EVE Energy Co., Ltd. Business Report FY ended Dec. 2022

Financial Overview

(CNY millions)

	FY ended Dec. 31, 2022	FY ended Dec. 31, 2021	Rate of change（%）
Sales	36,303.95	16,899.80	114.82
Operating income	3,511.93	3,091.36	13.60
Ordinary income	3,498.13	3,041.36	15.20
Net income	3,671.89	3,149.49	16.59

primary factor

-As a result of economic recovery inside and outside of China, the consumer battery business saw sales increase by 23.81% year-over-year (y/y) and sales in the drive battery business increase by 176.63% y/y.
-In 2022, sales in the drive battery business increased by 176.63% y/y to CNY 27,682.8 million. The increase was mainly due to the establishment of production bases in Jingmen, Hubei Province, Chengdu, Sichuan Province, and Shenyang, Liaoning Province for the 46 series and other large cylindrical ternary batteries, and the expansion of production capacity. In addition, the company received orders from major OEMs such as Chengdu Danyun Automobile and BMW.

Orders

Customer	Announcement time	Remarks
Chengdu Dayun	April 2022	The 46 Series cylindrical battery cells.
Bosch	March 2022	Supplying lithium-ion batteries for electric vehicles (EVs) for the global market.
Powin Energy	August 2021	As a strategic supplier of Powin Energy's battery stacks, for two years the company will supply battery cells of the same standard as those conventionally used by Powin Energy.
Jaguar Land Rover (JLR)	February 2021	Supply 48V battery system. The Company is the supplier for the "20Ah MHEV Battery" project.

Strategic alliance

Ronbay	The company announced the signing of a strategic cooperation agreement with Ningbo Ronbay New Energy Technology Co., Ltd. (Ronbay). The two parties will conduct all-round, in-depth cooperation in such fields as batteries, materials, markets, strategies, technologies, product development, and supply chains to jointly build a New Energy material industrial chain with global competitiveness.
Yunnan Province	The company announced that it has signed a partnership agreement in Kunming, Yunnan Province, on an NEV (New Energy Vehicle) battery full-industrial chain project with the Yuxi city government, Yunnan Energy New Material Co., Ltd. (Yunnan Energy New Material), Zhejiang Huayou Holding Group Co., Ltd. (Huayou Holding), and Yunnan Yuntianhua Co., Ltd. (Yuntianhua). Per the agreement, all parties will jointly establish two joint venture companies in Yuxi, Yunnan Province. The joint venture companies will exploit mineral resources and process them for the R&D, manufacturing and sales of NEV batteries, as well as upstream and downstream materials for NEV batteries. EVE Energy, Yunnan Energy New Material, Huayou Holding, and Yuntianhua plan to focus on the target mineral resources in Yuxi to produce NEV batteries, lithium battery separators, iron phosphate and lithium iron phosphate, and copper foil. (From a press release dated February 17, 2022)
Huizhou municipal government	The company announced that it signed a framework agreement for a strategic partnership with the Huizhou municipal government. According to the agreement, the Huizhou government will support EVE Energy in building new projects in the city and provide help to project investors. It will also assist EVE Energy in attracting upstream raw material suppliers to establish manufacturing sites in the city and support EVE Energy in building a New Energy Vehicle battery industrial park. Additionally, the Huizhou government will support EVE Energy in its innovative development and launch incentive policies to facilitate the introduction and training of top talent. Conversely, EVE Energy and its subsidiaries promise to invest no less than CNY 2 billion in local R&D and innovation projects. The company will put more effort into introducing talent with doctoral degrees and plans to build an R&D facility for energy storage and power batteries as well as a key material research center, which are expected to have world-leading technological expertise and global influence. As soon as the conditions for starting construction of the plant are met, EVE Energy and its subsidiaries expect to achieve a combined output value of CNY 100 billion by 2025. Furthermore, EVE Energy will introduce upstream suppliers and projects that focus on cathodes, anodes, electrolytes, separators, copper foils and other major materials for manufacturing of lithium batteries. (From a press release dated February 7, 2022)
Sunresin	The company announced that it signed a strategic cooperation agreement with Sunresin New Materials Co., Ltd. (Sunresin). The two parties will carry out deep cooperation in the lithium industry chain and participate in the development and utilization of lithium resources in Jieze Chaka Salt Lake, Tibet. Sunresin will encourage all parties involved in the project to give priority to supplying qualified lithium salts to the company and its designated parties on a long-term basis at competitive prices. (From a press release dated January 11, 2022)

