Research from Water Tower Research, Water Tower Research

Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Research from Water Tower Research

Equity Research Firm

Equity Bottom-Up

<h3>KEY POINTS</h3>
<ul>
<li>On December 13, 2022, SES hosted its second annual Battery World Event and provided an update on its efforts to commercialize its Li-Metal battery technology. Dr. Qichao Hu, founder and CEO of SES AI, unveiled the company’s new facility in Chungju, South Korea during his keynote address.</li>
<li>Equipped with improved in-house manufacturing capabilities, the new facility bolsters SES AI’s global cell engineering capabilities. It strongly complements SES AI’s Shanghai Giga in the continuous production of large-format 50Ah and 100Ah Li-Metal cells. The increased production capacity in South Korea will also boost relations with GM, Hyundai, and Honda, OEMs with whom SES AI has a joint development agreement.</li>
<li>Initial results from SES AI’s large-format cells continue to demonstrate the promising potential of Li-Metal chemistry due to the development of enhanced engineering capabilities. The high energy density of the 50Ah batteries enables them to work excellently in temperatures as low as -30°C and during high-power discharge at ambient temperature.</li>
<li>Regarding safety, the 50Ah batteries passed abuse tests conducted by a third party, including nail penetration, overcharge, external short circuit, and thermal stability. SES AI thinks it is the world’s first manufacturer of large-format Li-Metal cells to get UN38.3 transport certification.</li>
<li>Hu also displayed a video of a successful Electric Vertical Take Off and Landing (eVTOL) aircraft test flight, powered by SES AI’s 100Ah Li-Metal battery pack and AI-powered safety software Avatar.</li>
<li>According to SES, its ability to predict failures in 50 and 100 Ah cells has increased from 0% to ~60%. By comparison, the ability to predict failures in smaller 4 Ah cells is more than 99% after four years of data training.</li>
<li>Hu acknowledged the importance of building a robust supply chain to accelerate the development of batteries in 2023 and taking charge of the ecosystem to achieve commercialization of Li-Metal battery technology.</li>
</ul>
<h3>OUR INSIGHTS</h3>
<h2>The Opportunities</h2>
<p>SES AI’s lithium metal batteries outperform lithium-ion batteries in density, affordability, performance, and safety, and provide a faster pathway to commercial-scale relative to SSB. SES’s battery platform can take advantage of the current Li-ion infrastructure to create Li-Metal batteries, making them scalable, while providing higher-performance characteristics. The company has already inked A-sample JDAs with GM, Hyundai, and Honda. The company has aggressive expansion plans and intends to have a total capacity of more than 100 GWh by 2028, and it believes it currently has the capital to reach that objective. SES management believes it is uniquely positioned to outperform existing lithium-ion batteries and do so at a competitive price point relative to existing lithium platforms in the market today.</p>
<h2>The Obstacles</h2>
<p>The company is still in the initial stages of R&amp;D. Signing A-sample JDAs does not obligate OEMs to employ its batteries in their cars. The company has yet to produce in large quantities, leaving SES susceptible to supply chain and execution risks. Moreover, there is always a degree of ambiguity in user behavior regarding technological adoption.</p>
<h2>HIGHLIGHTS</h2>
<ul>
<li>The event also featured a panel discussion joined by leading representatives (GM, Hyundai, Honda, Ivanhoe Mines, and Tianqi Lithium) from the EV ecosystem, from upstream mining industry players to downstream auto OEMs.</li>
<li>A replay of the whole session is available here&nbsp;https://youtu.be/NkqzHdYPq64</li>
<li>SES contends it has made good progress on its mid-2023 milestones. It intends to deliver and optimize “A-sample” batteries for the three JDA partners, initiate the transition from "A-sample" to “B-sample” batteries, and continue establishing supply chains for crucial materials.</li>
<li>SES achieved several key milestones. In the third quarter, the SES Korea pilot facility was completed and its cell assembly line was ready to use in September, only eight months after breaking ground on this greenfield facility in January. SES Korea has already produced about 100 large Apollo-based 50 and 100 Ah cells.</li>
<li>Since January 2022, the Shanghai Giga facility has manufactured ~1000 Apollo 50 and 100Ah cells. It achieved full operational status in the third quarter.</li>
