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Item 1. Business

2024-02-28 compared with 2023-03-01 · 170 added, 177 removed, 124 unchanged (74% of the section changed)

Solid Power is developing solid state battery technologies to enable the next generation of rechargeable batteries for the fast-growing EV and other markets.

Our core technology is our proprietary sulfide-based solid electrolyte material, which replaces the liquid or gel electrolyte used in conventional lithium-ion batteries.

We believe that our electrolyte material can enable extended driving range, longer battery life, improved safety, and lower costs compared to conventional lithium-ion.

We also are designing and developing solid state cells that utilize our electrolyte in the cathode, anode, and separator layers.

Our most mature cell design uses a silicon anode, NMC cathode, and solid separator.

We are in earlier research development on additional cell designs, including lithium-metal, an anode-less design and a cell that replaces the nickel and cobalt in the cathode with earth abundant materials.

We currently produce 0.2 Ah, 2 Ah, 20 Ah, and EV cells on two pilot lines using established manufacturing processes.

To support testing requirements of our partners and further refinement of our cell design, we will continue to produce 2 Ah, 20 Ah and EV cells during 2023.

Longer-term, we expect to use our pilot lines to further our research and development activities.

We have partnered with industry leaders, including Ford, BMW, and SK On.

We are working closely with each of these partners to refine and validate our cell designs and electrolyte material with the ultimate goal to commercialize our technologies.

The products we currently make are in the development stage and require continued development and validation before we can commercialize either our electrolyte or cell technology.

Solid Power is developing solid-state battery technology for EV and additional markets served by battery manufacturers.

Our core technology is our proprietary solid electrolyte material, which replaces the liquid or gel electrolyte used in traditional lithium-ion batteries.

We believe that our electrolyte material can improve driving range, battery life, safety performance, and battery costs.

We are also developing solid-state cells with our electrolyte, with the aim of commercializing our technology by selling our electrolyte material and licensing our cell designs.

This approach is capital light, unlike other battery manufacturers who require significant production facilities and equipment.

This strategy allows us to focus on our core strengths of electrolyte production and solid-state technology development.

We currently produce our electrolyte on a pilot manufacturing line, which is used in our cell development and for customer sampling.

We currently develop our cells on our two pilot lines, producing multiple cell sizes to both support our partners and refine cell designs.

Longer-term, we expect our pilot lines to focus on research and development.

We have partnered with industry leaders BMW, Ford, and SK On and will continue to work closely with our partners to improve cell designs, produce electrolyte material, and commercialize our technology.

Our products are currently in the development stage and require further research and improvement before we can commercialize our technology.

For more information, see “Risk Factors—Risks Related to Development and Commercialization.”

Business Model

Our business model currently has two strategic elements:

Our business model has two strategic elements:

● Selling our electrolyte material.

● Licensing our cell designs and manufacturing processes.

We believe this business model distinguishes us from many of our competitors that seek to become commercial battery manufacturers.

Ultimately, we endeavor to be a leading producer and distributor of sulfide-based solid electrolyte material for powering both EVs and other applications.

Since we do not intend to commercially produce battery cells, we expect to invest significantly less than other development-stage battery companies that plan to commercially manufacture their own cell designs and construct their own battery production facilities.

Benefits of Our Technologies

Driving Range

We have designed our cells with the expectation they will have higher energy compared to traditional lithium-ion battery cells.

We expect higher energy cells to provide OEMs with the flexibility to balance cost and driving range when designing their EVs.

We expect our electrolyte will improve high temperature stability of our cells compared to conventional lithium-ion technology.

This could allow for the removal or reduction of battery pack cooling systems.

A potential additional benefit could be a longer life of the cell and less permanent degradation in battery capacity at higher temperatures.

We believe this business model distinguishes us from competitors who are becoming commercial battery manufacturers.

Our goal is to become a leading provider of solid electrolyte material for EVs and other markets.

We intend to sell our electrolyte to customers that license our cell technology and those which have their own cell designs.

Since we do not plan to produce battery cells long term or build gigafactories, we expect to invest significantly less than other battery developers.

Benefits of Our Technology

We have designed our electrolyte and cells targeting the following potential benefits over traditional lithium-ion batteries:

● Driving Range – Higher energy capabilities to increase driving ranges.

● Battery Life – Improvement in high temperature stability to provide longer battery lives.

● Safety – Improved safety performance as our battery cells use zero liquids or gels, which can be highly flammable and volatile, and the fact that our proprietary electrolyte has higher ignition points.

● Cost – Our manufacturing processes reduce the time, cost, and space required and may allow OEMs to reduce costly pack materials and cooling systems.

Solid Power, Inc.

| 2023 Form 10-K | 7

We believe solid electrolytes can improve the safety of battery cells because conventional lithium-ion batteries use a liquid or gel electrolyte that is highly flammable and volatile under certain circumstances.

Our solid electrolyte has a much higher ignition point than traditional liquid or gel electrolytes, which means it has the potential to be safer than conventional lithium-ion.