Trends of production sites
Headquartered in Huizhou, Guangdong Province, China, the company has 12 production sites including the headquarters in Jingmen and Wuhan, Hubei Province; Ningbo, Zhejiang Province; Keidong and Yancheng, Jiangsu Province; Chengdu and Jinyang, Sichuan Province; Yuxi and Qijing, Yunnan Province; Shenyang, Liaoning Province; and Malaysia. For drive batteries, the company produces soft packs, large cylindrical batteries, and other products. A large cylindrical battery plant (production capacity of 20GWh) in Jingmen, Hubei Province will be completed soon, and plants are under construction in Chengdu, Sichuan Province; Shenyang, Liaoning Province; and Hungary, with plans to increase total production capacity to over 100GWh by 2025.

Plant construction

Locations	Investment (CNY)	Status	Products and production capacities	Details
Chengdu, Sichuan	20 billion	Planned	50GWh Drive/storage battery	In the first phase, a production line with an annual capacity of 20GWh will be built. The first phase of research facilities will be constructed. -In the second phase, a production line with an annual capacity of 30GWh will be built. The second phase of research facilities will be constructed.
Jingmen, Hubei	12.6 billion	Planned	20GWh Rectangular lithium-ion iron phosphate batteries; 48GWh Drive/storage batteries	-CNY 3.8 billion to install a 20GWh lithium-ion iron phosphate battery production line and ancillary facilities. -48 GWh-scale drive battery production line and ancillary facilities on a site area of approximately 480,000 square meters. The investment amount is approximately CNY 8.8 billion.
	4.375 billion	Financing in progress	20GWh 46 series lithium-ion battery	-The passenger car lithium-ion battery plant will be operated by a subsidiary, EVE Power Co., Ltd. (EVE Power). Construction period is 3 years.
	4.127 billion	Under construction	16GWh Rectangular lithium-ion iron phosphate batteries	-Operated by EVE Power. Construction is scheduled to be completed in November 2024.
	16.6 billion	In production	73GWh Drive/storage batteries	‐
	10.8 billion	Under construction	60 GWh -	‐The factory is a Smart Factory, covering an area of approximately 667,000 square meters.
Huizhou, Guangdong	2.1 billion	In production	‐	-Site area of 135,000 square meters. Mainly R&D, production and sales of 12V and 48V battery systems.
Huizhou, Guangdong	3.1 billion	In production	12.5GWh Drive batteries	‐Located on a 176,000 square meter site, the plant will mainly produce drive batteries, with a production capacity equivalent to 184,000 BEVs. The value of annual production is expected to exceed CNY 9.6 billion.
Liaoning, Shenyang	‐	‐	Drive/storage batteries	-R&D and production base for batteries for Northeast China and Northeast Asia.
Sichuan, Jianyang	Approx. 10 billion	Planned	20 GWh Drive/storage batteries	-Signed an investment agreement with the Jianyang City government for the "20GWh Power Battery Production Base Project".
Yunnan, Yuxi	3 billion	Under construction	10GWh Drive/storage batteries	-The site area is approximately 334,000 square meters, and the value of annual production is expected to reach CNY 9.1 billion.
Yunnan, Yuxi	Approx. 5.5 billion	Planned	23GWh Cylindrical storage and drive batteries	-Buile a cylindrical lithium iron phosphate storage battery production line.
Debrecen, Hungary	‐	Planned	Large cylindrical batteries	-In March 2022, the Company purchased a 450,000 square meter plot from Debreceni Ingatlanfejleszto Korlatolt Felelossegu, a government-owned company in Debrecen, Hungary. The land is located in Debrecen’s North-West Economic Zone and be used to build a drive battery manufacturing plant. -The plant will supply the iFactory of BMW Group, which is located next to the plant. The new battery plant is expected to be operational by 2026 and employ more than 1,000 people.
Malaysia　 Kulim, Kedah	USD 422.3 million	Planned	Cylindrical batteries (mainly 21700 batteries for two-wheelers)	-Investment project in a section of the International Cylindrical Battery Industrial Park. The project will create about 600 jobs. -In addition to electric motorcycles, the company will produce 21700 battery cells for power tools and supply them to customers in Malaysia and other countries in Southeast Asia.