<li>The 50 Ah batteries made by Shanghai Giga have been granted UN38.3 certification by a reputable independent testing facility, indicating that they are safe for transport. In addition, the Shanghai Giga line’s 50 Ah cells got IATF16949 quality certification, passing the automobile industry’s quality criteria. The same approvals are anticipated for 100 Ah batteries made by Shanghai Giga and SES Korea.</li>
<li>SES has shared information on 50 Ah cells with all of its OEM joint development agreement (JDA) partners and has supplied these cells to some of them. It expects to distribute cells to all its partners, including GM, Hyundai, and Honda. In addition, SES intends to distribute 100 Ah cells to JDA partners in early 2023.</li>
<li>In addition to the JDA partners, SES has shared cell data with several electric vehicles and electric vehicle take-off and landing (eVTOL) original equipment manufacturers (OEMs) from across the globe.</li>
<li>SES is closing the performance gap between 4 Ah and 50 Ah cells. 50 Ah and, subsequently 100 Ah cells should match the performance of 4 Ah cells.</li>
<li>Our prior content on SES can be accessed&nbsp;here.</li>
<li>OUR PREVIOUS RESEARCH CONTENT</li>
</ul>
<p>Initiation of Coverage Report<br>04/12/22 Driving Ahead With Commercial Scale Proprietary Li-Metal Battery Solutions For Electric Vehicles</p>
<p>Extensive coverage on SES AI Corp assessing key opportunities, obstacles, technology, industry, risks, competition, financials, management profiles, etc.</p>
<p>Management Series Summary<br>07/26/22 New AI-Powered Battery Software to Generate Recurring Revenue; CEO Discusses 2022 Key Milestones</p>
<p>CEO Dr. Qichao Hu provides a progress report on the milestones for 2022 and talks about opportunities in Battery-as-a-Service (BaaS) and how it could fit into SES's long-term strategy.</p>
<p>04/06/22 COO Rohit Makharia Discusses Key Milestones and Drivers Behind SES's Unique Li-Metal Technology and the Drive Towards Commercialization</p>
<p>Rohit Makharia, President and COO, talks about his history and SES's partnership with GM, OEMs requirements and expectations from battery companies, problems with solid-state batteries, key company milestones, etc.</p>
<p>Update Note Summary<br>11/10/22 3Q22 Results: Operating Loss at $21.7 Million; Cash Usage Guidance Lowered; SES Korea Pilot Facility Completed; SES Shanghai Fully Operational</p>
<p>SES reported a 3Q22 operating loss of $21.7 million, $11.0 million higher than 3Q21, primarily due to increased personnel to support the development of battery cells and AI software.</p>
<p>08/16/22 2Q22 Results: Operating Loss at $19.1 Million; 2022 Financial Outlook Remains Unchanged; Progress of SES Korea Facility on Track to Support JDA Partners</p>
<p>SES reported an operating loss of $19.1 million, an increase of $12.5 million Y/Y due to increased personnel to support the development of battery cells and AI software.</p>
<p>05/16/22 1Q22 Results: Strong Cash Balance of $426 Million to Support Key Future Milestones and Drive Commercialization of Li-Metal Technology</p>
<p>The company reported its financial performance for the first time since the SPAC transaction in early February.</p>
<h2>COMPANY OVERVIEW</h2>
<p>SES AI Corp. develops and produces high-performance, Li-Metal rechargeable batteries for electric vehicles and other applications. The company’s Li-Metal batteries are designed to combine the high-energy density of Li-Metal with the cost-effective, large-scale manufacturability of Li-ion rechargeable batteries, which it has demonstrated by producing more than 15,000 multi-layer Li-Metal battery cells on a Li-ion-like manufacturing line. Its technology, which third parties and several OEMs have evaluated, has exhibited 43% greater density than leading Li-ion batteries, coupled with better performance across operating temperatures, faster charging, high safety, and longer life. In November 2021, the company unveiled a&nbsp;100+ Ah Li-Metal cell, the world’s first 100+ Ah and biggest Li-Metal cell (Apollo), created exclusively for the automobile sector. The company is backed by major auto OEMs, including GM, Hyundai, and Honda, with aggressive electrification targets. SES is the only company that has established A-sample (prototypes developed for OEMs based on OEMs’ technical specifications) JDAs with key OEMs for Li-Metal technology, which it aims to deliver to auto OEMs by the end of 2022. Additionally, the firm has garnered capital from OEMs Geely and SAIC Motors and strategic and financial investors such as SK, LG, Foxconn, Tianqi, Applied Materials, Temasek, and Vertex.</p>