We anticipate cell designs incorporating our electrolyte will cost less to produce than conventional lithium-ion.

This is enabled in part because our cell designs can be manufactured with existing industry-standard manufacturing processes and equipment.

The processes we have adopted have the potential to reduce the time, cost and space needed to manufacture cells.

Additionally, we are in the early stages of developing a cell that replaces the nickel and cobalt in the cathode with earth abundant materials.

If we are able to successfully develop this technology, it could cut cathode costs by up to 90%.

2022 Highlights

Fiscal year 2022 was an important and successful year for Solid Power during which we installed critical infrastructure, enhanced our electrolyte and cell development capabilities, expanded our relationship with BMW, and added critical team members.

Our key 2022 highlights are below and discussed elsewhere in this Business section:

Electrolyte facility .

We began construction of a pilot electrolyte production line.

We expect this facility to come online in the first quarter of 2023.

We anticipate this facility will be capable of producing up to 30 metric tons of electrolyte per year, which we expect to be sufficient to support demand until commercialization.

Installation of the EV line .

We successfully installed the EV line and began producing our first EV cells.

We expect to utilize the EV line for the automotive qualification process and for vehicle demonstration purposes.

The EV line is designed to ultimately produce up to 300 EV cells a week.

Delivery of 20 Ah cells to our partners .

We were able to successfully produce and deliver hundreds of 20 Ah cells to our automotive partners and third-party testing agencies as part of our JDA programs.

In addition, our 20 Ah cells recently received UNDOT 38.3 certification, which is required to demonstrate the safety of our cells during shipping.

BMW R&D technology transfer .

We entered into our first research and development-only license agreement with BMW, which will allow BMW to replicate our pilot cell lines at their own facilities and develop cells based on our designs.

Our Growth and Research & Development Strategy

Our research and development activities focus on making continual improvements to our electrolyte and cell technologies with the ultimate goal of commercializing technologies that outperform conventional lithium-ion.

While we believe our goals are achievable, and our roadmap to hitting those goals is reasonable, as with any company that is developing novel technology, our strategy, forecasts, and timetables are subject to change.

For more information, see “Risk Factors — Risks Related to Development and Commercialization.” Our research and development activities are currently focused on the following initiatives:

Electrolyte Development

As we continue to scale our electrolyte capabilities, we are focused on the following:

Expand sulfide-based solid electrolyte production .

We currently produce approximately 2 metric tons of electrolyte per year.

After we initiate electrolyte production on our new line, we expect to have the capacity to produce approximately 30 metric tons of electrolyte per year.

We intend to scale our electrolyte capacity based on market adoption and the electrolyte needs of our partners and other potential customers.

Solid Power, Inc.

| 2022 Form 10-K | 8

Continue development of electrolyte materials and performance .

Our research and development focuses on improving our electrolyte and cell technology to commercialize products that will outperform conventional lithium-ion.

While we believe we have reasonable goals and a reasonable roadmap to hit those goals, our strategy, forecasts, and timetables are subject to change similar to any technology developer.

Our research and development activities are currently focused on the following initiatives:

Our electrolyte is a sulfide-based material comprised of lithium sulfide and other proprietary inputs.

We believe most OEMs and battery manufacturers have a future technology roadmap which includes sulfide-based, solid-state cell products which can utilize our electrolyte.

Our growth and development for electrolyte is focused on:

Expanding electrolyte production.

In 2023, we commissioned an electrolyte production facility with an annual capacity of 30 metric tons.

We can further scale electrolyte capacity based on partner needs and market reception.

Customer sampling.

We are providing electrolyte samples to potential OEMs and battery manufacturer customers to develop commercial markets for our electrolyte.

We are receiving feedback and tailoring our electrolyte to meet their needs.

Samples provided from larger scale production batches are preferable to potential customers.

Continued development of electrolyte materials .

Our first generation of electrolyte is primarily used in cells we manufacture.

We have started producing limited volumes of our second-generation electrolyte and will increase production volumes based on external and internal demand.

Our second-generation electrolyte has demonstrated improved performance characteristics compared to our first-generation electrolyte, especially with respect to ionic conductivity.

Better ionic conductivity can improve charge rates and cell performance.

We are continuously working to improve the performance and anticipated cost of our electrolyte materials and to develop new materials.

Increase lithium sulfide production .

We currently take a multi-pronged approach to secure the Li2S needed to make our electrolyte.

We are constructing a new electrolyte research and development lab and are producing limited volumes of our second-generation electrolyte to improve performance, manufacturability, and cost.

Supply chain improvements.

We currently source Li2S from leading lithium and chemical companies globally.

While we expect Li2S production to increase significantly with commercialization of sulfide-based cells, we are also developing a low-cost Li2S production method to address potential supply chain risks.

Cell Development

As we continue to develop our cell technology, we are focused on the following:

Drive cell performance improvements to meet OEM specifications .

We have worked closely with each of our partners to develop a roadmap to meet their ultimate commercial performance targets.

