SES AI Corp

Previous wording

The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The following discussion and analysis should be read in conjunction with the accompanying unaudited interim condensed consolidated financial statements as of and for the three months ended March 31, 2025 and the related notes included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements as of and for the year endedDecember 31, 2024 and the related notes contained in the 2024 Annual Report on Form 10-K. This Quarterly Report on Form 10-Q includes forward-looking statements. These forward-looking statements within the meaning of the federal securities law are based on our current expectations and beliefs concerning future developments and their potential effects on us. These forward-looking statements are not statements of historical fact and may include statements regarding possible or assumed future results of operations. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Factors that might cause or contribute to such forward-looking statements include, but are not limited to, those set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Item 1A. Risk Factors in the 2024 Annual Report on 10-K. Unless the context otherwise requires, references in this section to “the Company,” “we,” “us” and “our” refer to the business and operations of SES Holdings Pte. Ltd. (“Old SES”) and its consolidated subsidiaries prior to the Business Combination and to SES AI Corporation and its consolidated subsidiaries following the Closing. References in this section to our future plans that indicate the timing of when we expect such plans to be completed by a certain year mean at any point during that year.

Current wording

The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The following discussion and analysis should be read in conjunction with the accompanying condensed consolidated financial statements as of and for the three and six months ended June 30, 2025 and the related notes included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements as of and for the year ended December 31, 2024 and the related notes contained in the 2024 Annual Report on Form 10-K. This Quarterly Report on Form 10-Q includes forward-looking statements. These forward-looking statements within the meaning of the federal securities law are based on our current expectations and beliefs concerning future developments and their potential effects on us. These forward-looking statements are not statements of historical fact and may include statements regarding possible or assumed future results of operations. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be

Previous wording

We are a leading developer and manufacturer of high-performance, AI-enhanced Lithium-Metal and Li-ion rechargeable batteries for electric vehicles (“EVs”), urban air mobility (“UAM”), drones, robotics, battery energy storage systems (“BESS”) and other applications. Our differentiated battery technology has been designed to combine the high energy density of Li-Metal with the large-scale manufacturability of conventional Lithium-ion (“Li-ion”) batteries and will help to promote the transition from the global dependence on fossil fuel-based automotive vehicles to clean and efficient EVs and help enable an era of electric transportation in the air.

Current wording

We are a leading developer and manufacturer of high-performance, AI-enhanced Lithium-Metal and Li-ion rechargeable batteries for electric vehicles (“EVs”), urban air mobility (“UAM”), drones, robotics, energy storage systems (“ESS”) and other applications. Our differentiated battery technology has been designed to combine the high energy density of Li-Metal with the large-scale manufacturability of conventional Lithium-ion (“Li-ion”) batteries and will help to promote the transition from the global dependence on fossil fuel-based automotive vehicles to clean and efficient EVs and help enable an era of electric transportation in the air.

Previous wording

Revenue for the three months ended March 31, 2025 was $5.8 million and was primarily attributable to service-related contracts from OEMs and other manufacturers.

Current wording

Revenue for the three and six months ended June 30, 2025 was $3.5 million and $9.3 million, respectively. This revenue was primarily earned from service-related contracts with OEMs and other manufacturers.

Previous wording

Cost of revenue for the three months ended March 31, 2025 was $1.2 million, primarily attributable to personnel costs.

Current wording

Costs of revenue for the three and six months ended June 30, 2025 were $0.9 million and $2.2 million, respectively, primarily attributable to personnel costs.

Previous wording

General and administrative expenses consist primarily of costs incurred for salaries and personnel-related expenses, including bonus and stock-based compensation expense, for our finance, legal and human resource functions, expenses for director and officer insurance, outside contractor and professional service fees, audit and compliance expenses, legal, patent-related costs, accounting and other advisory services, as well as allocated facilities and information technology costs, including depreciation. Upon commencement of commercial operations, we also expect to incur customer and sales support and advertising costs.

Current wording

General and administrative expenses consist primarily of costs incurred for salaries and personnel-related expenses, including bonus and stock-based compensation expense, for our finance, legal and human resource functions, expenses for director and officer insurance, outside contractor and professional service fees, audit and compliance expenses, legal, patent-related costs, accounting and other advisory services, as well as allocated facilities and information technology costs, including depreciation.