<p>SES went public on the&nbsp;NYSE&nbsp;in February 2022 via the SPAC route. The company had $450 million of cash on its balance sheet at the closing (2/3/22), which it will use to reach commercial scale with multiple OEMs. The company’s 300,000-square-foot 1 GWh Pilot Facility in&nbsp;Shanghai&nbsp;was fully operational in 3Q22.&nbsp;SES South Korea&nbsp;will also act as a pre-production site for A-sample development, complementing the existing Chinese facility. SES anticipates its next-generation batteries will be in automobiles by mid-decade. By 2028, it plans to have a total capacity of more than 100 GWh over a global network of facilities. SES AI Corp. was established in 2012 and is based in Woburn, Massachusetts, USA.</p>
<h2>The Technology</h2>
<p>According to the company, replacing the present Li-ion graphite/silicon anode with Li-Metal will achieve the highest energy density and improve performance with any cathode chemistry. Further, lithium metal anode battery cells may be exceedingly compact and light since the lithium ions do not have to diffuse in and out of the anode host material (as they do in typical Li-ion). The SES Lithium-Metal platform has significant energy density advantages over conventional lithium-ion batteries but still has the manufacturability to be cost-effective. Compared with all-solid-state li-metal batteries, the SES solution offers comparable energy density but high manufacturability, which is paramount to long-term commercial success. SES has a cell architecture that uses a liquid electrolyte to transport the lithium ions, preserving the high energy density advantages of Li-Metal. SES’s “Apollo” batteries are projected to have an energy density of at least 400 Wh/kg and 1000 Wh/liter to achieve a driving range of ~540 miles and be fast charged to 80% in less than 15 minutes. Unlike the traditional liquid electrolyte used in Li-ion cells, SES's high-concentration solvent-in-salt electrolyte is non-flammable and less volatile.</p>
<p>SES employs an AI-powered technology (Avatar) that accurately monitors the condition of health of the battery cells, avoiding dendrite-related or other safety concerns before they occur. Through its “Hermes” platform, the company has a platform for new material development. Hermes™ cells consist of 25+ layers of cathode and anode (a total of 50+ layers). It is used to develop, test, and qualify novel electrolytes (high-concentration solvent-in-salt), anode protective coatings, separators, cathodes (both high nickel for premium vehicles and nickel/cobalt-free for value vehicles), and other materials.</p>
<h2>The Market</h2>
<p>Automotives:&nbsp;The company believes Li-Metal batteries (LMBs) are a potential EV battery technology for maximum energy density. The global market for EV batteries is expected to grow substantially as battery capacity increases and costs decrease. This will be fueled by increasing EV adoption, with the global passenger EV market expected to grow at a CAGR of 19.1%, from 2.7 million in 2020 to 90 million in 2040 (company presentation). During the same period, the average battery pack capacity is expected to rise from 45 to 56 kWh per EV, while the cost of an EV battery pack is expected to decrease over 50% from $150 to $70 per kWh. The TAM is estimated to grow at a CAGR of 15.7%, from $19 billion in 2020 to $350 billion in 2040. SES aspires to grab 5% of the global EV battery market by 2030.</p>
<h3>DISCLOSURES</h3>
<div></div>
<p>Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.<br><br>WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.<br><br>Shawn Severson, who is the writer of this report, covers the BioEconomy, Emerging Growth &amp; Special Situations, and ClimateTech &amp; Sustainable Investing sectors for WTR. Mr. Severson and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.<br><br>Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.<br><br>WTR is being compensated for its research by the company which is the subject of this report. WTR receives no more than a maximum of $10,500 per month from a given client and is required to have at least a 6-month commitment. None of the earned fees are contingent on, and WTR’s client agreements are not cancellable for the content of its reports. WTR does not accept any compensation in the form of warrants or stock options or other equity instruments that could increase in value based on positive coverage in its reports.<br><br>WTR or an affiliate may seek to receive compensation for non-research services to covered companies, such as charges for presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services that WTR or an affiliate might offer to clients.<br><br>The manner of WTR’s research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly-written compliance guidelines.<br><br>The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors, agents or affiliate shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.<br><br>All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.</p>

