SES AI Corporation

Good afternoon. Thank you for attending today's SES AI Corporation first quarter 2022 earnings call. My name is Amber and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad at any time. I now have the pleasure of handing the conference over to our host, Eric Goldstein, Vice President of Investor Relations with SES. Mr. Goldstein, please proceed.

Thank you, operator. Hello, everyone, and welcome to our conference call covering our first quarter 2022 results and outlook for the year. Joining me today are Qiqiao Hu, Founder and Chief Executive Officer, and Jing Nielis, Chief Financial Officer. We issued a press release just after 4 p.m. today detailing our financial results. You'll find the press release and today's conference call webcast in the investor relations section of our website at ses.ai. Before we get started, this is a reminder, the discussion today may contain forward-looking information or forward-looking statements within the meaning of applicable securities legislation. Such statements involve certain risks, assumptions, and uncertainties, which may cause the company's actual or future results and performance to be materially different from those that are expressed or implied in these statements. The principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our latest earnings release and in our SEC filings. This afternoon, we will review our business as well as results for the quarter. We'll then provide some milestones we are looking to achieve over the next 12 months. With that, I'll pass it over to Chi Chow.

Thank you, Eric. Good afternoon, everyone, and thanks for taking the time to join our first earnings call. It's been a very busy and exciting time for our company. In early February, we completed the merger with Ivan Hall Capital Acquisition Corp. and started trading on the New York Stock Exchange. The merger resulted in a total cash position of $426 million at the end of the first quarter. This event was the culmination of a 10-year journey that began in the basement of Building 4 at MIT, and I believe the best is yet to come. I cannot say thank you enough to all of our employees at our Boston headquarters, SCS Korea, and Shanghai Giga. The automotive industry is going through a rapid change. In the past year, almost every major country and company in the world has announced that they plan to electrify their entire fleet to address climate change. High energy density and low-cost batteries are key. This is why we believe lithium metal batteries are the next big thing. We are the first and only next-gen lithium metal company to have three A-sample joint development agreements, JDAs, with global carmakers, General Motors, Hyundai, and Honda. And our strategic investors included six carmakers, GM, Honda, Hyundai, GE, Shanghai Auto, and Foxconn, as well as Coke, SKLG, Tianqi Lithium, and Applied Materials. We live in an increasingly volatile world. Rapid increases in demand for lithium and other raw materials, as well as geopolitics, have created great disruptions in the supply chain. Going forward, a sustainable supply chain strategy and innovative business model will be crucial. So first, let's talk about lithium metal batteries. We have made significant progress in all three of our technology platforms and are on track with our A-sample JDAs. Let me go through more details. So first, it's HERNES, a platform for material development. Our Boston headquarter has developed several new generations of electrolytes. With each generation, we get one step closer to meeting our OEM partners' complex set of requirements, ranging from safety to cycle life to temperature performance to power density to storage and so on. We are confident that we can meet the OEM A-sample specifications in the next 12 months, which will allow us to transition to B-samples. Second is Apollo, engineering capability for large automotive cells. Manufacturability is core to our lithium metal system approach. We want to use lithium ion equipment and process to make lithium metal cells. Most of the EV batteries used in the U.S. today were developed in Korea, China, and Japan during their A-sample stage. This is why we chose to do A-sample large cell development in China and Korea, the hub of lithium-ion cell engineering, manufacturing, and supply chain. This is also reflected in our CapEx spending this year. Later, our CFO, Jim, will talk about it more. It's in line with mature lithium-ion CapEx investments. This will pave the way for eventually building large manufacturing plants in North America for seed samples and ultimately the start of production . We announced construction of Shanghai Giga last November at our first Battery World and unveiled the world's first 100mAh lithium-ion battery. I am very excited to announce that we have completed Shanghai Giga Phase 1 this March and achieved ready-to-use RTU. The facility is now capable of producing 0.2 gigawatt-hours of large lithium metal cells, both 50 amp-hour and 100 amp-hours. And we plan to reach 1 gigawatt-hour in Phase 2 next year. We have begun building and testing these large lithium metal A-sample prototype cells and sharing data with our OEM JVA partners. We even started implementing AIoT, artificial intelligence of things, devices, and data collection on our production lines for quality control. Our Shanghai team deserves a lot of appreciation. Two years ago, during the peak of COVID, when we cut everyone's salary, not a single person left. Recently, because