Good morning, everyone, and thanks for joining us at day three of TD Cowen Sustainability Week. My name is Gabe Daoud. I'm TD Cowen's energy, battery, and charging analyst. Next up this morning, we're delighted to host Solid Power, and presenting from Solid Power is CFO Kevin Paprzycki, and we also have Jen Almquist from investor relations. As folks on the line are aware, Solid Power is a next-generation battery company attempting to commercialize an all-solid-state battery, backed by Ford and BMW, and also recently has been engaged with SK On in South Korea. With that, Kevin, thanks so much for joining. Oh, thanks. Good morning, Gabe. Good morning, everyone. Kevin, why don't we maybe just start with a little bit of an overview on Solid Power, just maybe even a quick recap of your latest results that were announced not too long ago, and then from there we could get into some Q&A. Yeah. Yeah. So Solid Power has been around for about 10 years. We are a battery technology company. We do two things. We are focused on developing the next generation of EV battery cells, and we're also a provider of materials that go into those cells, specifically sulfide-based electrolytes. And so the company was founded in conjunction, came out of UC Boulder, has a facility just outside of Boulder, and we just opened our second facility that produces electrolyte here about a year ago, which is in Thornton, Colorado, just a little bit north of Denver. But technology came out of UC Boulder, merged with some technology licenses from Oak Ridge Labs and has developed what we think is some of the leading solid-state battery technology that's out there today. So our quarter, we're going through automotive qualification through our process, and this quarter reflected, you know, another solid quarter of progress here, both in terms of development of our cells, but also in terms of electrolyte sampling to customers, which we see as a growing market, and I'm sure we'll talk about, and our progress in Korea. But a good quarter, hitting our operational milestones as we consistently have. Awesome. Awesome. That's great. And maybe just getting right into it, maybe just, just at a high level for folks on the line, can you discuss the differences in business models between Solid Power and maybe some of the other next-generation battery companies that have emerged and gone public over the last several years? I think it's important to maybe draw the distinction between, you know, cell manufacturer or electrolyte provider. Maybe just talk a little bit about those differences. Yeah. Yeah, great, great question, and it's one where we really think Solid Power is unique in two ways. We're unique in our technology approach, and we are unique in our business model, and I'll start with the technology approach. Solid Power's focus is purely on solid-state technology, and we call it pure or all-solid-state technology. That means that our batteries are 100% liquid and gel-free. So we're targeting not just the performance improvements that a lot of other companies and our peers are from the next-generation batteries, but because they're solid state, we're targeting improved safety benefits as well. Our model is different also. We do not want to be a battery manufacturer long term. And again, we see ourselves as a battery technology company. We would prefer to partner with the larger battery manufacturers instead of competing against them, and we'd like to license them our cell designs and our technology, and then we would like to sell them our electrolyte. And what that, that combination results in is very much a capital-light business model, which is unique for our industry. Okay, awesome. That's a helpful distinction. So, like you said, capital-light and also, you know, assuming at scale, the margin profile would be better than cell manufacturing as well, particularly given some of the obvious benefits that could be had by your electrolyte powder. Okay, that's helpful. So, why don't we maybe spend a little bit of time on your production capabilities today? You know, last quarter you shipped samples to 10 partners across or potential customers across both cell OEMs and auto OEMs. So maybe talk a little bit about that, and then also some of the initial feedback that you've received on your electrolyte powder. Yep. So looking at... I'll start on the electrolyte side, Gabe. So you know, our electrolyte team has come and made a lot of progress scaling up our operation here and our production capabilities over the past couple years. We've gone from what was basically lab-scale production at our facility in Boulder. That was scaled up to more of a pilot line type of production, and then we've scaled that to our new SP2 facility, where we're capable. Our target this year is 30 metric tons. So we believe that we have, we probably have more capability in providing sulfide-based electrolyte than anybody on the planet, and so that's really our strength. When you're dealing with-... These battery manufacturers, and they want to test your electrolyte, they wanna know that it's not made in a lab, that you have the production capability, and they wanna test samples from