While we believe our roadmaps are achievable, we will need to continue to improve our overall cell performance, including energy density, pressure, cycle life, low temperature performance, and safety.

We recently began safety testing of our 20 Ah cells.

The results of certain safety tests were inconsistent with the results from the same tests on our 2 Ah cells.

A key objective for 2023 is to develop solutions to match the results of the 2 Ah cells with our 20 Ah cells.

As we work to formally enter automotive qualification with our EV cell, we will continue to refine our cell designs and manufacturing processes to improve the performance of our cells.

Refine manufacturing techniques .

As we moved from producing 2 Ah cells to the larger 20 Ah cells, our manufacturing yields were lower than we anticipated.

We have implemented cell design improvements that better match the manufacturing capabilities of our pilot lines, which we expect will result in continued yield improvements.

Invest in next-gen battery cell innovations .

In January 2023, we were awarded a $5.6 million research grant from the U.S.

Department of Energy ARPA-E group to continue our development of nickel- and cobalt-free battery cells.

This generation of cells, which is enabled by our electrolyte technology, could completely remove nickel and cobalt from the cathode, which can represent up to 90% of current cathode costs.

Our research and development teams also are working on lithium metal cells and a cell that is anode free.

However, we are also developing our own production abilities to address potential supply risks and potentially lower costs.

Our first generation EV cells are multi-layered stacked pouch designs made with a nickel, magnesium, and cobalt (NMC) cathode, a silicon-based anode, and our electrolyte as a separator.

We believe the cell advances we are making in solid-state electrolyte technology will improve EV manufacturability and performance.

As we continue to develop our cell technology, our focus is on the following:

Driving incremental performance improvement to meet OEM specifications.

We have worked closely with each of our partners to develop a cell roadmap to meet their ultimate commercial performance targets.

To hit those targets we need to continue to make improvements in cell performance.

In 2023, we delivered our first A1 cells and made improvements in energy density, pressure, cycle life, low temperature performance, and other metrics.

As we have scaled our cells up to the EV cell size, our safety performance has been varied, with a small number of cells going into thermal runaway in a controlled environment.

A key objective for 2024 is to further improve cell performance across the board to meet the more demanding targets in the A2 and A3 cells.

We have shifted our primary focus to our A2 cells, which incorporate planned designs and material modifications that we expect will improve overall cell performance, including safety.

Continue to invest in next-gen battery cell innovations.

Our research and development teams are working on second generation lithium metal and anode free cells.

Our focus on development of a third generation nickel- and cobalt-free battery cell could remove these costly and difficult to obtain materials from batteries.

Each of these technologies are significantly earlier in development than our current EV cell.

2023 Highlights

During 2023, we significantly enhanced electrolyte production capabilities, achieved major milestones for our cell development, increased collaboration with our global partners, and identified strategic priorities that we believe will form the basis for our 2024 goals.

Specifically, our key highlights for 2023 included:

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| 2023 Form 10-K | 8

Advances in electrolyte production and path to market.

We began producing electrolyte powder from our SP2 electrolyte production facility in April 2023.

By the end of the year, we had qualified SP2 electrolyte for use in our EV cells, utilized it in the manufacturing of our A1 EV cells, phased out SP1 electrolyte production, and ramped electrolyte production volumes at SP2.

Having demonstrated our ability to produce electrolyte at this scale, we sampled SP2 electrolyte to multiple new potential customers, partners and industry leaders.

These samples have yielded positive feedback.

We believe improved production capabilities and continued robust customer sampling will drive commercialization of our electrolyte.

Significant cell development progress.

In late 2023, we made our first A1 EV cell deliveries to BMW to formally enter automotive qualification.

The achievement of this milestone was preceded by improved manufacturing yields and consistency which enabled us to more efficiently begin large-scale production.

Increased collaboration with BMW.

After expanding our relationship with BMW in late 2022, Solid Power and BMW employees worked side-by-side developing our solid-state technology.

These efforts drove our ability to deliver A1 Sample cells to BMW in late 2023.

Delivering A1 Sample cells to BMW was a key step for BMW’s demo car program, which seeks to power a full-sized BMW EV using our EV cells.

During 2024, we intend to work closely with BMW to demonstrate that our A2 EV cell meets BMW’s requirements for its demo car program.

New Leadership.

During 2023, we appointed John Van Scoter as our new President and Chief Executive Officer and transitioned the Board chairperson responsibilities to John Stephens after the retirement of our previous Chief Executive Officer and Chairperson of the Board, David Jansen.

The Path to Automotive Qualification

Our cell technology must meet demanding OEM standards before they can be incorporated into EVs.

Our plan follows a staged product development approach guided by APQP.

The following table highlights the stages and standards we believe will need to be met for our technology to be integrated into EVs:

Our cell technology must meet demanding OEM standards before incorporation into EVs.

Our plan follows a multi-staged product development approach guided by APQP, with definitions of each stage uniquely defined by our OEM partners.

