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 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

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 nine months ended September 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 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.

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, 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.

Current wording

We are a leading developer and manufacturer of high-performance, AI-enhanced Lithium-Metal (“Li-Metal”) and Lithium-ion (“Li-ion”) rechargeable battery technologies for electric vehicles (“EVs”), Urban Air Mobility (“UAM”), drones, robotics, Energy Storage Systems (“ESS”) and other applications. The Company’s mission is to accelerate the world’s energy transition through material discovery and battery

Previous wording

SES’s mission is to accelerate the world’s energy transition through material discovery and battery management. To assist in achieving this mission, we have partnered with leading global original equipment manufacturers (“OEMs”), including GM, Hyundai, and Honda, among other strategic partners, under JDAs and service contracts to develop and produce our Li-Metal battery cells and technology. We have transitioned from the development and production of A-Sample batteries to B-Sample batteries with specifications required by OEMs for their EVs. This transition began when we signed a B-Sample agreement for Li-Metal development of EVs. A-Sample batteries are functional prototypes developed for OEMs based on their technical specifications. These are in contrast with B-Sample batteries, which are A-sample batteries manufactured under much higher throughput and tested in actual vehicles, and C-Sample batteries, which would be fully functional, mature samples for mass production and tested for full drivability in actual vehicles.

Current wording

In 2024, we transitioned from developing and producing A-Sample batteries to B-Samples to meet carmakers' requirements for their electric vehicles. A-Sample batteries are functional prototypes developed for OEMs based on their technical specifications. These are in contrast with B-Sample batteries, which are A-sample batteries manufactured under much higher throughput and tested in actual vehicles, and C-Sample batteries, which would be fully functional, mature samples for mass production and tested for full drivability in actual vehicles.

Previous 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.

Current wording

Revenue for the three and nine months ended September 30, 2025 was $7.1 million and $16.4 million, respectively. This revenue was primarily earned from service-related contracts with OEMs and other manufacturers totaling $3.9 million and $13.2 million, respectively, as well as ESS product shipments totaling $3.2 million for the three and nine months ended September 30, 2025, respectively.

Previous wording

Research and development expenses consist primarily of costs incurred for salaries and personnel-related expenses, including performance-based bonus and stock-based compensation expense, for scientists, experienced engineers and technicians, expenses for materials and supplies used in product research and development, process engineering efforts and testing, as well as payments to consultants, depreciation, and allocated facilities and information technology costs. Additionally, payments received from the JDA agreements are treated as reimbursements to research and development expenses.

Current wording

Research and development expenses consist primarily of costs incurred for salaries and personnel-related expenses, including performance-based bonus and stock-based compensation expense, for scientists, experienced engineers and technicians, expenses for materials and supplies used in product research and development, process engineering efforts and testing, as well as payments to consultants, depreciation, and allocated facilities and information technology costs.

Previous wording

Research and development expenses for the three months ended June 30, 2025 increased $4.0 million, or 27%, to $19.1 million, compared with $15.1 million for the three months ended June 30, 2024. This increase was primarily driven by a $4.4 million increase in AI infrastructure costs including Graphic Processing Unit (“GPU”) expenses and Molecular Universe costs, a $1.2 million increase in lab related expenses, and a $0.6 million decrease in reimbursements from prior year from our JDA partners due to the culmination of certain JDA activities in 2024. These increases were partially offset by a $1.4 million decrease in personnel costs and a $0.8 million decrease in

Current wording

Research and development expenses for the three months ended September 30, 2025 decreased $8.8 million, or 36%, to $15.6 million, compared with $24.4 million for the three months ended September 30, 2024. This decrease was primarily driven by a $8.4 million decrease in JDA related lab expenses during the current period, a $3.3 million decrease in personnel costs and a $2.9 million decrease in stock-based compensation mainly attributable to headcount reductions resulting from the company pivoting away from in-house manufacturing, and a $0.6 million decrease in other operating costs like professional fees, rent, and depreciation. These decreases were partially offset by a $4.5 million decrease in reimbursements from prior year from our JDA partners due to the culmination of certain JDA activities in 2024 and a $2.1 million increase in AI infrastructure costs including Graphic Processing Unit (“GPU”) expenses and development costs development of the Company’s Molecular Universe platform.

Previous wording

Research and development expenses for the six months ended June 30, 2025 increased $12.8 million, or 48%, to $39.6 million compared with $26.8 million for the six months ended June 30, 2024. This increase was primarily driven by a $8.5 million increase in AI infrastructure costs including GPU expenses and Molecular Universe costs, a $8.0 million increase in lab equipment due to JDA equipment purchases, a $4.0 million decrease in reimbursements compared to the prior period from billings from our JDA partners due to the culmination of certain JDA activities in 2024, and a net $0.8 million increase in facility related costs including rent, utilities, and depreciation. These increases were partially offset by a $4.1 million decrease in personnel costs, a $1.0 million decrease in stock-based compensation mainly attributable to headcount reductions and a $1.4 million decrease in lab supplies resulting from the company pivoting away from in-house manufacturing. Further, a net $1.4 million decrease in contracted software and professional services as well as a $0.6 million decrease in other operating costs that include repairs and maintenance and allocated expenses.