larger production runs. And so again, we feel our capability is pretty much unmatched here right now. So what we've been doing on the electrolyte side is we've now sampled with 10 different partners, 10 different potential customers, and those are outside of our JDA partners. And so we have 10 new customers, a mix of battery producers, and a mix of auto OEMs. And so we've provided them large samples of our electrolyte. Out of the 10, we have several that are in around 4 or 5 in terms of a feedback cycle, where we're providing them the sample, they're testing it, giving us feedback, "We'd like this tweaked up, we'd like this tweaked down or this mix," and then we're providing a second sample. And so we're very excited about the potential of where this, where this is gonna go over the course of this year, and how it eventually turns into supply agreements for our electrolyte. Okay, awesome. That's great to hear. Maybe just actually taking one step back, and, you know, we hear solid state batteries, and generally, there's three different types of, you know, solid state electrolytes/separators. It's either a sulfide, an oxide, or a polymer. And obviously, you guys are going with the sulfide approach. Don't have to get too deep into the weeds, but maybe just help us think about why sulfides may be the best way to go, and some of the actual performance benefits you get by using a sulfide-based electrolyte paired with, you know, either a lithium metal anode or a silicon anode as you're attempting. Yep. Let me start with the sulfides versus oxides, and then I'll kind of go into the generations, 'cause we're focused on silicon right now, with lithium kind of coming down the pipe. So we chose sulfides because they have the best balance of performance and stability. Sulfides have a very high ionic conductivity, gives them a lot more energy output, but they're also very manufacturable. They're a lot friendlier to work. And so we saw that as a quicker path towards co-commercialization. Sulfides are also a little bit more stable at higher temperatures, and that can lead to a little bit of safety and other performance benefits as well. And so that's why we chose sulfides. We are currently right now working on a silicon anode EV cell, okay? We chose silicon also because it was manufacturable, and it has a tendency to eliminate... It's not eliminate, but it has a tendency to reduce the dendrite issues that you can have with lithium metal. And so, again, we saw silicon, with all of its recent advances in the material and what was available, as a quicker path towards getting to getting to commercialization. We do have, especially for a company that's in our stage, we do have a pretty solid product pipeline. Again, our silicon anode EV cells are our focus right now, but we do have a small team that is focused on our second-generation cells, which are lithium metal. A ways to go, because, again, dendrite formation is challenging, but we're pretty excited about what we've seen in lithium metal for our Gen 2 cells. And then we also have a third-generation cell, which we call the nickel-free, cobalt-free cell, where we use some proprietary technology and materials to replace the cathode. And we feel that down the road, that could be a real game changer, not just for the cost of batteries, but also just for supply chains in general. 'Cause if you can take those commodities out and eliminate a lot of the mining risks. And so pretty developed product pipeline, and we're working on all three of those. Again, the lithium metal and the nickel-free, cobalt-free are pretty far down the road, but we're excited about their potential. The nickel-free, cobalt-free, we also have gotten funding over the years from the DOE, as... They've been a great partner for us on that technology. Okay, awesome. Awesome, and just on the silicon cell, that's a high-content silicon. What is the content of silicon in the anode? I'd imagine it's a silicon oxide. Is that right? I can't give you the exact content of the silicon. I probably couldn't disclose it, Gabe, and honestly, as the CFO, that's probably a little bit above my pay grade, knowing the exact chemistry. But I know that the recent advances in silicon and its manufacturing are why we chose it, but I couldn't give you the exact chemistry, and I don't think we've disclosed that. Okay. I figured I'd try. Yeah, I don't think it's been disclosed. But okay, so maybe could you also just talk about what some of the performance targets that are out there for your silicon EV cell, like whether it's an energy density number on a watt-hour per liter or watt-hour per kilo basis? Just trying to get a sense of, like, the type of performance improvement that you guys are expecting upon commercialization. Yeah. We have not disclosed overall performance for our EV cells here at this point, and it's something that we're working with our partners to disclose that information. Under our joint development agreements, it is our partners' proprietary information, and so we'd like to disclose those. That said, we're pretty excited about the continued improvement in our cells. You know, we've gone, in the past year, from