The following table highlights the general high-level stages and standards we believe will need to be met for our technology to be integrated into EVs:

Solid Power Cell Format

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Supply customer at requested volumes.

We are currently producing Pre-A sample 20 Ah and EV cells.

We are focused on demonstrating that our Pre-A sample cells will meet our partner’s basic requirements for vehicle integration.

A major 2023 goal is to produce EV cells to formally enter A-sample testing.

Once we formally begin the automotive qualification process with an A-sample, we expect to work closely with our partners to refine our cell designs to meet their performance requirements.

We anticipate that we will need to produce multiple A-sample variations before finalizing the design and progressing to B-sample.

One or more of our partners may elect to produce their own B-sample cells to customize the cells for their specific needs or to have more supply chain control.

After we enter A-sample, we intend to work with each of our partners to determine the preferred approach for B-sample production.

Due to the requirement that C-sample and D-sample cells are produced on production equipment rather than pilot equipment, we intend to partner with OEMs and/or top tier cell manufacturers for this stage of development rather than produce C-sample or D-sample cells at our facilities.

Since we do not contemplate becoming a mass commercial cell producer, one of our key goals is to establish and expand partnerships with OEMs and cell manufacturers.

Our joint development agreements with BMW, Ford, and SK On are non-exclusive.

This allows us the ability to pursue additional relationships with other OEMs or cell manufacturers.

We intend to focus on establishing and expanding our partnership relationships with additional OEMs and cell manufacturers through both our cell designs and electrolyte material.

The ultimate commercial success of our partnership relationships is subject to various risks and uncertainties.

For more information, see “Risk Factors — Risks Related to Development and Commercialization.” The following sets forth the material terms of our JDAs with each of BMW, Ford, and SK On.

During 2023 we reached a major goal of delivering A1 EV cells to BMW, marking the formal entry into automotive qualification.

We now expect to work closely with our partners to incrementally improve our cell performance to meet requirements.

We anticipate that we will need to produce and test multiple A-sample variations before finalizing the design and progressing to B-sample.

One or more of our partners may decide to produce their own B-sample cells.

We intend to work with each of our partners to determine the preferred approach for B-sample production.

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| 2023 Form 10-K | 9

Due to the requirement that C-sample and D-sample cells are produced on production equipment rather than pilot equipment, we intend to partner with OEMs or top tier cell manufacturers for this stage of development rather than produce C-sample or D-sample cells ourselves.

Since we do not contemplate becoming a commercial cell manufacturer, one of our key goals is to establish and expand partnerships with OEMs and cell producers.

Our JDAs with BMW, Ford, and SK On are non-exclusive allowing us to pursue additional OEM or cell manufacturer relationships.

The following sets forth the material terms of our JDAs with each of BMW, Ford, and SK On.

We have a long-standing relationship with BMW, which began in 2016.

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In 2021, BMW and Solid Power expanded the partnership with BMW Holding’s participation in the Series B Financing and with the execution of a JDA for EV cells for testing and vehicle integration with BMW.

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| 2022 Form 10-K | 10

Generally, the JDA with BMW sets out the framework for collaboration on the research and development and vehicle integration of solid-state battery cells.

The JDA requires us to continue our research and development efforts such that our products are capable of being deployed in BMW’s EVs.

Though our anticipated timing for achievement of the various milestones and development targets continues to evolve under the JDA, we are currently targeting delivery of EV cells to BMW in 2023.

Additionally, the terms of the JDA permit BMW to share in certain intellectual property developed through the research and development efforts required under the JDA.

The JDA with BMW sets out the collaborative framework for research and development and vehicle integration of solid-state battery cells.

The JDA requires us to continue our research and development efforts towards deployment in BMW’s EVs.

Though our anticipated timing of milestones and development targets continues to evolve under the JDA, we are currently targeting delivery of A2 EV cells to BMW in 2024.

Additionally, the terms of the JDA permit BMW to share in certain intellectual property developed through these research and development efforts.

Solid Power’s ability to share developments gained through the course of performance of the JDA with its other partners is limited in certain circumstances.

The JDA also contemplates that we will enter into additional agreements with BMW for purchase and pricing of electrolyte materials for integration into cell designs, as well as licensing our cell technology to cell producers.

However, the key commercial terms of such additional arrangements have not yet been determined.

During 2022, we amended our JDA with BMW to provide BMW with a research and development-only license to certain of our intellectual property relating to cell manufacturing.

The license allows, among other things, for BMW to install a solid-state prototype cell manufacturing line based upon our proprietary information.

In consideration of the license and additional development activities under the JDA, BMW agreed to pay us $20 million between December 2022 and June 2024, subject to our achieving certain milestones.

Under the amended JDA, and prior to the installation of BMW’s anticipated prototype cell manufacturing line, we expect to engage with BMW in joint development and manufacturing activities at our facilities.

The JDA also contemplates entering additional agreements with BMW for purchase and pricing of electrolyte materials, integration into cell designs, as well as licensing our cell technology to cell producers.