Current wording

Research and development expenses for the nine months ended September 30, 2025 increased $3.9 million, or 8%, to $55.2 million compared with $51.3 million for the nine months ended September 30, 2024. This increase was primarily driven by a $10.5 million increase in AI infrastructure costs including GPU expenses and costs related to development of the Company’s Molecular Universe platform, $8.5 million decrease in reimbursements compared to the prior period from billings from our JDA partners due to the culmination of certain JDA activities in 2024, and a $0.2 million increase in depreciation expense for assets placed in service. These increases were partially offset by a $7.4 million decrease in personnel costs, a $4.0 million decrease in stock-based compensation mainly attributable to headcount reductions resulting from the company pivoting away from in-house manufacturing, a $2.7 million decrease in JDA related lab equipment expenses.

Previous wording

General and administrative expenses for the three months ended June 30, 2025 decreased $3.1 million, or 32%, to $6.5 million, compared with $9.6 million for the three months ended June 30, 2024. This decrease was primarily driven by a decrease of $1.3 million for stock-based compensation and $1.0 million in personnel costs due to headcount reductions, and a $0.4 million decrease in professional services including recruiting and public relations.

Current wording

General and administrative expenses for the three months ended September 30, 2025 decreased $3.1 million, or 32%, to $6.7 million, compared with $9.8 million for the three months ended September 30, 2024. This decrease was primarily driven by a decrease of $1.6 million for stock-based compensation and $0.9 million in personnel costs due to headcount reductions, and a $0.9 million decrease in professional services including recruiting and public relations consulting, partially offset by a $0.2 million increase in other operating costs including franchise tax fees.

Previous wording

General and administrative expenses for the six months ended June 30, 2025 decreased $5.2 million, or 27%, to $13.8 million, compared with $19.1 million for the six months ended June 30, 2024. This decrease was primarily driven by a decrease of $2.0 million for stock-based compensation and $1.9 million in personnel costs due to headcount reductions, and a $1.1 million decrease in professional services including recruiting and public relations.

Current wording

General and administrative expenses for the nine months ended September 30, 2025 decreased $8.4 million, or 29%, to $20.5 million, compared with $28.9 million for the nine months ended September 30, 2024. This decrease was primarily driven by a decrease of $3.4 million for stock-based compensation and $2.9 million in personnel costs due to headcount reductions, and a $1.6 million decrease in professional services including recruiting and public relations consulting, a $0.6 million decrease in legal fees and a $0.5 decrease in insurance costs, partially offset by a $0.5 million increase in other operating costs including franchise tax fees and regulatory costs.

Previous wording

During the three and six months ended June 30, 2025, we had interest income of $2.4 million and $5.0 million, respectively, compared with $4.0 million and $8.2 million for the three and six months ended June 30, 2024, respectively. The $1.6 million and $3.2 million decreases from each of the three and six months ended June 30, 2024 to each of the three and six months ended June 30, 2025 were due to lower investment balances primarily arising from cash used in operations.

Current wording

During the three and nine months ended September 30, 2025, we had interest income of $2.3 million and $7.3 million, respectively, compared with $3.7 million and $11.8 million for the three and nine months ended September 30, 2024, respectively. The $1.4 million and $4.5 million decreases from each of the three and nine months ended September 30, 2024 to each of the three and nine months ended September 30, 2025 were due to lower investment balances primarily arising from cash used in operations.

Previous 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.

Current wording

During the three and nine months ended September 30, 2025, we incurred a loss of $3.9 million and a gain of $2.5 million, respectively, associated with the change in fair value of the Sponsor Earn-Out liabilities compared with gains of $1.0 million and $3.3 million, respectively, for the three and nine months ended September 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 10 – Sponsor Earn-Out Liabilities” to the condensed consolidated financial statements for additional information.

Previous wording

During the three months ended June 30, 2025, we had miscellaneous income of $0.1 million, compared with miscellaneous expense of $0.6 million for the three months ended June 30, 2024. This $0.7 million increase in miscellaneous income was primarily due to an increase in the gain on foreign currency translation.

Current wording

During the three months ended September 30, 2025, we had miscellaneous expense of $0.7 million, compared with miscellaneous expense of $0.5 million for the three months ended September 30, 2024. This $0.2 million increase in miscellaneous expense was primarily due to an increase in the loss on foreign currency translation.

Previous 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.

Current wording

During the nine months ended September 30, 2025, we had miscellaneous expense of $0.3 million, compared with miscellaneous expense of $0.2 million for the nine months ended September 30, 2024. This $0.1 million increase in miscellaneous expense was the result of an increase in the loss on foreign currency translations.

Previous wording

The provision for income taxes for the three and six months ended June 30, 2025 increased to $0.7 million, compared to $0.1 million and $0.3 million for the three and six months ended June 30, 2024, respectively, primarily due to local taxes in the foreign jurisdictions in which the Company operates.