Previous wording

During the three months ended March 31, 2025, we incurred a gain of $7.9 million associated with the change in fair value of the Sponsor Earn-Out liabilities compared with a gain of $0.9 million for the three months ended March 31, 2024. This gain on the change in fair value of the Sponsor Earn-Out liabilities is tied to SES’s stock price, continued volatility in the stock price or changes in the expected term. Refer to “Note 9 – Sponsor Earn-Out Liabilities” to the unaudited interim condensed consolidated financial statements for additional information.

Current wording

During the three and six months ended June 30, 2025, we incurred a loss of $1.4 million and a gain of $6.4 million, respectively, associated with the change in fair value of the Sponsor Earn-Out liabilities compared with gains of $1.4 million and $2.3 million, respectively, for the three and six months ended June 30, 2024. With the fair value of the Sponsor Earn-Out liabilities tied to the Company’s stock price, continued volatility in the stock price or changes in the expected term could result in further gains or losses resulting from the change in fair value. Refer to “Note 9 – Sponsor Earn-Out Liabilities” to the condensed consolidated financial statements for additional information.

Previous wording

During the three months ended March 31, 2025, we had miscellaneous income of $0.3 million compared with miscellaneous income of $0.9 million for the three months ended March 31, 2024. The $0.6 million decrease in miscellaneous income was primarily the result of a decrease in the fair value of equity investments.

Current wording

During the six months ended June 30, 2025, we had miscellaneous income of $0.4 million, compared with miscellaneous income of $0.3 million for the six months ended June 30, 2024. This $0.1 million increase in miscellaneous income was the result of an increase in other expenses and gains on foreign currency translations offset by a decrease in the fair value of our investment in publicly traded companies.

Previous wording

As of March 31, 2025, we had total cash and cash equivalents of $56.1 million and investments in marketable debt and equity securities of $183.7 million. As an early-stage growth company that has just begun the commercialization stage of development, the net operating losses we have incurred since inception are consistent with our strategy and budget.

Current wording

As of June 30, 2025, we had total cash and cash equivalents of $11.8 million and investments in marketable debt and equity securities of $217.1 million. As an early-stage growth company that has just begun the commercialization stage of development, the net operating losses we have incurred since inception are consistent with our strategy andbudget.

Previous wording

positive cash flows from operations. To date, we have funded our operations through a combination of proceeds from the Business Combination and subsequent equity private placement in 2022 and funding received through the sales of our redeemable convertible preferred stock. We believe that our cash on hand and marketable securities resulting from these proceeds will be sufficient to meet our principal working capital and capital expenditure requirements and ongoing costs, such as research and development relating to our Li-Metal batteries and the construction of additional manufacturing facilities, for a period of at least 12 months from the date of this Quarterly Report, as well as to full commercialization. However, additional funding may be required during or after this period for a variety of reasons, including additional opportunities to purchase data and equipment to develop and train our AI models, develop commercial operations in the United States, business combinations or acquisitions, and delays in expected development of our Li-Metal battery cells. If we need such additional funding beyond these existing short- to medium-term sources of liquidity, or if following commercialization, we are not able to fund our operations from cash flows generated from anticipated product sales, we expect that we will need to raise additional funds. This may be through a variety of possible methods, including, but not limited to, entry into joint ventures or other strategic arrangements, issuance of equity, equity-related or debt securities or through obtaining credit from financial institutions, as well as anticipated future revenue from product sales. For more information about our at-the-market equity offering program with certain investment banks, which we entered into on February 28, 2025, through which we may offer and sell, from time to time, shares of Class A Common Stock having an aggregate offering price of up to $150.0 million, see “Part II, Item 9.B. Other Information” in our 2024 Annual Report on Form 10-K. We sold no shares under the at-the-market equity offering program during the quarter ended March 31, 2025, and to date have sold no shares under the program.