The key commercial terms of such additional arrangements have not yet been determined.

During 2022, we amended our JDA to provide BMW with a research and development-only license to certain of our intellectual property relating to cell manufacturing.

The license allows for BMW to install a solid-state prototype cell manufacturing line based upon our proprietary information and BMW agreed to pay us $20 million between December 2022 and June 2024, subject to our achieving certain milestones.

During 2023, we engaged with BMW in joint development and manufacturing activities at our facilities.

Under the terms of the amended JDA, any intellectual property developed jointly by BMW and Solid Power at our facilities will be solely owned by us.

Finally, we expect to negotiate a non-exclusive short-term electrolyte supply agreement allowing us to supply BMW with our electrolyte material for use in BMW’s cell manufacturing, which is expected to commence in 2024 following commissioning of BMW’s prototype cell manufacturing line.

We expect to negotiate a non-exclusive electrolyte supply agreement to supply BMW with our electrolyte material following commissioning of BMW’s prototype cell manufacturing line.

Pursuant to the BMW Nomination Agreement, BMW Holding has the right to nominate a director for election to our Board.

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Ford Motor Company

We started our relationship with Ford in 2018, when it participated in our Series A-1 equity financing by providing both business plan validation and capital.

We started our relationship with Ford in 2018, when it participated in our Series A-1 equity financing.

In 2019, we announced an investment by Ford and partnership to jointly develop solid-state battery cells using our pilot production line.

In 2021, we expanded our partnership with Ford’s participation in the Series B Financing and the execution of a JDA relating to testing and vehicle integration of our EV cells.

Generally, the JDA with Ford sets out the framework for the collaboration on the research and development of our cells.

The JDA requires us to continue our research and development efforts such that our products are capable of being deployed in Ford’s EVs.

In 2023, we amended our JDA with Ford to extend the expiration date to December 31, 2024 and to revise our cell and electrolyte delivery obligations.

The JDA with Ford sets out the framework for the collaboration on the research and development of our cells.

The JDA requires us to continue our research and development efforts towards deployment in Ford’s EVs.

Though our anticipated timing for achievement of the various milestones and development targets continues to evolve under the JDA, we are currently targeting delivery of EV cells to Ford in 2024.

Additionally, the terms of the JDA permit Ford to share in the intellectual property developed through the research and development efforts required under the JDA.

Additionally, the terms of the JDA permit Ford to share in certain intellectual property developed through these research and development efforts.

Solid Power’s ability to share developments gained through the course of performance of the JDA with its other partners is limited in certain circumstances.

The JDA also contemplates that we will enter into additional agreements with Ford for purchase and pricing of electrolyte materials for integration into cell designs, as well as licensing our cell technology to cell producers.

However, the key commercial terms of such additional arrangements have not yet been determined.

In October 2021, we entered into a non-exclusive JDA with SK On for joint production of our EV cells and, contemporaneously, and in connection with the closing of the business combination, SK On invested $30 million in our company.

The JDA contemplates that SK On and Solid Power will collaborate to validate that Solid Power’s cell designs and production processes are scalable and compatible with existing lithium-ion production technology to enable us to deliver pre-commercial cells to our OEM customers as part of the APQP process.

Under the terms of the JDA, we expected that Solid Power would produce B-sample EV cells in 2023 at our headquarters in Louisville, Colorado and SK On would be capable of producing the Solid Power-designed C-sample EV cells in 2024 at its facilities, each as part of the APQP process.

However, due to the pace of development by both parties and delayed planned market adoption of

The JDA also contemplates entering into additional agreements with

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solid-state batteries in general, we do not currently expect to meet those target dates.

Ford for purchase and pricing of electrolyte materials, integration into cell designs, as well as licensing our cell technology to cell producers.

The key commercial terms of such additional arrangements have not yet been determined.

In October 2021, we entered into a non-exclusive JDA with battery manufacturer SK On for joint production of our EV cells.

In connection with the closing of the business combination, SK On invested $30 million into our company.

The JDA contemplates that SK On and Solid Power will collaborate to validate Solid Power’s cell designs and production processes are scalable and compatible with existing lithium-ion production technology, enabling us to deliver pre-commercial cells to our OEM customers.

However, due to the pace of development by both parties and delayed planned market adoption of solid-state batteries in general, we will not meet those target dates.

We are working collectively with SK On in connection with a revised development roadmap and associated expected timing.

The terms of the JDA permit SK On to share in the intellectual property developed through the joint production efforts required under the JDA.

The JDA also contemplates that Solid Power and SK On will, upon the fulfillment of certain milestones under the JDA, negotiate a commercial agreement, which agreement is expected to cover terms and conditions for the sale of our electrolyte materials and licensing terms for our cell designs, manufacturing techniques, and production practices.

We intend to negotiate the commercialization agreement simultaneously with fulfilling our obligations under the JDA for cell production.

