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CBAK Energy Technology (NASDAQ:CBAT) released its second-quarter results roughly in line with our forecast, which we had previously adjusted to reflect the planned upgrade to the Dalian production line. Total battery sales were 12% ahead of our forecast at $21 million, driven by the strong performance of the company’s Nanjing facility, which produces 32140 cells and has been operating at capacity for the majority of 2025. Light Electric Vehicle sales appear to have stabilized at around $2.5-$3 million per quarter, although we believe this has potential to grow given CBAK’s strong relationships with suppliers of two- and three-wheeled scooters in India.
As we noted last quarter, the company is transitioning its Dalian production lines from older 26650 cells to being capable of producing 40135 cells, and customer testing has begun. It is difficult to know exactly when this transition will be complete. Still, we think that by the end of the third quarter, we should have a reasonable estimate of the timeline for Dalian to return to its previous production levels.
The company’s Nanjing facility, which produces 32140 cells, continues to run at full capacity according to management. We believe that when CBAK can produce more cells at this facility, it will find a market willing to absorb that production. Demand for battery production equipment worldwide has surged in 2025, likely driven by companies looking to increase cell production outside of China to mitigate the impact of potential tariffs in the US. Challenges associated with securing equipment have caused the company to experience a two-month delay in expanding its Nanjing 32140 production lines.
CBAK is now more than halfway through the pivotal transformation to expand its 32140 cell production and shift from older 26650 cells to a new production line in Dalian for 40135 cells. The delay in expanding the output at Nanjing is disappointing, but in the long run, it is unlikely to have a significant impact on the company’s outlook.
We continue to focus on the fact that CBAK entered 2025 operating 2.3 GWh of production capacity (1.3 GWh at Nanjing and 1.0 GWh) and expect that by the end of 2025 or in the first quarter of 2026, the company could be operating over 6 GWh of capacity. This significant increase in production capacity is expected to have a meaningful impact on the company’s financial results in 2026.
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