Current wording

If we need additional funding beyond these existing short- to medium-term sources of liquidity, or if following commercialization, we are not able to fund our operations from cash flows generated from anticipated product sales, we expect that we will need to raise additional funds. This may be through a variety of possible methods, including, but not limited to, entry into joint ventures or other strategic arrangements, issuance of equity, equity-related or debt securities, and the obtaining credit from financial institutions. For more information about our at-the-market equity offering program with certain investment banks, which we entered into on February 28, 2025, through which we may offer and sell, from time to time, shares of Class A Common Stock having an aggregate offering price of up to $150.0 million, see “Part II, Item 9.B. Other Information” in our 2024 Annual Report on Form 10-K. We sold no shares under the at-the-market equity offering program during the quarter ended June 30, 2025, and to date have sold no shares under the program.

Previous wording

Our cash flows used in operating activities to date have primarily comprised research and development and general and administrative activities as discussed above. As we continue to ramp up hiring for research and development headcount to accelerate our engineering efforts, we expect our cash used in operating activities to increase significantly before we start to generate any material cash inflows from our operations.

Current wording

Our cash flows used in operating activities to date have primarily comprised research and development and general and administrative activities as discussed above.

Previous wording

Net cash used in operating activities of $22.8 million for the three months ended March 31, 2025 was primarily attributable to net loss of $12.4 million, as adjusted for a gain on change in fair value of Sponsor Earn-Out liabilities of $7.9 million, accretion income from marketable securities of $0.8 million, stock-based compensation expense of $4.0 million, depreciation and amortization of $2.5 million, and a $8.0 million working capital outflow. The working capital outflow was driven primarily by a $5.3 million decrease in accrued expenses and other liabilities, a $1.7 million increase in prepaid and other assets, a $1.0 million decrease in operating lease liabilities, a $0.5 million increase in trade accounts receivables, and a $0.1 million decrease in accounts payable. These working capital outflows were partially offset by working capital inflows of a $0.7 million increase in right of use assets. The decrease in accrued expenses and other liabilities was primarily due to accruals for purchases of equipment for a JDA, accrued income taxes payable, and payroll related accruals. The increase in prepaids and other assets was primarily due to accrued receivables for services rendered to customers. The changes to operating lease liabilities and right of use assets was primarily driven by lease modifications. The changes in receivables and payables were driven by timing of receipts.

Current wording

Net cash used in operating activities of $33.7 million for the six months ended June 30, 2025 was primarily attributable to net loss of $35.1 million, as adjusted for stock-based compensation expense of $6.7 million, a gain on change in fair value of Sponsor Earn-Out liabilities of $6.4 million, depreciation and amortization of $5.0 million, accretion income from marketable securities of $1.7 million, and a $2.2 million working capital outflow. The working capital outflow was primarily driven by a $2.5 million decrease in accrued expenses and other current liabilities due to accruals for purchases of equipment for a JDA, changes in deferred revenue balances, accrued income taxes payable, and payroll related accruals and a $2.1 million increase in receivables from customers. The working capital outflow was partially offset by a $2.3 million increase in prepaids and other assets primarily due to advance payments made for software related service costs due to AI infrastructure spend.

Previous wording

Net cash used in operating activities of $9.0 million for the three months ended March 31, 2024 was primarily attributable to net loss of $15.6 million as adjusted for stock-based compensation expense of $4.8 million, accretion income from marketable securities of $1.9 million, depreciation and amortization of $1.7 million, a gain on change in fair value of Sponsor Earn-Out liabilities of $0.9 million, and a $3.7 million working capital inflow. The working capital inflow was primarily driven by a $5.0 million decrease in prepaids and other assets primarily due to the receipt of $7.0 million in JDA receivable related payments from an OEM partner, of which $4.6 million was outstanding at year-end, and a $1.0 million decrease due to the renewal of our insurance policy at lower rates to cover potential liabilities under our indemnification obligations to our directors and certain officers partially offset by an increase in $1.4 million related to advanced payments

Current wording

Net cash used in operating activities of $31.1 million for the six months ended June 30, 2024 was primarily attributable to net loss of $35.5 million, as adjusted for stock-based compensation expense of $9.6 million, accretion income from marketable securities of $3.9 million, depreciation and amortization of $3.7 million, a gain on change in fair value of Sponsor Earn-Out liabilities of $2.3 million, other adjustments to net loss of $1.5 million, and a $1.2 million working capital outflow. The working capital outflow was primarily driven by a $2.5 million increase in prepaids and other assets. The increase in prepaids and other assets was primarily due to advance payments made for equipment purchases pursuant to our JDA agreements and prepaid costs related to software development. Additionally, a $1.8 million decrease in accrued expenses and other liabilities was due to the timing of legal fees and equipment purchases also contributed to the working capital outflow. The outflow was partially offset by a $3.3 million receipt from the related party.