Current wording

During the three months ended September 30, 2025, we had a benefit from income taxes of $0.1 million compared to a provision for income taxes of $0.1 million for the three months ended September 30, 2024. This $0.2 million increase in benefits from incomes taxes is primarily due to local taxes in the foreign jurisdictions in which the Company operates.

Previous 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.

Current wording

As of September 30, 2025, we had total cash and cash equivalents of $35.3 million and investments in marketable debt and equity securities of $178.7 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 andbudget.

Previous wording

We expect to sustain substantial operating expenses, without generating sufficient revenues to cover expenditures, for a number of years. Our ability to successfully develop our products and services, scale up our commercial operations and expand our business will depend on many factors, including our working capital needs, the availability of equity and/or debt financing and, over time, our ability to generate 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 prior to that, 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 Molecular Universe material discoveries, 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 to finance certain needs beyond our principal working capital and capital expenditure requirements and ongoing costs, including additional opportunities to purchase data and equipment, develop and train our AI models, and/or develop commercial operations in the United States, acquisitions or other strategic transactions, and unexpected delays in the development of our Li-Metal battery cells.

Current wording

We expect to sustain substantial operating expenses, without generating sufficient revenues to cover expenditures, for a number of years. Our ability to successfully develop our products and services, scale up our commercial operations and expand our business will depend on many factors, including our working capital needs, the availability of equity and/or debt financing and, over time, our ability to generate positive cash flows from operations. To date, we have funded our operations primarily through a combination of proceeds from the Business Combination and subsequent equity private placement in 2022, and prior to that, 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, operations of recently acquired ESS business, and Molecular Universe material discoveries, 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 to finance certain needs beyond our principal working capital and capital expenditure requirements and ongoing costs, including additional opportunities to purchase data and equipment, develop and train our AI models, and/or develop commercial operations in the United States and abroad, acquisitions or other strategic transactions, and unexpected delays in the development of our Li-Metal battery cells.

Previous 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.

Current wording

Net cash used in operating activities of $48.0 million for the nine months ended September 30, 2025 was primarily attributable to net loss of $56.0 million, as adjusted for stock-based compensation expense of $8.9 million, a gain on change in fair value of Sponsor Earn-Out liabilities of $2.5 million, depreciation and amortization of $7.7 million, a loss on disposal of fixed assets of $0.6 million, accretion income from marketable securities of $2.4 million, and a $4.6 million working capital outflow. The working capital outflow was primarily driven by a $5.4 million increase in prepaids and other assets primarily due to advance payments made for software related service costs due to AI infrastructure spend, a $2.0 million increase in accrued expenses and other current liabilities due to accruals for deferred consideration in connection with the acquisition, changes in deferred revenue balances, accrued income taxes payable, and payroll related accruals and a $1.3 million increase in receivables from customers.

Previous 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.

Current wording

Net cash used in operating activities of $53.8 million for the nine months ended September 30, 2024 was primarily attributable to net loss of $65.6 million, as adjusted for stock-based compensation expense of $16.1 million, accretion income from marketable securities of $6.0 million, depreciation and amortization of $5.9 million, a gain on change in fair value of Sponsor Earn-Out liabilities of $3.3 million, other adjustments to net loss of $1.0 million, and a $0.1 million working capital inflow. The working capital inflow was primarily driven by a $2.8 million increase in accrued expenses and other liabilities, including due to the timing of payments for legal fees and equipment purchases, and a $1.3 million receipt for reimbursements of our expenses from a JDA partner. The working capital inflow was partially offset by a $3.7 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, the $0.4 million decrease in accounts payable was due to the timing of vendor payments, which also offset the working capital inflow.

Previous 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.

Current wording

Net cash used in investing activities was $43.7 million for the nine months ended September 30, 2025, compared to net cash provided by investing activities of $34.2 million for the nine months ended September 30, 2024.

Previous 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.

Current wording

Purchases, Maturities, and Sale of Investments – Net purchases of investments in marketable debt and equity securities were $47.4 million for the nine months ended September 30, 2025, compared to net proceeds from investments in marketable debt and equity securities of $46.1 million during the nine months ended September 30, 2024. During the nine months ended September 30, 2025, we sold investments prior to maturity resulting in $5.0 million in proceeds from sale of investments compared to none in the nine months ended September 30, 2024.

Previous 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.

Current wording

Capital Spending – Capital expenditures were $2.1 million and $12.0 million for the nine months ended September 30, 2025 and 2024, respectively, and primarily related to the shift from investing in manufacturing equipment to more AI/software, which is less capital intensive. 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 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.

Current wording

Net cash used in financing activities was $2.0 million for the nine months ended September 30, 2025 compared to net cash provided by financing activities of $0.4 million for the six months ended June 30, 2024, respectively, due to $1.6 million in stock repurchases during the period and $0.4 million in payments for taxes withheld to cover vested restricted stock.

Previous 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.

Current wording

See “Note 2 – Basis of Presentation” of our accompanying condensed consolidated financial statements for the three and nine months ended September 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.