia-Pacific region, we are also expanding our sales presence internationally. The following table sets forth a breakdown of our revenue by major geographic regions in which our customers are located, for the periods indicated:

Current wording

We derive revenue from the sales of our electric battery products, including LpTO, LpCO, MpCO, HpCO and HnCo battery power systems. While we have historically marketed and sold our products primarily in China and the wider Asia-Pacific region, While we have historically marketed and sold our products primarily in China and the broader Asia-Pacific region, we are also expanding our international sales presence, with notable revenue growth in the EMEA (Europe, Middle East, and Africa) region. This expansion reflects increasing demand and positive growth trends in EMEA as we continue to broaden our global market reach. The following table sets forth a breakdown of our revenue by major geographic regions in which our customers are located, for the periods indicated:

Previous wording

Cost of revenues includes direct and indirect materials, manufacturing overhead (including depreciation, freight and logistics), warranty reserves and expenses, provision for obsolete inventories, and labor costs and related personnel expenses, including stock-based compensation and other related expenses that are directly attributable to the manufacturing of products.

Current wording

Cost of revenues includes direct and indirect materials, manufacturing overhead (including depreciation, freight and logistics), warranty reserves and expenses, write-down of obsolete inventories, and labor costs and related personnel expenses, including stock-based compensation and other related expenses that are directly attributable to the manufacturing of products.

Previous wording

Our revenues increased from approximately $75.0 million for the three months ended June 30, 2023 to approximately $83.7 million for the same period in 2024, primarily driven by an increase in sales volume from approximately 270.2 MWh for three months ended June 30, 2023 to approximately 301.7 MWh for the same period in 2024.

Current wording

Our revenues increased from approximately $80.1 million for the three months ended September 30, 2023 to approximately $101.4 million for the same period in 2024, primarily driven by an increase in sales volume from approximately 319.2 MWh for three months ended September 30, 2023 to approximately 434.0 MWh for the same period in 2024.

Previous wording

Our cost of revenues for the three months ended June 30, 2024 decreased by $7.0 million, or 11.0%, compared to the same period in 2023. The decrease in the cost of revenues was primarily due to the decrease in raw material prices.

Current wording

Our cost of revenues for the three months ended September 30, 2024 increased by $5.5 million, or 8.9%, compared to the same period in 2023. The increase in the cost of revenues was primarily in line with the increased sales,

Previous wording

Our gross margin increased from 15.3% for the three months ended June 30, 2023 to 32.5% for the same period in 2024. The increase in gross margin was due to a combination of factors including better economies of scale through improving utilization, more favorable product mix and lower raw material prices.

Current wording

Our gross margin increased from 22.3% for the three months ended September 30, 2023 to 33.2% for the same period in 2024. The increase in gross margin was due to a combination of factors including better economies of scale through improving utilization, more favorable product mix and lower raw material prices.

Previous wording

For the three months period ended June 30, 2024, we recorded a loss of $1.6 million mainly due to the change in fair value of convertible loan with shareholder of $1.6 million, details please see Note 14 – Convertible loan with shareholder.

Current wording

For the three months period ended September 30, 2024, we recorded a gain of $2.8 million mainly due to the change in fair value of convertible loan with shareholder of $2.8 million, details please see Note 14 – Convertible loan with shareholder measured at fair value.

Previous wording

Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

Current wording

Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023

Previous wording

Our revenues increased from approximately $121.9 million for the six months ended June 30, 2023 to approximately $165.0 million for the same period in 2024, primarily driven by an increase in sales volume from approximately 402.8 MWh for six months ended June 30, 2023 to approximately 654.9 MWh for the same period in 2024.

Current wording

Our revenues increased from approximately $202.0 million for the nine months ended September 30, 2023 to approximately $266.4 million for the same period in 2024, primarily driven by an increase in sales volume from approximately 722.0 MWh for nine months ended September 30, 2023 to approximately 1,088.9 MWh for the same period in 2024.

Previous wording

Our cost of revenues for the six months ended June 30, 2024 increased by $15.0 million, or 14.2%, compared to the same period in 2023. The increase in the cost of revenues was primarily in line with the increased sales, partially offset by $0.4 million of decreased share-based compensation expenses.

Current wording

Our cost of revenues for the nine months ended September 30, 2024 increased by $20.5 million, or 12.2%, compared to the same period in 2023. The increase in the cost of revenues was primarily in line with the increased sales, partially offset by $1.2 million of decreased share-based compensation expenses.

Previous wording

Our gross margin increased from 13.4% for the six months ended June 30, 2023 to 26.9% for the same period in 2024. The increase in gross margin was due to a combination of factors including better economies of scale, more favorable product mix and lower raw material prices.

