Energy Vault Holdings (NRGV) risk factors, FY2024 10-K

Risks Related to Our Business and Our Industry

1. 01Our limited operating history and our rapidly evolving industry make it difficult to evaluate our business, the risks and challenges we may face and future prospects
2. 02Our projections are subject to significant risks, assumptions, estimates and uncertainties. As a result, our projected revenues, market share, expenses and profitability may differ materially from our expectations
3. 03Our business model depends on acceptance of our technology by our customers, retaining existing customers, and the success of our business model
4. 04We depend on a limited number of customers for the majority of our revenue, and the loss of any one of these customers could substantially reduce our revenue and impact our liquidity
5. 05Our business depends on our ability to succeed in implementing our energy storage systems and introduce innovative and competitive energy storage technologies. As our energy storage systems are highly complex, this process is costly and time-consuming
6. 06If we are not able to reduce our cost structure in the future, our ability to become profitable may be impaired
7. 07Operational costs can be difficult to predict and may include costs from requirements related to the decommissioning of our systems
8. 08Our energy storage systems have significant upfront costs, and certain customers may need, or may prefer to acquire, third-party financing to purchase our systems. We will need to obtain third-party financing to continue our transition to owning assets as well as selling energy storage products
9. 09The economic benefit of our energy storage systems to us and to our customers depends on the cost of electricity available from alternative sources, including local electric utility companies, which cost structure is subject to change
10. 10Our energy storage systems’ performance may not meet our customers’ expectations or needs
11. 11If our estimates of the useful life for our energy storage systems are inaccurate or we do not meet service and warranties and performance guarantees, our business and financial results could be adversely affected
12. 12We intend to explore alternative, co-active use case opportunities for our systems, but there is no assurance that such opportunities exist or that they would be as beneficial to us as we expect
13. 13Our future growth depends upon our ability to maintain relationships with third parties, and the terms and enforceability of many of these relationships are not certain
14. 14We depend upon component and product manufacturing and logistical services provided by third parties, many of whom are located outside of the U.S
15. 15The failure or inability of our suppliers to deliver necessary components or raw materials for construction of our energy storage systems and their failure or inability to deliver them in a timely manner could cause installation delays, cancellations, penalty payments and damage to our reputation
16. 16Our systems often rely on interconnections to distribution and transmission facilities that are owned and operated by third parties, and as a result, are exposed to interconnection and transmission facility development and curtailment risks
17. 17Our business is subject to risks associated with construction, cost overruns and delays, including those related to obtaining government permits and approvals, electrical interconnection, and other contingencies that may arise in the course of completing installations
18. 18The size of our G-Vault products may negatively impact our ability to enter into contracts with customers or obtain government permits and approvals
19. 19The design of our G-Vault, H-Vault, and B-Nest products are based on established principles that are deployed in a novel way; the products are intended to provide longer energy storage durations than are provided by other types of energy storage systems
20. 20In certain circumstances we enter into tolling arrangements in which customers purchase the energy storage and dispatch of electricity from us while we retain an ownership interest in the system. To date, we have entered into two such tolling arrangements, but we are actively looking at additional opportunities
21. 21Increasing attention to, and scrutiny of, ESG matters could increase our costs, harm our reputation, impact our share price or access to or cost of capital, or otherwise adversely impact our business
22. 22Should we pursue acquisitions in the future, it would be subject to risks associated with acquisitions
23. 23Our operations are international, and expanding operations in some international markets could expose us to additional risks
24. 24As a result of these risks, any potential future international expansion efforts that we may undertake may not be successful
25. 25Even if renewable energy and energy storage become more widely adopted, our energy storage technology may not achieve widespread market acceptance or may be less cost-effective as compared to competing technologies
26. 26We operate in highly competitive energy industries and there is increasing competition. Many of our competitors and future competitors may have significantly more financial and other resources than we do and if we do not compete effectively, our competitive positioning and our operating results will be harmed
27. 27If we are unable to attract and retain key employees and hire qualified management, technical, engineering, and sales personnel, including a highly skilled and diverse management team with experience in the energy storage sectors, our ability to compete and successfully grow our business could be harmed
28. 28Labor disputes could disrupt our ability to serve our customers and/or lead to higher labor costs
29. 29Changes in business, economic, or political conditions, including overall changes in demand, are beyond our control and could impact our business, resulting in lower revenues and other adverse effects to our results of operations
30. 30Similarly, our business depends on the overall business and global or regional political conditions, which are beyond our control
31. 31We are subject to a series of risks related to climate change
32. 32Fuel prices, including volatility in the cost of diesel or natural gas or a prolonged period of low gasoline and natural gas costs, could decrease incentives to transition to renewable energy
33. 33Our insurance coverage, customer indemnifications or other liability protections may be unavailable or inadequate to cover all of our significant risks, which could adversely affect our profitability and overall financial position

