SES AI Corporation (NYSE:SES) Q4 2023 Earnings Call Transcript

So our data are specific to lithium-metal, and our Avatar is specific to lithium-metal. And then so it’s unique in the sense that, no one else has access to the kind of lithium-metal data that we do. So our Avatar is most accurate for lithium-metal. Now, in terms of is this approach unique, it’s also unique because, even if you look at lithium ion today, most OEMs still have access to car data, but they won’t have access to battery data, or most car battery, battery companies won’t have access to manufacturing data, but not car data. But then — so what we’re trying to do is actually integrate the battery manufacturing data with the car data. And then this actually — this approach is also quite unique. Some larger companies are in the process of doing this, but then because they have a large inertia and then it’s quite expensive for them to change so that they have not implemented this approach yet.

But so for us, it’s unique because we have the highest quality and highest quantity of lithium-metal data and also this approach of combining cell manufacturing and also vehicle data.

Shawn Severson: Thanks. And my last question is regarding the UAM market and opportunity. Obviously, you seem pretty excited about the opportunities having some commercialization there. Can you help us understand how you think about the market, the development, the commercialization there? I mean, obviously, now you’re talking about very few units, but going out over the next year or so. But why does this make you excited when you look to this as being important part of SES’s future?

Qichao Hu: Yeah. So, I mean, the focus is on EV, and all the development that we’re doing are not really targeted for UAM. They are for EV. It’s just that these batteries actually happen to have very good usage in UAM. And what’s exciting about this is there’s really two things. One is from the customer perspective. So UAM currently, this market doesn’t really exist or it’s very early stage because without a high energy density, high power density battery, it’s not practical. You can only carry two people or you can fly 10 minutes, less than 20 minutes. The whole market is not economical. But with lithium-metal, so you can carry more people, you can carry more payloads, and then you can fly for longer, then the business actually becomes more economical.

So from the customer’s perspective, UAM lithium-metal really enables UAM, and then that’s why it’s really exciting. And then from our perspective because once we get designed in, once we go through all the qualification, all the testing, the FAA certification, then this battery pack actually becomes FAA certified. And then you are there. You set the standards for, many years to come. So from both the customer’s perspective and also our perspective, it’s a very good fit. And the volume is too small, so we can actually produce using our B-sample lines and also A-sample lines. That’s why it’s a good fit in terms of the near term.

Shawn Severson: Great. Thank you. That’s very helpful.

Operator: Thank you. The next question comes from the line of Jed Dorsheimer with William Blair. Please proceed.

Mark Shooter: You have Mark Shooter on for Jed Dorsheimer here today. Qichao, question for you on the progress of the prismatic cells. That was one of the main takeaways from Battery World. I’m wondering, has there been any more progress there? Any other color, on that? Anything from the other JDA partners on the prismatic cell?

Qichao Hu: Yeah. So the prismatic cell, we have made some progress and then we plan to update that in second half of this year. And prismatic cell is actually for one of the B-sample JDA partners. So they use the combination of LFP lithium-metal in the prismatic format. We’ll have more updates later this year.

Mark Shooter: Okay. Great. Thank you. Next switching gears a bit to UAM. You talked about a 60% increase in energy density versus the incumbent. So if I take around 700 watt hours per liter for traditional cells, which is a rough benchmark, are you looking to target then over 1100 watt hours per liter for these cells? Is that is a target you need for that B-sample line that’s converting to UAM?

Qichao Hu: Right. So, the current lithium ion, we’re talking about 720, 750 watts per liter, and then 260, 280 watts per kg. So for the UAM, cells, we’re targeting at least 440 and higher watts per kg and 1100 to 1200 watts per liter. So these watt have very high energy density at the cell level.

Mark Shooter: Okay. And are there the latest 100 amp hour data was around 860 watt hours per liter. So are there — what are the puts and takes there? Is that just general materials improvement, or can you make trade offs versus cycle life to achieve that?

Qichao Hu: Right. So the UAM will not use the exact same cell design as the 100 amp hour, the A-sample cell. So the A-sample and the B-sample EV cells, those are designed for long cycle life and then EV cycling conditions, typically over three charge and discharge, three hour charge and discharge. But then for UAM, then the cell designs will be different because we’re going to target much higher energy density, and then the charge and discharge profiles will be different. We’re going to use relatively slower charge or battery swapping. This is one business model that we are actually discussing with several UAM customers and also the UAM discharge profile. So take off, climb, cruise, descent, and the landing, and also the, the depth of charge and discharge are different.

So because of the difference in the UAM, mission profile and the EV mission profile, we will design the cells differently. So the materials will still be the same, but then, for example, capital loading, thickness of lithium, the cell design will be different.

Mark Shooter: Got it. Thank you very much.

Qichao Hu: Thank you.

Operator: Thank you. There are no additional questions left at this time. I will hand the call back to Kyle Pilkington for any closing remarks.

Kyle Pilkington: Thanks. I’ll turn it over to Qichao for any closing remarks before we end the call.