Current wording

Our gross margin increased from 16.9% for the nine months ended September 30, 2023 to 29.3% for the same period in 2024. The increase in gross margin was due to a combination of factors including better economies of scale, more favorable product mix and lower raw material prices.

Previous wording

General and Administrative expenses for the six months ended June 30, 2024 increased by $3.4 million, or 7.8%, compared to the same period in 2023. The increase in General and Administrative expenses was primarily due to $2.4 million of increased personnel-related expense, $5.6 million of increased professional fee and insurance fee, $0.9 million of increased depreciation and amortization, $1.6 million of increased credit loss, $1.3 million of increased exchange loss and other increases related to business expansion, offset by $8.8 million of decreased share-based compensation expenses.

Current wording

General and Administrative expenses for the nine months ended September 30, 2024 decreased by $9.7 million, or 14.1%, compared to the same period in 2023. The decrease in General and Administrative expenses was primarily due to $15.8 million of decreased share-based compensation expenses, offset by $6.7 million of increased professional fee and insurance fee.

Previous wording

The impairment loss of long-lived assets was $64.9 million for the three months ended June 30, 2024, primarily driven by a $64.8 million impairment loss in our U.S. operations. During this period, we initiated a strategic shift towards LFP technology in the U.S., and we decided to pause the construction of our battery plant in Tennessee until additional funding for the remaining capital expenditure is secured. As a result of these events and circumstances in the second quarter, we conducted impairment testing for our long-lived assets in the U.S. and recognized an impairment loss of $64.8 million.

Current wording

The impairment loss of long-lived assets was $64.9 million for the nine months ended September 30, 2024, primarily driven by a $64.8 million impairment loss in our U.S. operations in the second quarter of 2024. During the first half year of 2024, we initiated a strategic shift towards LFP technology in the U.S., and we decided to pause the construction of our battery plant in Tennessee until additional funding for the remaining capital expenditure is secured. As a result of these events and circumstances in the second quarter, we conducted impairment testing for our long-lived assets in the U.S. and recognized an impairment loss of $64.8 million.

Previous wording

For the six months period ended June 30, 2024, we recorded a loss of $1.5 million mainly due to the change in fair value of convertible loan with shareholder of $1.6 million, details please see Note 14 – Convertible loan with shareholder.

Current wording

For the nine months period ended September 30, 2024, we recorded a gain of $1.2 million mainly due to the change in fair value of convertible loan with shareholder of $1.2 million, details please see Note 14 – Convertible loan with shareholder measured at fair value.

Previous wording

The consolidated net cash position as of June 30, 2024 included cash and cash equivalents of $43.9 million and $13.8 million held by our PRC and European subsidiaries, respectively, that is not available to fund our U.S. operations unless funds are repatriated. Should we need to repatriate to the U.S. part or all of the funds held by our international subsidiaries in the form of a dividend, we would need to accrue and pay withholding taxes. We do not intend to pay any cash dividends on our common stock in the foreseeable future and intend to retain all of the available funds and any future earnings for use in the operation and expansion of our business in the PRC, Europe and the U.S.

Current wording

The consolidated net cash position as of September 30, 2024 included cash and cash equivalents of $29.6 million and $19.3 million held by our PRC and European subsidiaries, respectively, that is not available to fund our U.S. operations unless funds are repatriated. Should we need to repatriate to the U.S. part or all of the funds held by our international subsidiaries in the form of a dividend, we would need to accrue and pay withholding taxes. We do not intend to pay any cash dividends on our common stock in the foreseeable future and intend to retain all of the available funds and any future earnings for use in the operation and expansion of our business in the PRC, Europe and the U.S.

Previous wording

In addition to the above, the Company is engaged in discussions with third parties to assess strategic alternatives, including ways to enhance our liquidity and/or the sale or disposal of certain US real estate assets that are not integral to the our cell manufacturing or assembly operations. These plans are not final and are subject to market and other conditions not within our control. As such, there can be no assurance that we will be successful in obtaining sufficient capital. Accordingly, management has concluded under the accounting standards that these plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern. Should sufficient capital not be secured through the plans, or should there be a delay in the timing of securing capital through these alternatives, this would have adverse implications for the Company and our shareholders. In these scenarios, we will need to seek other options, including delaying or reducing operating and capital expenditure and the possibility of an alternative transaction.