The JDA also contemplates that Solid Power and SK On will, upon the fulfillment of certain milestones, negotiate a commercial agreement, which is expected to cover terms and conditions for the sale of our electrolyte materials and licensing terms for our cell designs, manufacturing techniques, and production practices.

In January 2024, we entered into expanded agreements with SK On to include a research and development license, a line installation arrangement, and an electrolyte supply agreement.

Under the research and development license, SK On will license Solid Power’s cell designs and manufacturing processes in exchange for payments totaling $20 million from 2024 to 2027, upon achievement of milestones.

The license limits SK On to research and development activities and may not be used for commercial cell production.

The line installation arrangement provides that Solid Power will design, procure, and install a new cell manufacturing line at one of SK On’s Korea facilities in exchange for an estimated $22 million, upon achievement of milestones.

SK On has also agreed to purchase Solid Power’s electrolyte for use on its new line in Korea through Solid Power’s first-of-its-kind electrolyte supply agreement.

Initially, under the electrolyte supply agreement, SK On will purchase electrolyte to validate its new solid-state line.

After validation, SK On is required to purchase at least eight metric tons of electrolyte from Solid Power through 2030, which it will use in advancing its cell technologies.

Depending on volumes, Solid Power expects to receive at least $10 million from these electrolyte sales.

Manufacturing and Supply

We have designed our manufacturing processes to use much of the same equipment currently used in production of conventional lithium-ion battery cells.

Since inception, manufacturability has been fundamental to our strategy.

This drove the selection of a sulfide-based solid electrolyte solution and our subsequent research and development.

We believe that using industry standard production processes and equipment reduces commercialization risk and can allow for rapid deployment of technology among early adopters.

We have designed our manufacturing processes to use much of the same equipment currently used in conventional lithium-ion battery cell production.

We believe using industry standard production processes and equipment reduces commercialization risk and allows for a more rapid and broad deployment of our technology.

Our electrolyte is made from abundant materials produced at industrial scale in multiple geographical locations, except for the Li2S precursor material.

Since we anticipate our need for Li2S to significantly increase upon commercialization of sulfide-based cells, we are taking a two-pronged approach to secure the necessary supply of Li2S:

sourcing from multiple global entities and working to develop processes to produce material in-house using novel production methods.

Our cell design is a multi-layered stacked pouch cell, which we manufacture ourselves.

We also manufacture our cathode and anode using materials sourced from external suppliers.

Since we anticipate our Li2S need to significantly increase upon commercialization, we are taking a two-pronged approach to secure supply:

sourcing from multiple global entities as well as working to develop in-house processes to produce material.

We currently manufacture all of our cell designs ourselves, including our cathodes and anodes, using materials sourced from external suppliers.

We source other input materials from both industry leading and emerging suppliers.

Our two pilot production lines have successfully produced prototype cells in 0.2 Ah, 2 Ah, 20 Ah, and EV cell form factors.

Our two pilot production lines have successfully produced prototype cells in various sizes.

Intellectual Property

Our proprietary battery material and cell technology is protected through a combination of patents, patent applications, and trade secrets.

Our patent portfolio includes technologies invented by us, in addition to exclusive licenses obtained from the University of Colorado Boulder and Oak Ridge National Laboratory.

Our patent portfolio includes technologies we invented, in addition to exclusive licenses obtained from the University of Colorado Boulder and Oak Ridge National Laboratory.

Solid electrolyte materials and methods of production make up the largest portion of our patent application filings.

Additional subjects include electrode and cell designs, cell processing methods, and electrolyte precursor methods, among others.

We accelerated our patent application filings in 2022 and are continuing that acceleration in 2023.

We regularly file new applications in areas that are enforceable and/or reverse-engineerable.

Processes for manufacturing sulfide-based solid electrolyte materials and solid-state cells make up the majority of our trade secrets.

As of February 1, 2023, we owned or exclusively licensed 13 issued United States patents and 38 pending United States patent applications, 48 non-United States and PCT patents and applications, and two registered United States trademarks.

We further protect our intellectual property with non-disclosure agreements for all employees and consultants and material transfer agreements and non-disclosure agreements with third parties.

Performance improvements in next-generation battery and EV technologies will contribute to global adoption of EVs.

This trend has heightened competition in the industry and increased the risk of potential new entrants, which could negatively impact the success of our business, results of operations or financial condition.

We compete directly with both established and emerging EV battery cell producers and materials suppliers.

As we get closer to start-of-production for the next generation of EVs, new and emerging battery technologies could create impediments to our commercial success.

Nonetheless, we believe we are well-positioned across the battery cell technology value chain, including material and cell development, production techniques, and our business model.

Our prospective competitors include major OEMs and top tier battery producers currently supplying, producing and developing batteries for EVs.

A number of mature and development-stage companies are seeking to improve conventional lithium-ion battery cells or to develop new technologies for solid-state battery cells and cell components.

Some of these companies have established relationships with OEMs and are in varying stages of development.

We accelerated our patent application filings in recent years and are continuing that acceleration in 2024.