Risks Related to Our Financial Condition and Liquidity

1. 34Material weaknesses in our internal control over financial reporting could have a significant adverse effect on our business and the price of our common stock
2. 35In addition, as a public company we are required to document and test our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act so that our management can certify as to the effectiveness of our internal control over financial reporting
3. 36We are an early stage company with a history of losses, and expect to incur significant expenses and continuing losses for the foreseeable future, and we may not be able to achieve profitability in the future
4. 37Our energy storage systems involve a lengthy sales and installation cycle, and if we fail to close sales on a regular and timely basis it could harm our business. Moreover, the long sales cycles for our energy storage systems and other factors may result in significant fluctuations in our results from period to period
5. 38These lengthy sales and installation cycles increase the risk that our customers fail to satisfy their payment obligations or cancel orders before the completion of the transaction or delay the planned date for installation
6. 39Our total backlog, bookings and developed pipeline may not be indicative of our future revenue, which could have a material adverse impact on our business, financial condition, and results of operations
7. 40Our ability to use net operating losses and other tax attributes to offset future taxable income may be subject to certain limitations
8. 41Changes in tax laws and regulations may have a material adverse effect on our business, financial condition, and result of operations
9. 42We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment
10. 43Incorrect estimates or assumptions by management in connection with the preparation of our consolidated financial statements could adversely affect our reported assets, liabilities, income, revenue or expenses
11. 44Government control of currency conversion and expatriation of funds may affect our liquidity

Risks Related to Our IP and Technology

1. 45We may be unable to protect, defend, maintain or enforce IP rights on which our business depends, including as against existing or future competitors, which may adversely affect our growth and success
2. 46We may be subject to third-party claims of infringement, misappropriation or other violation of IP rights, or other claims challenging our agreements related to IP, which may be time-consuming and costly to defend, and could result in substantial liability
3. 47Any of the foregoing could adversely affect our business, prospects, operating results, and financial condition. In addition, any litigation or claims, whether or not valid, could harm our reputation, result in substantial costs and divert resources and management attention
4. 48We may be subject to claims that our employees, consultants, or advisors have wrongfully used or disclosed proprietary information or know-how of their current or former employers or claims asserting ownership of what we regard as our own IP rights
5. 49We utilize open-source software, which may pose particular risks to our proprietary software and solutions
6. 50Cyberattacks and other security breaches affecting, or significant interruptions to, information technology systems on which we rely could have an adverse effect on our business, operations and financial condition, including through harm to our reputation and exposure to liability
7. 51Any failure to offer high-quality technical support services may adversely affect our relationships with our customers and adversely affect our financial results
8. 52If any of our products are or are alleged to be defective in design or manufacturing or experience other failures, we may be compelled to undertake corrective actions, which could adversely affect our business, prospects, operating results, reputation and financial condition

Risks Related to Government Regulation

1. 53Changes to U.S. tariff and import/export regulations may have a negative effect on our business, financial condition and results of operations
2. 54The United States has recently enacted and proposed to enact significant new tariffs, as well as changes to existent tariffs. In particular, the Section 301 tariff rate on lithium-ion non-EV batteries imported from China has been amended several times since the beginning of 2025 and may continue to change
3. 55Our future financial performance may depend on the continued availability of rebates, tax credits and other financial incentives. The reduction, modification, or elimination of government economic incentives could cause our revenue to decline and harm our financial results
4. 56We could be liable for environmental, health, and safety (“EHS”) issues resulting from our operations, which could impact our reputation, our business, and our operating results
5. 57Action by governmental authorities and local residents to restrict construction or use of our systems or the projects/facilities that rely on our systems in their localities could substantially harm our business and financial results
6. 58our business opportunities, results of operations and financial condition. In addition, the ongoing costs of complying with such laws, regulations and rules could be significant
7. 59Litigation, regulatory actions and compliance issues could subject us to significant fines, penalties, judgments, remediation costs, negative publicity and requirements resulting in increased expenses
8. 60Government reviews, inquiries, investigations, and actions could harm our business or reputation

Risks Related to Ownership of Energy Vault’s Securities

1. 61Concentration of ownership among our executive officers, directors, and their affiliates may prevent new investors from influencing significant corporate decisions
2. 62There can be no assurance that our common stock will be able to continue to comply with the continued listing standards of the NYSE
3. 63We expect to continue incurring significant increased expenses and administrative burdens as a public company, which could negatively impact our business, financial condition and results of operations
4. 64If, securities or industry analysts cease publishing research or reports about the Company, its business, or its market, or if they change their recommendations regarding the Company’s securities adversely, the price and trading volume of the Company’s securities could decline
5. 65Because we have no current plans to pay cash dividends on the Company’s common stock for the foreseeable future, you may not receive any return on investment unless you sell the Company’s common stock for a price greater than that which you paid for it
6. 66The Company may issue additional shares of common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of the Company’s common stock
7. 67Our stock price may be volatile or may decline regardless of our operating performance. You may lose some or all of your investment
8. 68Activist stockholders may attempt to effect changes to our company, which could adversely affect our corporate governance, results of operations, and financial condition
9. 69Anti-takeover provisions in our certificate of incorporation, our bylaws and under Delaware law could make an acquisition of the Company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove the Company’s current management