Current wording

These plans are not final and are subject to market and other conditions not within our control. As such, there can be no assurance that we will be successful in obtaining sufficient capital. Accordingly, management has concluded under the accounting standards that these plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern. Should sufficient capital not be secured through the plans, or should there be a delay in the timing of securing capital through these alternatives, this would have adverse implications for the Company and our shareholders. In these scenarios, we will need to seek other options, including delaying or reducing operating and capital expenditure and the possibility of an alternative transaction.

Previous wording

As of June 30, 2024, we had bank borrowings of $94.2 million, the terms of which range from 2 to 30 months. The interest rates on our bank borrowings ranged from 3.30% to 4.85% per annum. As of June 30, 2024, we had convertible bonds outstanding of $43.2 million, with interest rates ranging from 3% to 4%. The convertible bonds are all due in 2027. As of June 30, 2024, we also had the Convertible loan with shareholder of $13.3 million outstanding at an initial interest rate equal to Term SOFR for the applicable interest period, plus an initial applicable margin of 9.75% per annum, 3.75% of which shall be paid in kind and added to the outstanding principal under the Convertible loan with shareholder, with the remaining interest to be paid in cash. See Note 14 for details. As of June 30, 2024, we were in compliance with all material terms and covenants of our loan agreements, credit agreements and bonds.

Current wording

As of September 30, 2024, we had bank borrowings of $119.6 million, the terms of which range from 1 to 27 months. The interest rates on our bank borrowings ranged from 3.30% to 4.85% per annum. As of September 30, 2024, we had convertible bonds outstanding of $43.2 million, with interest rates ranging from 3% to 4%. The convertible bonds are all due in 2027. As of September 30, 2024, we also had the Convertible loan with shareholder of $24.4 million outstanding at an initial interest rate equal to Term SOFR for the applicable interest period, plus an initial applicable margin of 9.75% per annum, 3.75% of which shall be paid in kind and added to the outstanding principal under the Convertible loan with shareholder, with the remaining interest to be paid in cash. See Note 14 for details. As of September 30, 2024, we were in compliance with all material terms and covenants of our loan agreements, credit agreements and bonds.

Previous wording

On July 23, 2021, we received $708.4 million from the completion of the Business Combination, $705.1 million net of transaction costs paid by Microvast, Inc. We have used $438.8 million of the net proceeds from the Business Combination to expand our manufacturing facilities and for the purchase of property and equipment associated with our existing manufacturing and R&D facilities. In addition, $143.9 million of the net proceeds were used for working capital as of June 30, 2024.

Current wording

On July 23, 2021, we received $708.4 million from the completion of the Business Combination, $705.1 million net of transaction costs paid by Microvast, Inc. We have used $469.3 million of the net proceeds from the Business Combination to expand our manufacturing facilities and for the purchase of property and equipment associated with our existing manufacturing and R&D facilities. In addition, $181.3 million of the net proceeds were used for working capital as of September 30, 2024.

Previous wording

Further, due to the working capital needs of MPS China and adverse tax consequences as well as foreign restrictions, we are unable to repatriate cash from China to pay our accounts payable in the U.S. and fund the continued expansion of our U.S. operations. We are in discussions with third parties to assess strategic alternatives, including ways to enhance our liquidity and/or the sale or disposal of certain US real estate assets that are not integral to the our cell manufacturing or assembly operations. Until financing is in place, this will limit our growth opportunities especially in the U.S. market. Also, we will be forgoing potential Inflation Reduction Act credits until such time as the Clarksville, Tennessee expansion is in operation.

Current wording

Further, due to the working capital needs of MPS China and adverse tax consequences as well as foreign restrictions, we are unable to repatriate cash from China to pay our accounts payable in the U.S. and fund the continued expansion of our U.S. operations. We are in discussions with third parties to assess strategic alternatives, including ways to enhance our liquidity and/or the sale or disposal of certain U.S. real estate assets that are not integral to the our cell manufacturing or assembly operations. Until financing is in place, this will limit our growth opportunities especially in the U.S. market. Also, we will be forgoing potential Inflation Reduction Act credits until such time as the Clarksville, Tennessee expansion is in operation.

Previous wording

We regularly enter into non-cancelable contractual obligations primarily related to purchases of inventory. As of June 30, 2024, such purchase commitments, which do not qualify for recognition on our Unaudited Condensed Consolidated Balance Sheets, amount to $46.0 million , most of which is short-term.

Current wording

We regularly enter into non-cancelable contractual obligations primarily related to purchases of inventory. As of September 30, 2024, such purchase commitments, which do not qualify for recognition on our Unaudited Condensed Consolidated Balance Sheets, amount to $52.3 million , most of which is short-term.