We regularly file new applications in areas that are enforceable or reverse-engineerable.

Processes for

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We believe our ability to compete successfully with traditional lithium-ion battery cell technology and with other companies seeking to develop solid-state battery cells will depend on several factors, including electrolyte performance and cost, safety, energy density, and battery life, and on non-technical factors such as brand, established customer relationships and financial and manufacturing resources.

We believe our close working relationships with Ford, BMW, and SK On can expedite our research and development process relative to our competitors by creating a constant feedback loop allowing for more rapid and intelligent iterations.

manufacturing sulfide-based solid electrolyte materials and solid-state cells make up the majority of our trade secrets.

As of February 1, 2024, we owned or exclusively licensed 14 issued United States patents, 64 pending United States patent applications, 85 non-United States and PCT patents and applications, 2 registered United States trademarks, 2 pending United States trademarks, and 8 registered or pending non-United States trademarks.

We further protect our intellectual property with non-disclosure agreements for all employees, consultants, and other third parties, material transfer agreements, and license agreements.

Performance improvements in next-generation battery and EV technology will contribute to global adoption of EVs.

This trend has heightened competition and brought new entrants into the industry.

We compete directly with both established and emerging EV battery cell producers and materials suppliers.

We believe we are well-positioned across the battery cell technology value chain, including material and cell development, production techniques, and our business model.

Our prospective competitors include major OEMs and top tier battery producers currently providing and developing batteries for EVs.

A number of mature and development-stage companies are seeking to improve conventional lithium-ion battery cells or to develop new technologies for battery cells.

Some of these companies have established relationships with OEMs and are in varying stages of development.

We believe our ability to compete successfully with both traditional lithium-ion and new battery technology will depend on several factors, including electrolyte performance and cost, safety, energy density, and battery life, and on non-technical factors such as brand, established customer and partner relationships, and financial and manufacturing resources.

We believe our close working relationships with BMW, Ford, and SK On can expedite our research and development process relative to our competitors by creating a constant feedback loop allowing for rapid and intelligent iterations.

Government Regulation and Compliance

Government regulations frequently control how battery cells and their components are stored, transported, used and disposed of.

We are subject to regulations governing the proper handling, storage, disposal and transportation of products containing hazardous materials, including federal regulations governing transport of battery cells and state laws relating to recycling and disposal of battery cells.

We are subject to federal and state environmental laws and regulations regarding the handling and disposal of hazardous substances and solid waste.

These laws regulate the generation, storage, treatment, transportation, and disposal of solid and hazardous waste and may impose strict, joint and several liability for the investigation and remediation of areas where hazardous substances may have been released or disposed.

We are subject to substantial regulation in the United Staes and abroad, including international, federal, state, and local laws which may vary from country to country and are subject to change.

Government regulations frequently control how battery cells and their components are stored, transported, used and disposed of through environmental laws and regulations regarding hazardous substances and solid waste.

These laws may impose strict, joint, and several liability for the investigation and remediation of areas where hazardous substances may have been released or disposed.

In the course of ordinary operations, we, through third parties and contractors, may handle hazardous substances within the meaning of the Comprehensive Environmental Response, Compensation, and Liability Act and similar state statutes and, as a result, may be jointly and severally liable for all or part of the costs required to clean up sites at which these hazardous substances have been released into the environment.

We are also subject to the strict requirements of the Resource Conservation and Recovery Act and comparable state statutes for the generation or disposal of solid waste, which may include hazardous waste.

We believe that we are in material compliance with applicable environmental laws and regulations.

The cost of compliance with such laws and regulations has not had a material adverse effect on our capital expenditures, earnings, or competitive position and is not anticipated to have a material adverse effect in the future.

However, we cannot guarantee that we are in full compliance with all environmental laws and regulations or that we will be able to comply with any future requirements or changes in such laws and regulations without significant costs.

OSHA and comparable laws in other jurisdictions regulate the protection of the health and safety of workers.

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Such laws may include the export administration regulations and similar export control regimes, trade and economic sanctions maintained by the Office of Foreign Asset Control and other similar agencies, foreign direct investment rules and regulations, tariffs and quotas, and other related regulations in jurisdictions in which we operate.

In particular, an export license may be required to export or re-export our products and technology to certain countries or end-users or for certain end-uses or may be prohibited.

Obtaining the necessary export license for a particular sale or offering may not be possible or may be time-consuming and may result in the delay or loss of sales opportunities.

Any failure to adequately address these legal obligations could result in civil fines or suspension or loss of our export privileges, any of which could materially adversely affect our business, financial condition, and results of operations.

In addition, our business may be subject to the Foreign Corrupt Practices Act and other anti-corruption, anti-bribery, and anti-money laundering laws and regulations in the jurisdictions in which we have offices or do business, both domestic and abroad.

In particular, an export license may be required to export or re-export our products and technology to certain countries or end-users or for certain end-uses or such export, re-export, or end uses may be prohibited.