KEY POINTS

On December 13, 2022, SES hosted its second annual Battery World Event and provided an update on its efforts to commercialize its Li-Metal battery technology. Dr. Qichao Hu, founder and CEO of SES AI, unveiled the company’s new facility in Chungju, South Korea during his keynote address.
Equipped with improved in-house manufacturing capabilities, the new facility bolsters SES AI’s global cell engineering capabilities. It strongly complements SES AI’s Shanghai Giga in the continuous production of large-format 50Ah and 100Ah Li-Metal cells. The increased production capacity in South Korea will also boost relations with GM, Hyundai, and Honda, OEMs with whom SES AI has a joint development agreement.
Initial results from SES AI’s large-format cells continue to demonstrate the promising potential of Li-Metal chemistry due to the development of enhanced engineering capabilities. The high energy density of the 50Ah batteries enables them to work excellently in temperatures as low as -30°C and during high-power discharge at ambient temperature.
Regarding safety, the 50Ah batteries passed abuse tests conducted by a third party, including nail penetration, overcharge, external short circuit, and thermal stability. SES AI thinks it is the world’s first manufacturer of large-format Li-Metal cells to get UN38.3 transport certification.
Hu also displayed a video of a successful Electric Vertical Take Off and Landing (eVTOL) aircraft test flight, powered by SES AI’s 100Ah Li-Metal battery pack and AI-powered safety software Avatar.
According to SES, its ability to predict failures in 50 and 100 Ah cells has increased from 0% to ~60%. By comparison, the ability to predict failures in smaller 4 Ah cells is more than 99% after four years of data training.
Hu acknowledged the importance of building a robust supply chain to accelerate the development of batteries in 2023 and taking charge of the ecosystem to achieve commercialization of Li-Metal battery technology.

OUR INSIGHTS
The Opportunities
SES AI’s lithium metal batteries outperform lithium-ion batteries in density, affordability, performance, and safety, and provide a faster pathway to commercial-scale relative to SSB. SES’s battery platform can take advantage of the current Li-ion infrastructure to create Li-Metal batteries, making them scalable, while providing higher-performance characteristics. The company has already inked A-sample JDAs with GM, Hyundai, and Honda. The company has aggressive expansion plans and intends to have a total capacity of more than 100 GWh by 2028, and it believes it currently has the capital to reach that objective. SES management believes it is uniquely positioned to outperform existing lithium-ion batteries and do so at a competitive price point relative to existing lithium platforms in the market today.
The Obstacles
The company is still in the initial stages of R&amp;D. Signing A-sample JDAs does not obligate OEMs to employ its batteries in their cars. The company has yet to produce in large quantities, leaving SES susceptible to supply chain and execution risks. Moreover, there is always a degree of ambiguity in user behavior regarding technological adoption.
HIGHLIGHTS

