[26 August 2022] Gotion High-tech Co., Ltd. (“Gotion High-tech” or the “Company”; Stock Code: 002074.SZ) announced its interim results for the six months ended 30 June 2022 (the "Reporting Period"). During the Reporting Period, the Company achieved revenue of RMB8,638 million, representing a year-on-year growth of 143.24%, of which revenue from overseas regions (including Hong Kong, Macau and Taiwan) increased by 358.28% year-on-year to RMB772 million, and is expected to achieve its target of 100% growth in total revenue over the previous year in the future. Net profit attributable to shareholders of the listed company was RMB64.62 million, representing a year-on-year increase of 34.15%. The Company's net cash flow from operating activities was RMB91.6 million, representing a year-on-year increase of 6.38%.

During the Reporting Period, Gotion High-tech generated revenue mainly from power lithium battery, energy storage battery and power transmission and distribution equipment. Power lithium battery business maintained a solid growth trend, and achieved revenue of RMB6,609 million during the period, representing a year-on-year increase of 113.93%, and was the largest contributor to the Company's revenue. In particular, the energy storage battery business was disclosed for the first time in the financial report, achieving revenue of RMB1,279million during the period, accounting for 14.80% of the total revenue.

Revenue size doubled again and market share continued to increase

Gotion High-tech is a leading power battery company in the field of new energy vehicles in China, and is one of the first enterprises in China to engage in independent research and development, production and sales of lithium-ion batteries for new energy vehicles. Since the start of 2022, China further emphasized its support for the accelerated development of new energy industry as a strategic emerging industry. Against this backdrop, Gotion High-tech continued to expand its production capacity, strengthened its technological advantages, further deepened its market cooperation and steadily accelerated the implementation of its international strategy. Driven by multiple factors, the Company achieved revenue of RMB8,638 million in the first half of the year, up 143.24% year-on-year, registering triple-digit growth; of which, revenue from overseas regions was RMB772million, up 358.28% year-on-year, showing rapid expansion. It is expected to reach the target of RMB20 billion in total revenue by the end of the year. The Company is expected to achieve its target of 100% growth in total revenue over the previous year by the end of the year.

According to SNE Research, in the first half of the year, Gotion High-tech has battery installed capacity of 5.8 GWh, with a market share of 2.9%, up 1 percentage point from the same period of last year, ranking 8th in the world. In terms of the number of installed units, the capacity coverage and global delivery capability continued to improve. For customer structure, passenger car customers improved significantly with increase in overseas and mid-to-high-end customers, leading to continuous improvement of customer structure. According to CBEA, in the first half of the year, the Company recorded 228 thousand units for EV battery installed passenger vehicle in China, accounting for a market share of approximately 9.7%, and ranked among the top 3 in China; and recorded over 250 thousand units for EV battery installed passenger vehicle in the world, accounting for a market share of approximately 5.9%, and ranked 5th in the global market.

Research and development capability continued to strengthen to create "long-life batteries"

In its main business of power battery and energy storage battery, Gotion High-tech has strong R&D capability, especially in the chemical composition of battery and battery cell, which are crucial to the electric vehicle market. In the process of building the layout of the whole industrial chain, the Company persists in independent R&D and innovation based on the requirements of its development strategy, introduces high-end technical talents and cooperates with universities and colleges, so as to build a high-standard, highly efficient and high-quality R&D model with multi-discipline and internal and external collaboration, thereby maintaining its technological advantages and ranking steadily among the top in the industry in terms of R&D capability. In the first half of 2022, Gotion High-tech's R&D expense amounted to RMB510 million, an increase of 104.97% year-on-year. The Company made early plan for lithium resources and strengthened its integrated layout. It has achieved remarkable results and made progress in the research of advanced technologies such as low-temperature electrolyte technology for lithium iron, research and development of thermal insulation materials, anti-thermal runaway management in battery cells and semi-solid battery technology. At present, the Company has enabled the industrial application of full life-cycle anode lithium-ion compensation technology in the field of energy storage, increasing the life of lithium-ion batteries to 12,000 cycles and becoming an industry model of low-cost, high-safety and long-life lithium batteries.