Solid Power, Inc.

| 2023 Form 10-K | 12

In addition, we are subject to the FCPA and other anti-corruption, anti-bribery, and anti-money laundering laws and regulations in the jurisdictions in which we have offices or do business, both domestic and abroad.

Any failure to adequately comply with any of these obligations, or future changes with respect to any of these legal regimes, could cause us to incur significant costs, including the potential for new overhead costs, fines, sanctions, and third-party claims.

Human Capital

As of February 1, 2023, we employed 236 full-time employees, based out of our facilities in Louisville, Colorado and Thornton, Colorado.

This represents a growth of over 100 employees in the past year.

As of February 1, 2024, we employed over 270 full-time employees, primarily based out of our facilities in Louisville, Colorado and Thornton, Colorado.

This represents growth of 40 employees in the past year.

Many of our employees have a technical background or hold advanced engineering and scientific degrees.

We are committed to increasing diversity in the workforce and we believe building and maintaining an inclusive and positive culture is important for our success.

We are committed to increasing diversity in the workforce and we believe building and maintaining an inclusive and equitable culture is important for our success.

We are committed to compensating our employees in a competitive manner.

We have taken steps to comply with Colorado’s Equal Pay for Equal Work Act.

We offer competitive salaries and benefits, as well as a robust equity compensation plan, all with the intention of attracting and retaining team members capable of making our company a world leader in electrolyte production and solid-state battery development.

We offer competitive salaries and benefits, as well as a robust equity compensation plan, all with the intention of attracting and retaining team members capable of making our company a world leader in solid-state electrolyte production and battery development.

Our compensation decisions are driven by individual contributions, the overall market, and how critical the role is to our success.

Solid Power, Inc.

| 2022 Form 10-K | 13

To date, we have not experienced any work stoppages and we consider our relationship with our employees to be good.

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Chief Technology Officer

Interim Chief Executive Officer, President, Chairman of the Board, and Class III Director

Derek Johnson

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Chief Financial Officer and Treasurer

John Van Scoter

President, Chief Executive Officer, and Director

Joshua Buettner-Garrett serves as our Chief Technology Officer.

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in Mechanical Engineering from Colorado State University.

David Jansen serves as our Interim Chief Executive Officer, President, Chair and a Class III Director of Solid Power.

He served as Legacy Solid Power’s President since February 2017 and was an advisor to the company since its inception.

He was a member of Legacy Solid Power’s board of directors since March 2014.

Jansen previously served as a Managing Partner of Murphee Colorado, a small business venture capital fund, from 2002 to 2010.

From 2005 to 2009, he served as the President and Chief Executive Officer of Advanced Distributed Sensor Systems, which developed and manufactured remote sensors for intelligence, surveillance and reconnaissance applications.

He has also served on a variety of boards and has been involved with helping startups from formation to exit.

Jansen has a B.S.

in Electrical Engineering from the University of Arizona.

Derek Johnson serves as our Chief Operating Officer.

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Johnson has published 16 peer reviewed publications and holds 38 patents.

Solid Power, Inc.

| 2023 Form 10-K | 13

James Liebscher serves as our Chief Legal Officer and Secretary.

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Prior to joining Legacy Solid Power, Mr.

Paprzycki served as Chief Financial Officer, Treasurer and

Solid Power, Inc.

| 2022 Form 10-K | 14

Corporate Secretary (Principal Financial Officer and Chief Accounting Officer) of Scott’s Liquid Gold-Inc.

Paprzycki served as Chief Financial Officer, Treasurer and Corporate Secretary (Principal Financial Officer and Chief Accounting Officer) of Scott’s Liquid Gold-Inc.

(SLGD) since June 2018, a member of its board of directors since 2019, and began serving as interim co-President in April 2021.

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Subsequent to his employment with the Westmoreland entities, on October 9, 2018, both Westmoreland entities filed voluntary petitions in the United States Bankruptcy Court for the Southern District of Texas seeking relief under the provisions of Chapter 11 of Title 11 of the United States Code.

John Van Scoter serves as our President, Chief Executive Officer, and Director.

He has served as our Chief Executive Officer, President and as a Class I Director since June 2023.

Prior to joining Solid Power, Mr.

Van Scoter served as Vice President, General Manager Products at SRI International Inc., an independent nonprofit research institute, from 2019 until June 2023.

Prior to joining SRI, Mr.

Van Scoter was the CEO, President and Chairman of eSolar, Inc., an early-stage solar power plant technology company, from 2010 until 2018.

Prior to eSolar, he held multiple leadership positions over an almost 30-year career with Texas Instruments Incorporated (Nasdaq:

TXN), including as Senior Vice President, Alternative Energy Strategy and Senior Vice President, General Manager of DLP® Products Division.

Van Scoter served on the board of directors of TE Connectivity Ltd.

(NYSE:TEL) from 2008 until 2018.

Van Scoter holds a B.S.

in Mechanical Engineering from the University of Vermont.

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What changed 10-K

Item 1. Business