CBAK Energy Technology (CBAT 3.23%), a lithium battery manufacturer serving sectors like electric vehicles and energy storage, released its second quarter 2025 results on August 18, 2025. The company reported GAAP revenue of $40.52 million, ahead of analyst estimates of $33.56 million. Earnings per share (EPS) (GAAP) were a loss of $(0.03), better than the expected loss of $(0.04). Despite surpassing expectations, both sales and profits (GAAP) showed significant year-over-year declines as the business continued to invest in new product rollouts and ramp up its next-generation battery models. The quarter highlighted continued operational headwinds connected to upgrading key facilities and managing a steep product transition, with a marked drop in gross profits and margin (GAAP).
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $(0.03) | $(0.04) | $0.07 | (142.9%) |
| Revenue | $40.52 million | $33.56 million | $47.79 million | (15.2%) |
| Gross Profit | $4.46 million | $12.73 million | (64.9%) | |
| Gross Margin | 11.0% | 26.6% | (15.6 pp) | |
| Net Income Attributable to Shareholders | $(3.07 million) | $6.45 million | ($147.6%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About CBAK Energy Technology and Its Focus Areas
CBAK Energy Technology specializes in developing and producing lithium batteries, and offers products for electric vehicles and energy storage systems. Its clients range from automakers and light vehicle makers to companies providing residential backup power and industrial energy storage.
The company's recent business focus centers around rolling out newer battery products and expanding manufacturing capacity. Key success factors include the ability to develop advanced battery technologies, diversify its customer base internationally, and maintain a varied product portfolio serving several unique end markets.
Quarter Highlights: Transition Period and Financial Impacts
Revenue exceeded forecasts, growing 16% sequentially from the previous quarter ended March 31, 2025, even as it dropped 15% compared to the same quarter last year. However, battery business revenues alone fell 40.8% year over year—mainly because the company is transitioning at its Dalian manufacturing site from older Model 26650 cylindrical batteries to the newer Model 40135. Model 26650 has become outdated in many segments, while customers are currently testing and validating Model 40135, with mass production planned for September.
The product transition caused sharp drops in both margin and overall profitability. Gross profit (GAAP) fell 65.0% versus the prior year, and gross margin dropped to 11%, down from 26.6% in Q2 2024. Battery business segment margin shrank similarly, pressured by a less favorable product mix and the costs of ramping up new lines.
Other segments offered some support: light electric vehicle battery sales grew 33% from the prior year to $2.43 million, partly offsetting the steep drop in residential energy supply sales, which fell 44.8% to $18.52 million.
The quarter saw continued investment in research and development (R&D), with spending rising to $3.61 million compared to $2.96 million in Q2 2024. Even as margins contracted, management maintained focus on bringing its new Model 40135 battery to market and expanding capacity for Model 32140 batteries in its Nanjing plant. Phase II expansion in Nanjing was delayed to the fourth quarter.
Recent Developments and Operational Trends
The most significant development remains the ongoing shift from Model 26650 to Model 40135 cylindrical battery products. Cylindrical batteries are used for applications ranging from home energy storage to electric scooters, and offer advantages in stability and design for certain voltage requirements. Customers are providing “highly positive feedback” on the new product, yet have not completed the validation process necessary for mass rollout. Management expects a recovery as Model 40135 enters full production in Dalian in Q4 2025.
The company’s Model 32140 large cylindrical battery, produced in Nanjing, continued to see robust demand. The current production run is fully booked, and plans are in place to expand this capacity in coming quarters. However, the addition of this capacity has been delayed, pushing anticipated volume gains to Q4 2025.
This partially cushioned the impact of softness in residential and backup power battery sales, which remain the company’s largest segment but have declined significantly. Management emphasized a global customer base and pointed to agreements in progress with internationally known firms, including leading electric scooter and portable power manufacturers.
Cost pressure was evident not just in gross margins but also in increases in inventory and working capital. Inventory grew 63.9% compared to year-end 2024, resulting in a lower equity base and signaling tighter balance sheet conditions. Meanwhile, cash and equivalents dropped to $5.68 million at quarter end (June 30, 2025),
Outlook and Investor Considerations
Company management signaled cautious optimism that upgrades and new product launches would begin to drive a recovery in production and sales from Q4 2025 onward. There was no concrete financial guidance given for subsequent quarters or for full fiscal 2025, but the expectation is that mass production of the Model 40135, combined with expanded Model 32140 output, will support a rebound in revenue starting in Q4 2025. Executives highlighted ongoing global expansion efforts, including the possibility of establishing new manufacturing sites in Southeast Asia or the United States, primarily to address customer requirements in response to tariffs or regulatory requirements.
Looking ahead, investors are watching for signals that customers will complete their validation of Model 40135 and move into commercial orders. Progress on the postponed Nanjing expansion and success in signing contracts with major international clients will also be important. Continued margin pressure, working capital consumption, and tighter cash balances remain risks while the company completes its upgrades and transitions to newer battery models.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