The event also featured a panel discussion joined by leading representatives (GM, Hyundai, Honda, Ivanhoe Mines, and Tianqi Lithium) from the EV ecosystem, from upstream mining industry players to downstream auto OEMs.
A replay of the whole session is available here&nbsp;https://youtu.be/NkqzHdYPq64
SES contends it has made good progress on its mid-2023 milestones. It intends to deliver and optimize “A-sample” batteries for the three JDA partners, initiate the transition from "A-sample" to “B-sample” batteries, and continue establishing supply chains for crucial materials.
SES achieved several key milestones. In the third quarter, the SES Korea pilot facility was completed and its cell assembly line was ready to use in September, only eight months after breaking ground on this greenfield facility in January. SES Korea has already produced about 100 large Apollo-based 50 and 100 Ah cells.
Since January 2022, the Shanghai Giga facility has manufactured ~1000 Apollo 50 and 100Ah cells. It achieved full operational status in the third quarter.
The 50 Ah batteries made by Shanghai Giga have been granted UN38.3 certification by a reputable independent testing facility, indicating that they are safe for transport. In addition, the Shanghai Giga line’s 50 Ah cells got IATF16949 quality certification, passing the automobile industry’s quality criteria. The same approvals are anticipated for 100 Ah batteries made by Shanghai Giga and SES Korea.
SES has shared information on 50 Ah cells with all of its OEM joint development agreement (JDA) partners and has supplied these cells to some of them. It expects to distribute cells to all its partners, including GM, Hyundai, and Honda. In addition, SES intends to distribute 100 Ah cells to JDA partners in early 2023.
In addition to the JDA partners, SES has shared cell data with several electric vehicles and electric vehicle take-off and landing (eVTOL) original equipment manufacturers (OEMs) from across the globe.
SES is closing the performance gap between 4 Ah and 50 Ah cells. 50 Ah and, subsequently 100 Ah cells should match the performance of 4 Ah cells.
Our prior content on SES can be accessed&nbsp;here.
OUR PREVIOUS RESEARCH CONTENT