At the 11th Gotion High-tech Technology Conference held during the year, the Company unveiled two new products, namely the 360Wh/kg semi-solid battery and the Yijiadian intelligent mobile energy storage charging pile. In particular, the 360Wh/kg semi-solid battery is capable of passing the 180°C 30min hot box test and the needle penetration test, which are higher than the national standard, and is expected to be installed in vehicles this year. In addition, Gotion High-tech has developed a prototype for the 400Wh/Kg ternary semi-solid battery in its laboratory. In the future, the Company will make technological innovation to iterate silicon-based negative electrodes, lithium metal negative electrodes and pre-lithium technology to accelerate the transition from liquid to semi-solid batteries and eventually develop full solid state battery.

As of the end of the Reporting Period, Gotion High-tech applied for 5,687 patents and obtained 3,835 patents, including 1,016 invention patents, covering the whole battery industry chain. The Company has also published 255 research papers, 23 articles in SCI, 147 articles in core publications and 109 software copyright registrations, covering the entire life cycle of lithium batteries.

Steady acceleration of internationalization strategy and continuous construction of the whole industry chain layout

In the first half of the year, the Company continued to increase its efforts in overseas expansion ，of which, revenue from overseas regions was RMB772million, up 358.28% year-on-year with the successful opening of the Göttingen plant in Europe and the steady progress of construction plans for power batteries and supporting industrial bases in North America, Southeast Asia, South Asia and other overseas markets. It also proposed to establish a new generation power battery production line to form an integrated supporting system for international research, production, supply and sales. On June 24, President Fernández of Argentina met with Li Zhen, our chairman, and the Company reached a consensus on cooperation with the Jujuy National Energy and Mining Company on the construction of battery-grade lithium carbonate production line, etc. On July 28, Gotion High-tech was successfully listed on the SIX Swiss Exchange AG as the first batch of GDR-listed enterprises under the China-Swiss Stock Connect, and with a total fundraising size of US$685 million, it became the largest project of equity financing in the Swiss capital market since the beginning of this year, which fully accelerated the Company’s strategic progress of international development.

The Company continued to optimize the construction of the whole industry chain system and accelerated the implementation of resource projects, and the layout of upstream materials has covered most of the raw materials for lithium battery production. It also developed its materials business in Lujiang of Anhui, Feidong of Anhui, Yichun of Jiangxi, Wuhai of Inner Mongolia and Jujuy of Argentina, with five major materials bases starting to take shape.

Making good progress in commencement of production of power battery projects

During the Reporting Period, Gotion High-tech’s Nanjing New Energy Intelligent Manufacturing 20GWh Power Battery Project officially commenced production, Yichun Gotion 10GWh Power Battery Project was completed and put into production, and Gotion Kehong High-end Positive Electrode Material Project with an annual capacity of 200,000 tonnes was put into production. The successful commencement of production of these projects will further enhance the level of industrialization and significantly contribute to achieving the production capacity target of 100GWh by the end of the year.

In the first half of this year, the Company also entered into a Procurement Fixed-point Agreement with Volkswagen and became its first supplier for standard battery cells. With the deepening cooperation with Volkswagen, Gotion High-tech has accelerated its expansion plan in the European market. Recently, the Göttingen plant in Germany, which is wholly owned by Gotion High-tech, has started renovation and is expected to start production of the first phase of power battery capacity in 2023. This will bring localized and low-cost battery options to European car manufacturers, helping the Company quickly tap into the European vehicle battery market and facilitating the achievement of Europe's target of carbon peaking and carbon neutrality. UBS expects Volkswagen to become the Company's largest customer by 2025.

In the future, by adhering to the mission of “To Make Green Energy Accessible and Sustainable” and the vision of “Focus on Technology-driven Development and Become the Leader of Global Energy Storage Industry”, the Company will expand its production capacity through global development, vertically integrate the industry chain, overcome technological and quality bottlenecks, improve operational efficiency, enhance management effectiveness and build a global platform to achieve a 300GWh production capacity by 2025.