building 20 amp-hour cells to scaling up to our EV cells, which are somewhere in the 60 amp-hour range. We just delivered our A1 sample cells here in late 2023, and have now shifted our gears towards our A2 cells, which will have a number of targeted and planned performance upgrades. And so we're pretty excited, and our goal for the year, for this year, is to deliver our A-2 cells to our customers by end of 2024. Got it. Okay. Okay, yeah, that's, that's helpful. And why don't we maybe pivot to some of the goals that you've outlined for 2024? Again, manufacturing and shipping electrolyte powder, but you also obviously have an EV cell line that is producing samples to send to customers. So maybe just, just lay out the goals for us for this year on both, like, the EV cell side and then the electrolyte side. Yeah. So we have several big goals here for 2024. I already mentioned on the cell side, delivery of our A2 cells by the end of the year. And we're excited about those minor improvements, changes, slight changes in chemistry and design. But the challenge is balancing that chemistry, design, and manufacturing process, and getting everything in alignment to deliver those by year-end. On the electrolyte side, again, we've delivered samples now to 10 customers outside of our JDA partners. We're gonna continue that sampling program, growing it, going through additional testing and feedback cycles with each of these customers. And basically, here, by the end of the year, we're hoping to position ourselves for an electrolyte supply agreement in the near future. That's kinda... We wanna be in a position towards the end of the year where we're looking at and discussing with customers a larger, longer-term electrolyte supply agreement, so that's very exciting. One of the initiatives when our CEO, John, came in here almost exactly a year ago was to establish a presence in Korea, and so we've done that. We have a small office and a small team, but growing team over there. Basically, we're trying to establish a presence in what is a very important global battery market, both in terms of partners, suppliers, and the technology, and the expertise that's over there. And then lastly, just continue to execute for our partners, for BMW, you know, two fantastic partners, delivering the cells to them, continuing to share technology and work collaboratively to meet their objectives. But also our third partner, which is SK, the battery manufacturer, and the agreement we just signed with them, we're hoping to complete the line install. They're replicating our line in their facility in Korea, and then complete a technology transfer to them, where we're walking them through our cell technology, our processes, our chemistries, and how it works, so they can also continue development of our cell technology. Great. Great, okay. Okay, and, so the folks who are testing your electrolyte powder, do you know the composition of their cells that they're using the powder in? Like, are they silicon-based anodes? Is it different? Like, what are the chemistry choices? Do you have any insight into that? You know, it's actually, I think it points out another positive. What they're testing it on is basically their own cell designs, and they're testing it across multiple anode/cathode combinations, okay? And their own designs, their own anodes, their own cathodes. So we believe that our electrolyte can work in multiple different technology scenarios. While, you know, we probably have a small preference that these guys use our designs, because we get the license fee from that, we're just as happy if they want to use this on their own designs. Feel our electrolyte can work in their designs. And they... That may lead to breakthroughs that we didn't consider. They may have a better cell design than we do. While I think we have a great design team, the more folks that are out there testing our electrolyte on their designs, I think that just helps us create a stronger market in the long term. Okay, okay, and then the 10 potential partners or customers, again, it's battery and cell OEM. Does it skew to one or the other? And maybe can you give us a sense of, like, the type of scale of these potential customers, and maybe geographically, like, where are they located? It's a mixture of all over. If you just ran a list of the top auto OEMs, especially those who are both more focused on EVs than those that aren't, and you looked at the top battery manufacturers by scale, you would see the list of people that we're currently working with. It would be contained in those. And so, from a scale perspective, it's some of the largest and also some of the mid-tier battery manufacturers. And globally, it is all over, again, concentrated in Europe and Asia, where battery production is—it tends to be focused. But it is a pretty good mixture between auto OEMs, battery manufacturers, and global. It's a good mix, and so we're just going right down the... Our business model enables us to work with basically, and partner with basically anybody, and so that's basically what. Okay. Okay, great. Yeah, maybe on that note, the SK On partnership seems to be going well. Can you give us an