Initiation of Coverage Report 04/12/22 Driving Ahead With Commercial Scale Proprietary Li-Metal Battery Solutions For Electric Vehicles
Extensive coverage on SES AI Corp assessing key opportunities, obstacles, technology, industry, risks, competition, financials, management profiles, etc.
Management Series Summary 07/26/22 New AI-Powered Battery Software to Generate Recurring Revenue; CEO Discusses 2022 Key Milestones
CEO Dr. Qichao Hu provides a progress report on the milestones for 2022 and talks about opportunities in Battery-as-a-Service (BaaS) and how it could fit into SES's long-term strategy.
04/06/22 COO Rohit Makharia Discusses Key Milestones and Drivers Behind SES's Unique Li-Metal Technology and the Drive Towards Commercialization
Rohit Makharia, President and COO, talks about his history and SES's partnership with GM, OEMs requirements and expectations from battery companies, problems with solid-state batteries, key company milestones, etc.
Update Note Summary 11/10/22 3Q22 Results: Operating Loss at $21.7 Million; Cash Usage Guidance Lowered; SES Korea Pilot Facility Completed; SES Shanghai Fully Operational
SES reported a 3Q22 operating loss of $21.7 million, $11.0 million higher than 3Q21, primarily due to increased personnel to support the development of battery cells and AI software.
08/16/22 2Q22 Results: Operating Loss at $19.1 Million; 2022 Financial Outlook Remains Unchanged; Progress of SES Korea Facility on Track to Support JDA Partners
SES reported an operating loss of $19.1 million, an increase of $12.5 million Y/Y due to increased personnel to support the development of battery cells and AI software.
05/16/22 1Q22 Results: Strong Cash Balance of $426 Million to Support Key Future Milestones and Drive Commercialization of Li-Metal Technology
The company reported its financial performance for the first time since the SPAC transaction in early February.
COMPANY OVERVIEW
SES AI Corp. develops and produces high-performance, Li-Metal rechargeable batteries for electric vehicles and other applications. The company’s Li-Metal batteries are designed to combine the high-energy density of Li-Metal with the cost-effective, large-scale manufacturability of Li-ion rechargeable batteries, which it has demonstrated by producing more than 15,000 multi-layer Li-Metal battery cells on a Li-ion-like manufacturing line. Its technology, which third parties and several OEMs have evaluated, has exhibited 43% greater density than leading Li-ion batteries, coupled with better performance across operating temperatures, faster charging, high safety, and longer life. In November 2021, the company unveiled a&nbsp;100+ Ah Li-Metal cell, the world’s first 100+ Ah and biggest Li-Metal cell (Apollo), created exclusively for the automobile sector. The company is backed by major auto OEMs, including GM, Hyundai, and Honda, with aggressive electrification targets. SES is the only company that has established A-sample (prototypes developed for OEMs based on OEMs’ technical specifications) JDAs with key OEMs for Li-Metal technology, which it aims to deliver to auto OEMs by the end of 2022. Additionally, the firm has garnered capital from OEMs Geely and SAIC Motors and strategic and financial investors such as SK, LG, Foxconn, Tianqi, Applied Materials, Temasek, and Vertex.
SES went public on the&nbsp;NYSE&nbsp;in February 2022 via the SPAC route. The company had $450 million of cash on its balance sheet at the closing (2/3/22), which it will use to reach commercial scale with multiple OEMs. The company’s 300,000-square-foot 1 GWh Pilot Facility in&nbsp;Shanghai&nbsp;was fully operational in 3Q22.&nbsp;SES South Korea&nbsp;will also act as a pre-production site for A-sample development, complementing the existing Chinese facility. SES anticipates its next-generation batteries will be in automobiles by mid-decade. By 2028, it plans to have a total capacity of more than 100 GWh over a global network of facilities. SES AI Corp. was established in 2012 and is based in Woburn, Massachusetts, USA.
The Technology
According to the company, replacing the present Li-ion graphite/silicon anode with Li-Metal will achieve the highest energy density and improve performance with any cathode chemistry. Further, lithium metal anode battery cells may be exceedingly compact and light since the lithium ions do not have to diffuse in and out of the anode host material (as they do in typical Li-ion). The SES Lithium-Metal platform has significant energy density advantages over conventional lithium-ion batteries but still has the manufacturability to be cost-effective. Compared with all-solid-state li-metal batteries, the SES solution offers comparable energy density but high manufacturability, which is paramount to long-term commercial success. SES has a cell architecture that uses a liquid electrolyte to transport the lithium ions, preserving the high energy density advantages of Li-Metal. SES’s “Apollo” batteries are projected to have an energy density of at least 400 Wh/kg and 1000 Wh/liter to achieve a driving range of ~540 miles and be fast charged to 80% in less than 15 minutes. Unlike the traditional liquid electrolyte used in Li-ion cells, SES's high-concentration solvent-in-salt electrolyte is non-flammable and less volatile.
SES employs an AI-powered technology (Avatar) that accurately monitors the condition of health of the battery cells, avoiding dendrite-related or other safety concerns before they occur. Through its “Hermes” platform, the company has a platform for new material development. Hermes™ cells consist of 25+ layers of cathode and anode (a total of 50+ layers). It is used to develop, test, and qualify novel electrolytes (high-concentration solvent-in-salt), anode protective coatings, separators, cathodes (both high nickel for premium vehicles and nickel/cobalt-free for value vehicles), and other materials.
The Market
Automotives:&nbsp;The company believes Li-Metal batteries (LMBs) are a potential EV battery technology for maximum energy density. The global market for EV batteries is expected to grow substantially as battery capacity increases and costs decrease. This will be fueled by increasing EV adoption, with the global passenger EV market expected to grow at a CAGR of 19.1%, from 2.7 million in 2020 to 90 million in 2040 (company presentation). During the same period, the average battery pack capacity is expected to rise from 45 to 56 kWh per EV, while the cost of an EV battery pack is expected to decrease over 50% from $150 to $70 per kWh. The TAM is estimated to grow at a CAGR of 15.7%, from $19 billion in 2020 to $350 billion in 2040. SES aspires to grab 5% of the global EV battery market by 2030.
DISCLOSURES

Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.  WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.  Shawn Severson, who is the writer of this report, covers the BioEconomy, Emerging Growth &amp; Special Situations, and ClimateTech &amp; Sustainable Investing sectors for WTR. Mr. Severson and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.  Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.  WTR is being compensated for its research by the company which is the subject of this report. WTR receives no more than a maximum of $10,500 per month from a given client and is required to have at least a 6-month commitment. None of the earned fees are contingent on, and WTR’s client agreements are not cancellable for the content of its reports. WTR does not accept any compensation in the form of warrants or stock options or other equity instruments that could increase in value based on positive coverage in its reports.  WTR or an affiliate may seek to receive compensation for non-research services to covered companies, such as charges for presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services that WTR or an affiliate might offer to clients.  The manner of WTR’s research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly-written compliance guidelines.  The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors, agents or affiliate shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.  All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.

Key Takeaways from the Second Annual Battery World Event