SES AI (SES) risk factors, FY2024 10-K

Risks Relating to Our Business and Technology

1. 01We face significant challenges in developing a Li-Metal battery that can be commercialized for use in EVs and other applications, and the pace of development is often unpredictable and subject to delays
2. 02We expect to continue to incur losses for the foreseeable future. While we expect to become profitable eventually, our projections are based on internal assumptions that may prove incorrect, and we may never achieve or maintain profitability
3. 03We will need substantial additional capital in the future to fund our business and may be unable to meet our future capital requirements, impairing our financial position and results of operations
4. 04Our Li-Metal technology is untested in actual EVs and may ultimately prove unworkable
5. 05The market for UAM, and for use of Li-Metal technology in UAM applications, is still emerging, and may not achieve the growth potential we expect
6. 06If our batteries fail to perform as expected, our ability to develop, market and sell our batteries could be harmed
7. 07We are unable to predict user behavior when driving EVs with Li-Metal technology
8. 08Delays in the pre-manufacturing development of our battery cells could adversely affect our business and prospects
9. 09We may not be able to engage target OEM customers successfully and to convert such contacts into meaningful orders in the future
10. 10If we are unable to integrate our products into EVs manufactured by OEM customers, our results of operations could be impaired
11. 11temporarily disrupt future research and development activities or production of our batteries until an alternative supplier is able to meet our requirements
12. 12Because we expect to rely heavily on complex machinery, well-trained personnel and a well-managed supply chain for our operations, our internal and outsourced production will involve a significant degree of uncertainty and risk in terms of operational capacity performance and costs
13. 13We have pursued and may continue to pursue JDAs, service contracts and other strategic alliances, which could have an adverse impact on our business if they are unsuccessful or if we are unable to enter into new strategic alliances
14. 14The EV battery market continues to evolve and is highly competitive, and certain other battery manufacturers have significantly greater resources than we do
15. 15We may not be able to estimate accurately the future supply and demand for our batteries, which could result in a variety of inefficiencies in our business and hinder our ability to generate revenue. If we fail to predict accurately our manufacturing requirements, we could incur additional costs or experience delays
16. 16Certain components of our batteries pose safety risks that may cause accidents. We may be subject to financial and reputational risks due to product recalls and product liability claims, and we could face substantial liabilities that exceed our resources
17. 17We may incur significant costs based on the warranties we may supply in our products and services
18. 18Our business depends substantially on the continuing efforts of our senior executives and other key personnel as well as the ability to attract, train and retain highly skilled employees and key personnel
19. 19Our insurance coverage may not be adequate to protect us from all business risks

Risks Relating to the EV Industry

1. 20Our future growth and success depend on the willingness of vehicle operators and consumers to adopt EVs
2. 21The unavailability, reduction or elimination of, or uncertainty regarding, government and economic incentives or subsidies available to us, end-users or OEMs could have a material adverse effect on our business, financial condition, operating results and prospects
3. 22Developments in alternative technology or other fossil fuel alternatives may adversely affect the demand for our battery products
4. 23If the EVs in which our batteries are installed do not meet certain motor vehicle standards, our business, operating results and prospects could be adversely affected
5. 24Our ability to successfully market our products will depend on the establishment of charging station networks meeting the needs of EVs using our products. If any of the charging station networks are not compatible with such products and technologies, our sales could be adversely affected

Risks Relating to Artificial Intelligence

1. 25The use of AI in our products and services may result in reputational harm and competitive harm
2. 26Our use of artificial intelligence and machine learning may result in legal and regulatory risks
3. 27The market for our AI-based services is still emerging, and our AI programs may not achieve the growth potential we expect

Risks Relating to Our Intellectual Property

1. 28Our patent applications may not result in issued patents or our patent rights may be challenged, invalidated or limited in scope, any of which could have a material adverse effect on our ability to prevent others from competing or interfering with the commercialization of our products
2. 29We rely heavily on our intellectual property portfolio, including unpatented proprietary technology. If we are unable to protect our intellectual property rights from unauthorized use, our business and competitive position would be harmed
3. 30We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial costs
4. 31We may face risks relating to protecting our intellectual property in various countries

Risks Relating to our International Operations

1. 32The international nature of our business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States
2. 33We could experience losses associated with our intellectual property in relation to our operations in China
3. 34Implementation of labor laws and regulations in China may adversely affect our business and results of operations
4. 35Our incentives from various governments are conditional upon achieving or maintaining certain performance obligations and are subject to reduction, termination, or clawback

Risks Relating to Regulations and Our Compliance With Such Regulations

1. 36Our operations expose us to litigation, environmental and other legal compliance risks. Compliance with laws and regulations can be expensive, and our failure to comply with these laws and regulations may result in monetary damages and fines, adverse publicity and a material adverse effect on our business
2. 37Failure to comply with certain health and production safety laws and regulations governing hazardous materials could materially adversely affect our business and results of operations
3. 38Governmental trade controls, including export and import controls, sanctions, customs requirements and related regimes, could subject us to liability or loss of contracting privileges, limit our ability to transfer technology or compete in certain markets and affect our ability to hire qualified personnel
4. 39Changes in U.S. and foreign tax laws could have a material adverse effect on our business, cash flow, results of operations or financial conditions
5. 40Certain U.S. state tax authorities may assert that we have a state nexus and seek to impose state and local income taxes which could harm our results of operations

Risks Relating to Privacy and Security

1. 41If we experience a significant cybersecurity breach or disruption in our information systems or any of our partners’ information systems, our business could be adversely affected

Risks Relating to Our Common Stock and Warrants

1. 42Our CEO and certain entities affiliated with the CEO (the “SES Founder Group”) is a large and significant stockholder and, as a result, we are a “controlled company,” which exempts us from certain obligations to comply with certain corporate governance requirements
2. 43We are controlled or substantially influenced by the SES Founder Group, whose interests may conflict with other stockholders. The concentrated ownership of our dual class common stock could prevent stockholders from influencing significant decisions
3. 44Provisions in our Certificate of Incorporation (the “Charter”) and Delaware law may inhibit a takeover attempt which could limit the price investors might be willing to pay in the future for our common stock and could entrench management
4. 45The price of our common stock has been and may continue to be volatile
5. 46Our public warrants may never be in the money, and they may expire worthless
6. 47We may redeem unexpired public warrants prior to their exercise at a time that is disadvantageous to the warrant holders, thereby making the warrants worthless
7. 48If the price of our Class A common stock increases, warrants to purchase SES common stock could increase the number of shares eligible for future resale in the public market and result in dilution to stockholders
8. 49We may be subject to securities litigation, which is expensive and could divert management’s attention
9. 50Our failure to satisfy certain NYSE listing requirements may result in our Class A common stock being delisted from the NYSE, which could eliminate or adversely affect the trading market for our Class A common stock
10. 51We are a “smaller reporting company” and the reduced reporting requirements applicable to such companies may make our securities less attractive to investors