Previous wording

There have not been any other material changes during the three and six months ended June 30, 2024 to our contractual obligations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Current wording

There have not been any other material changes during the three and nine months ended September 30, 2024 to our contractual obligations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Previous wording

During the six months ended June 30, 2024, our operating activities generated $2.1 million in cash. This increase in cash consisted of (1) a net loss of $103.3 million and non-cash charges of $116.5 million, of which $14.9 million is depreciation of property, plant and equipment, $24.0 million is non-cash share-based compensation expense and $64.9 million is impairment loss from long-lived asset; and (2) a $11.1 million decrease in cash flows from operating assets and liabilities including $39.9 million cash inflow due to the net decrease of accounts receivable and notes receivable, $1.5 million increase in inventories, $44.1 million cash outflow from accounts payable and notes payable, $3.9 million cash outflow from accrued and other liabilities and prepaid expense and other current asset, and $1.5 million cash outflow from other operating assets and liabilities.

Current wording

During the nine months ended September 30, 2024, our operating activities used $3.3 million in cash. This decrease in cash consisted of (1) a net loss of $90.0 million and non-cash charges of $135.2 million, of which $22.4 million is depreciation of property, plant and equipment, $30.3 million is non-cash share-based compensation expense and $64.9 million is impairment loss from long-lived asset; and (2) a $48.5 million decrease in cash flows from operating assets and liabilities including $27.3 million cash inflow due to the net decrease of accounts receivable and notes receivable, $4.1 million increase in inventories, $54.7 million cash outflow from accounts payable and notes payable, $30.8 million cash outflow from accrued and other liabilities and prepaid expense and other current asset, and $13.8 million cash inflow from other operating assets and liabilities.

Previous wording

During the six months ended June 30, 2024, cash used in investing activities totaled $7.4 million. This cash outflow primarily consisted of capital expenditures related to the expansion of our manufacturing facilities and to the purchase of property and equipment associated with our existing manufacturing and R&D facilities.

Current wording

During the nine months ended September 30, 2024, cash used in investing activities totaled $12.0 million. This cash outflow primarily consisted of capital expenditures related to the expansion of our manufacturing facilities and to the purchase of property and equipment associated with our existing manufacturing and R&D facilities.

Previous wording

During the six months ended June 30, 2024, cash generated from financing activities totaled $28.5 million. This cash inflow was a result of $40.5 million proceeds from bank borrowings and $12.0 million proceeds from Convertible loan offset by $23.5 million repayment on bank borrowings and $0.5 million of debt cost for Convertible loan.

Current wording

During the nine months ended September 30, 2024, cash generated from financing activities totaled $46.6 million. This cash inflow was a result of $70.4 million proceeds from bank borrowings and $25.0 million proceeds from Convertible loan offset by $31.9 million repayment on bank borrowings and $0.5 million of debt cost for Convertible loan, $16.4 million of deferred payment related to purchases of property, plant and equipment.

Previous wording

There have been no substantial changes to these estimates, or the policies related to them during the six months ended June 30, 2024, except for the impairment of long-lived assets illustrated in below paragraphs. For other discussion of these estimates and policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

There have been no substantial changes to these estimates, or the policies related to them during the nine months ended September 30, 2024, except for the impairment of long-lived assets illustrated in below paragraphs. For other discussion of these estimates and policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

During the three months ended June 30, 2024, we decided to pause the construction of the battery plant in Tennessee until additional funding for the remaining capital expenditure is secured. As a result, we reassessed the recoverability of the long-lived assets in the U.S. and utilized the residual method to estimate the fair value of the plant under construction located in Tennessee. For other long-lived assets in the U.S. to be dispose, we estimated market value or estimated cash flow from disposition of the assets. As a result of the assessment, we recorded impairment loss of long-lived assets $0.1 million and $64.9 million for the three and six months ended June 30, 2023 and 2024, respectively, in operating expenses.

Current wording

During the first half year of 2024, we decided to pause the construction of the battery plant in Tennessee until additional funding for the remaining capital expenditure is secured. As a result, we reassessed the recoverability of the long-lived assets in the U.S. and utilized the residual method to estimate the fair value of the plant under construction located in Tennessee. For other long-lived assets in the U.S. to be dispose, we estimated market value or estimated cash flow from disposition of the assets. As a result of the assessment, we recorded impairment loss of long-lived assets $0.0 million and $0.4 million for the three months ended September 30, 2024 and 2023, respectively, in operating expenses. We recorded impairment loss of long-lived assets of $64.9 million and $0.5 million for the nine months ended September 30, 2024 and 2023, respectively, in operating expenses.