of lockdowns, our Shanghai gigafacility was down for more than a month. But when it reopened, our team immediately volunteered to go back. and now they eat, sleep, and work in the factory. No other facility in the world can match Shanghai Giga for lithium metal battery production. We currently have two A-sample OEM JDAs out of Shanghai Giga, and other top global OEMs have expressed interest in forming A-sample JDAs that will be sourced from this facility. We also started construction of SCS Korea and expect to achieve ready-to-use RTU by the end of this year. It will have similar capabilities as Shanghai Giga, initially at a smaller scale, but eventually grow to a similar scale. We partnered with our long-time equipment vendor to fully leverage the manufacturability of lithium-ion equipment and process to build lithium metal cells. Now, we serve one A-sample OEM JDA out of SCS Korea and expect over time to serve additional OEM JDAs. Our career team also works through Spring Festival and other holidays to build and test A-sample prototype cells for our OEM JD apartment. Third is Avatar, AI software for battery health monitoring. Our Boston headquarter team developed several new algorithms that can actually predict battery health by monitoring electrochemical, thermal, and mechanical data. The goal is to monitor the growth of mossy lithium due to cycling and manufacturing defects and predict failure. We also partnered with a world-leading AI company, a blockchain platform company, and an AIoT data collection company for data management and algorithm implementation. While it's impossible to make any battery 100% safe, especially high energy density ones like our lithium metal, 400 watts per kg and 100 amp hours, our goal is to make the user experience 100 safe through inherently safer materials that's hermes cell engineering that's apollo and ai software that's avatar and and monitor moxie looking growth 24 7 and predict failure second let's talk about the supply chain we expect to transition from a samples to b samples in the next 12 months As we prepare for the transition, we are focused on what is also the industry's biggest concern, the supply chain, which has been impacted by the global lithium rush and geopolitics. It is estimated that most, if not all, of mature producing lithium mines around the world already have their updates committed until 2026. And many junior mines are at least eight years away from production. How do we secure supply? And how do we build independent regional supply chains to meet geopolitical challenges are the key questions. We are participating in building two independent supply chains and balancing commercial efficiency with geopolitical concerns. So the first is a China-inclusive supply chain. Politics aside, China today has the world's most complete and efficient EV battery supply chain and the biggest talent pool at EV market. Since the number one priority for EVs is low cost and manufacturability is core to our lithium metal battery systems approach, we built our Shanghai facility in 2019, not far from the Tesla and CATL's Shanghai Giga. and expanded it to Shanghai Giga in 2021 to leverage this supply chain and talent pool. We are supported by several global OEMs and will continue to develop samples with our OEM partners in Shanghai. We also plan to establish strategic partnerships with key material suppliers over the next year, especially for our thin lithium metal foil and lithium salt for our proprietary electrolyte. Second is a China-free supply chain. Outside of China, especially for the North American and European markets, we are working with our partners and strategic investors to build a China-free regional supply chain. Korea, with the world's second most complete and efficient EV battery supply chain, is the best choice, especially for A-sample development. We started partnering with our Korean equipment vendor in 2015 and started to build SCS Korea in January 2022. We are currently supported by one global OEM JDA partner and several advanced materials and equipment partners. We also plan to transfer our learnings in China and Korea to build an EV battery supply chain in North America, including mining, value materials, value manufacturing, vehicle integration, and recycling. While our A sample lines are in China and Korea, our C sample and start of production will likely be in North America. And third, alternative strategies. In addition to the supply chain strategies previously mentioned, we also started developing recycling capability for Moxie Lithium and exploring new business models, such as battery as a service, which will leverage the data analytics capabilities of our Avatar AI software. These alternative strategies will be done in collaboration with our OEM partners and strategic investors. There's no silver bullet to addressing supply chain issues. It will be a combination of approaches. And finally, in summary, we are dealing with a complex problem that requires a system approach. We are confident that within the next 12 months, we will, number one, deliver and optimize A samples for our three JDA partners. Number two, begin to transition from A samples to B samples. And number three, continue to establish supply chains for key materials. All of these targeted milestones will help pave the way to achieve our goal to build our first commercial production plant in North America. I'll now pass the call to Junie Alice, our CFO, who will take us through the financials.