R&D structure

-The Company has a research and development team with over 30 PhDs and nearly 600 engineers in the fields of materials, electrochemistry, structural design, and electronic-circuit design.

-The R&D center covers an area of 50,000 square meters and has assets worth over CNY 300 million. It has five research laboratories, including a series of laboratories that check electrical performance and measure safety and reliability. It has partnered with many universities and research institutes, including Wuhan University, South China University of Technology and South China Normal University.

R&D structure

-The Company has a research and development team with over 30 PhDs and nearly 600 engineers in the fields of materials, electrochemistry, structural design, and electronic-circuit design.

R&D Centers

	Content
Power Battery R&D Center	-The inauguration of its headquarters R&D center and the launch of its new technologies and products. The R&D center has an investment of over CNY 2 billion and covers a construction area of 145,000 square meters. The construction of the center started in August 2021 and was completed in November 2022. The center houses a power battery research institute, a battery system research institute, an electrical performance testing center, a safety testing center, and R&D labs, covering precision testing and analysis of cylindrical batteries, prismatic batteries, modules, BMS (Battery Management System) and energy storage systems. At the new technology and product launch event, EVE Energy released a large cylindrical battery, the “π” battery system, a solid-state battery, a sodium-ion battery, a lithium secondary battery, and hydrogen energy technologies. Specifically, the next-generation large cylindrical battery is an R&D sample with an energy density of 350Wh/kg and the capability of 9-minute super-fast charging; the “π” battery system based on the CTP (Cell-To-Pack) integration technology uses new high-efficiency composite materials and new adhesives, resulting in a weight reduction of 10% and an energy density of 260Wh/kg; the large cylindrical sodium-ion battery, a product based on a laminated oxide cathode and a hard carbon anode and with a C40 aluminum shell as the carrier, has an energy density of 135Wh/Kg and can operate normally at minus 40 degrees Celsius, with a capacity retention rate of 80% at 2,500 cycles. Currently, EVE Energy is preparing for pilot-scale testing of the sodium-ion battery with its end customers. (From an EVE Energy official WeChat account press release dated December 15, 2022)
Primary lithium battery technology center	The company has two large laboratories, including a materials analysis laboratory, an electrochemical analysis laboratory, and a safety measurement and pilot production line, are available for testing, analysis, and measurement of the entire lithium battery life cycle. In 2017, the company invested further in R&D of primary lithium batteries by setting up a building of 14,000 square meters to focus on R&D of lithium batteries with solid cathodes.
Lithium-ion battery technology center	The center is primarily engaged in the R&D of lithium-ion power batteries, lithium-ion energy storagebatteries, consumer lithium-ion batteries, and new materials and core technologies. It also develops high-safety power and energy storage battery module and system integration technologies, to provide global customers with power supply solutions.
Power supply system technology center	This center consists of the automotive power battery department, energy storage communication department and safety reliability department, to mainly design, develop and verify energy storage communication and automotive power batteries. Since its establishment, the company has undertaken several national and Guangdong major scientific research projects: 1) Key technology research and industrialization of battery electric logistics vehicle power supply systems 2) Dual energy power integration unit and control system research and industrialization of extended-range electric buses

R&D Expenditure

(CNY millions)

	FY ended Dec. 31, 2022	FY ended Dec. 31, 2021	FY ended Dec. 31, 2020
R&D expenditure	2,260.95	1,379.21	723.1
Percent of sales (%)	6.23	8.16	8.9

-As of the end of December 2022, the Company had 4,192 R&D personnel. This represents 15.28% of the Company's total workforce.

Patents

-As of December 31, 2022, the number of China patent applications is 4,627. Among them, 3,286 patents were granted. (From the 2022 Annual Report)

-The company announced that it passed the TISAX AL3 assessment, the highest level information security management system recognized by the European Automobile Manufacturers’ Association. TISAX (Trusted Information Security Assessment Exchange) is an assessment and exchange mechanism for information security founded jointly by the German Association of the Automotive Industry (VDA) and the ENX Association.

-The company announced that its subsidiary, EVE Power Co., Ltd. (EVE Power), has obtained ISO 26262: 2018 (Ed.2 up to ASIL D) process certification from TUV Nord Cert GmbH.