Previous wording

Net cash used in investing activities was $49.8 million for the three months ended March 31, 2025 compared to net cash used in investing activities of $53.2 million for the three months ended March 31, 2024.

Current wording

Net cash used in investing activities was $83.2 million for the six months ended June 30, 2025, compared to net cash provided by investing activities of $0.5 million for the six months ended June 30, 2024.

Previous wording

Purchases and Maturities of Investments – Net purchases of investments in marketable debt securities were $48.9 million for the three months ended March 31, 2025 compared to $60.0 million of net proceeds from investments in marketable debt securities for the three months ended March 31, 2024.

Current wording

Purchases and Maturities of Investments – Net purchases of investments in marketable debt and equity securities were $81.5 million for the six months ended June 30, 2025, compared to net proceeds from investments in marketable debt and equity securities of $11.0 million during the six months ended June 30, 2024.

Previous wording

Capital Spending – Capital expenditures were $0.9 million and $6.8 million for the three months ended March 31, 2025 and 2024, respectively, and primarily related to purchases of lab machinery and equipment, lab tools and instruments. We expect capital expenditures to decrease in 2025 compared with 2024 as we continue to spend on AI related infrastructure classified as research and development expense rather than invest in manufacturing equipment.

Current wording

Capital Spending – Capital expenditures were $1.7 million and $10.5 million for the six months ended June 30, 2025 and 2024, respectively, and primarily related to the timing of purchases of lab machinery and equipment, lab tools and instruments related to our build out of production lines and facilities. We expect capital expenditures to decrease in 2025 compared with 2024 as we continue to spend on AI related infrastructure classified as research and development expense rather than invest in manufacturing equipment.

Previous wording

Net cash provided by financing activities was immaterial for the three months ended March 31, 2025 and March 31, 2024.

Current wording

Net cash used in financing activities was $0.3 million for the six months ended June 30, 2025 compared to net cash provided by financing activities of $0.1 million for the six months ended June 30, 2024, respectively, due to $0.3 million in payments for taxes withheld to cover vested restricted stock and a decrease in receipts for option exercises of $0.1 million.

Previous wording

(1) Purchase obligations include commitments for the purchase of lab supplies and equipment as well as committed spend related to a JDA. These commitments are derived from purchase orders, supplier contracts and open orders based on projected demand information.

Current wording

(1) Purchase obligations include commitments derived from a JDA agreement, outstanding purchase orders, and supplier contracts of lab supplies and equipment.

Previous wording

See “Note 2 – Basis of Presentation” of our accompanying unaudited interim condensed consolidated financial statements for the three months ended March 31, 2025 included in this Quarterly Report on Form 10-Q for more information about recent accounting pronouncements, the timing of their adoption, and their potential impact on our financial condition, results of operations and cash flows.

Current wording

See “Note 2 – Basis of Presentation” of our accompanying condensed consolidated financial statements for the three and six months ended June 30, 2025 included in this Quarterly Report on Form 10-Q for more information about recent accounting pronouncements, the timing of their adoption, and their potential impact on our financial condition, results of operations and cash flows.

Previous wording

Our financial statements have been prepared in accordance with U.S. GAAP. In the preparation of these unaudited interim condensed consolidated financial statements, we are required to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the unaudited interim condensed financial statements, as well as the reported expenses incurred during the reporting periods.

Current wording

Our financial statements have been prepared in accordance with U.S. GAAP. In the preparation of these condensed consolidated financial statements, we are required to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods.

Previous wording

There have been no significant changes to our critical accounting policies or in the underlying accounting assumptions and estimates used in such policies from those disclosed in our annual consolidated financial statements and accompanying notes included in our 2024 Annual Report on Form 10-K.

Current wording

There have been no significant changes to our critical accounting policies or in the underlying accounting assumptions and estimates used in such policies from those disclosed in our annual consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2024.