update on that and maybe the significance? You know, I think you hosted some of SK On officials in Colorado to kind of go through the tech transfer process. But maybe just give us an update on the SK On partnership specifically, and then we'd love to get into Ford and BMW. Yeah. The SK agreement that we announced earlier here in 2024 was a just great series of agreements, and it sort of proves out our business model. Again, we do not wanna be a battery producer in the long term, and that gives us the ability to partner with these large battery manufacturers. And SK sort of proved that out in terms of this advanced technology agreement. These agreements enable Solid Power to advance their battery development. But again, we will have a partner that is installing a line, a replica of our line that's in Boulder, in Korea. Actually, we're installing the line for them, but it's gonna be another line. And so here, you know, in mid 2025, we're gonna have development on a Solid Power solid-state EV line in Boulder, which is our own. We will have a... BMW's putting their own line in, which will give development, you know, another major EV player in Europe, and then we will be installing the SK line in Korea. So you're gonna have, you know, three major sort of facilities around the planet, all focused on Solid Power technology advancement. That's probably the first thing that comes from our SK agreement. Second, I talked about, you know, growing our presence in Korea. Us putting a line in there, sharing our technology with SK will help us establish a team and grow our presence in Korea. The third thing is this agreement, or sorry, this with SK agreements, this is really our first firm electrolyte supply agreement that Solid Power has had. We will provide electrolyte to SK for their line between now and 2030, and so we've got a firm commitment on our electrolyte, so that was a first for us. Then lastly, the agreement strengthens our balance sheet because the technology transfer comes with a royalty fee, and so it further strengthens our cash position. So again, these agreements vary in terms of dollar amounts and the timing. Timing on the line install will be here over the next year. The tech transfer and the electrolyte supply agreement will stretch over the rest of the 2020s. Oh, pretty great. It's exciting. Maybe give us an update on BMW. Obviously, that partnership has strengthened over the last couple of years, and I believe they have some of their engineers here working in tandem with your engineers. Maybe give us an update there. I also think, or obviously, you shipped them some A1 samples at the end of last year. Any feedback from that too? Yes. You know, BMW has been a great partner. All of our partners are fantastic. We're fortunate to have them. Towards the end of 2022, we advanced our BMW agreement, and it was basically escalated the level of our technology sharing. BMW sent a team of their top battery engineers over to our facility, and they have been working over the past year, shoulder to shoulder with our team. You know, making suggestions, giving us feedback, and learning our technology. And what they've really brought is, they've brought us the knowledge and the expertise in how the batteries need to function within the pack and how they attempt to design them. And so, you know, their team working collaboratively with our team is really what drove the improvement from our 20 amp hour cells up to our EV cells and allowed us to get in the EV sample. And so now we've delivered those EV cells, the first A-1 samples, to them officially to start the APQP process. That was in the latter part of 2023, and we're now going forward with our A-2 designs also with their involvement. But, can't say enough about the collaboration with that partner. Awesome. Okay, and you said this earlier, obviously, so A2 cells expected to be in partners' hands by the end of this year. Is that right? Correct. And so the goal here is A2s this year, that would obviously be followed by an A2, and hopefully soon after that, we'd lock design and then go into B sample, which is where you move from proof of concept, really to proof of manufacturing. And so we'd be locking the design and increasing the scale of our production. Yeah. Okay. And then I also think BMW noted the concept or prototype car using your, your cell design. Is there, at some point, I think in 2025, is that... Is there an update on that? Is that, is it possible you just roll out to B sample by then? Well, the B sample cells would not go into the demo car. We have the opportunity here to put the A2 sample cells into a full-size BMW demo car, and that's something that we're working towards. A little bit tough to fit that into BMW's development schedule and design, but what we've talked about is putting our cells into a full size BMW EV. And that's a very exciting concept. But first things first, we got to execute on the A2 performance improvements this year, get those cells delivered, and based on the performance of those cells, we'll evaluate the opportunity with BMW to put those into a demo car. But it's something we're pretty excited about. Okay. Okay, awesome. Yeah, looking forward to that. Okay, so what, what are your broader expectations then around solid state or all solid state battery commercialization, whether it's, you know, using your cell design or just your electrolyte powder and, you know, call it SK's solid state battery, let's say, or anyone else's solid state battery? Just when do you think we could see commercialization of solid state batteries? Yeah. So the great thing... And it's kind of an interesting dynamic here. As you look at Ford and BMW's investor or battery days, both of them independently have consistently said, "We believe that solid-state heavy solid-state commercialization will occur in the 2030s." And so that's basically collectively what we're all driving. Now, to get there, that means that we basically have to be commercializing our technology in the 2027, 2028, 2029 timeframe. And that technology is obviously not going to go into mass models, you know, at many different models and be available across the spectrum of vehicles until the 2030s. But our partners are driving us with a sense of urgency. We're all working together to a, you know, 27-28 type of commercialization timeframe that leads to that heavier mass commercialization in the 2030s. Okay. Okay, great. Let's talk a little bit about the balance sheet and liquidity. Pretty solid liquidity position exiting 1Q, but just give us a sense of how the balance sheet is today. Yep. So we're fortunate to have a strong balance sheet, just under $400 million of total cash and cash equivalents and cash investments, longer term cash investments. We believe that balance sheet will take us out into the late 2020s, potentially more, if we're able to secure all, you know, any of the grant fundings that we require. But given our capital light business model and the fact that we do not need to invest, you know, $1 billion-$3 billion, which is the investment required for a gigafactory, a smaller gigafactory, we, our strong cash balance sheet can last us out and gives us a very long cash runway. Yeah. Okay, great. Great. Okay, so a couple more minutes here. Let's just double-check, we've done questions. One minute. Oh, can you just talk about your relationship with Ford, Kevin, and anything to highlight there? Some reasons- Yep, Ford. Yep, Ford, Ford has also been a great partner for us. We basically are at the level with Ford that we were with BMW before we escalated the agreement. And that, that's a level of collaboration where we're providing cells to them. They are testing our cells, giving us feedback, we're making tweaks. And basically it is just a collaborative agreement where they're continuing to evaluate, give us our cells back with strong feedback, and it's been a great relationship. Both the Ford and BMW agreements have been in place since the, I wanna say it's the 2016, 2017 timeframe, and so we would not be where we are without their commitment, both our equity investors in Solid Power, and also their feedback has been phenomenal. Okay. Okay, great. And then, just going back to the A-1 cells, you know, I think there may be a small handful that had a thermal runaway event. Could you just maybe talk a little bit about what happened there? And I think the situation has been rectified, but maybe just talk a little bit about what happened and what was done to improve that. Yeah. So we have built thousands of our A1 cells, and so we had literally a handful that went into thermal runaway. For us, that's a normal and expected part of battery development. And so as you move up in cell size and you scale up, you basically have more material that you're using, you have more connection points between the material, and you're loading those cells with much more energy. And so the combination of more material, more connections, more energy, means that you have significantly more opportunities for failure. So out of the thousand, given that, you know, only a handful of the A1s went into thermal runaway, that is. I think we're pleased with that performance. We've still got to figure out how to address that and prevent it from happening 100%, and what the true advantages of solid state, you know, come through the inherent safety advantages. Our initial thoughts that we continue to announce this quarter, we're confirming, were that we had some impurities in the materials we received, and that drove a couple of the thermal runaways. And then again, battery manufacturing is tough. We can't just go to being a world-class battery manufacturer like an SK. And so we had some manufacturing defects in a couple of the cells, but we've been confirming those, addressing the root cause. And then through our plan in the A2 cells, just minor tweaks and improvements to the chemistry, the design, and the manufacturing process, we're pretty excited about what we can address in the A2 cells, and again, targeting those for end of 2024 delivery. Yeah. Okay, that's very helpful. All right, Kevin, it looks like we're right at 30 minutes. We'll leave it there. Appreciate the time. Good, good conversation and chat as always, and best of luck the rest of this year. Thanks, Gab. Have a good holiday weekend for you and everybody.