Executive Summary / Key Takeaways

• Elong Power is strategically pivoting towards the rapidly expanding energy storage systems (ESS) market, leveraging its proprietary fast-charging and long-lifespan lithium-ion battery technologies, which offer significant efficiency and safety advantages.
• The company faces severe financial distress, reporting a net loss of $30.11 million in 2024 on significantly reduced revenue of $0.40 million, alongside a working capital deficit of $9.90 million and a shareholders' deficit of $16.50 million, raising substantial doubt about its ability to continue as a going concern.
• Technological differentiation in ultra-fast charging (80% in 9-30 minutes) and advanced liquid-cooled ESS with over 10,000 cycles provides a competitive moat, supported by ongoing R&D in new materials and solid-state battery systems.
• Significant risks include potential Nasdaq delisting due to non-compliance with market value and bid price rules, an untimely Form 20-F filing, substantial litigation exposure, and the inherent uncertainties of operating in China.
• Elong Power's future hinges on the successful execution of its ESS expansion strategy, securing additional equity investment in 2025, and realizing substantial revenue from delayed orders and planned production capacity increases.

The Energy Transition's Powerhouse in Flux

Elong Power Holding Limited, a Cayman Islands-incorporated entity operating primarily through its subsidiaries in China, stands at a critical juncture in the global energy transition. Established in 2014 as Huizhou City Yipeng Energy Technology Co., Ltd., the company has built a foundation in the research, development, production, sales, and service of high-power lithium-ion batteries. These batteries are specifically designed for demanding applications in commercial electric vehicles and specialty vehicles, as well as large-capacity energy storage systems (ESS).

The company's strategic focus is now undergoing a significant pivot towards the burgeoning ESS market, a move driven by the increasing global demand for renewable energy integration and grid stability. This strategic shift aims to capitalize on broad industry trends, including a projected increase in global electric vehicle battery demand to 5.3 TWh by 2035 and an electrochemical ESS market expected to grow from $14.20 billion in 2022 to $130.40 billion in 2027, representing a compound annual growth rate of 56.70%.

Technological Edge: Fueling the Future of Power

Elong Power's core investment thesis is deeply rooted in its differentiated battery technology and vertical integration capabilities. The company has consistently pushed the boundaries of fast-charging technology, evolving from 1-2C fast charging batteries in 2014 to 6C fast charging batteries by 2020, placing it at the industry's forefront.

For its power battery products, Elong Power offers solutions capable of charging 80% in as little as 9 to 30 minutes, a significant efficiency advantage over many commonly used battery systems. The latest ultra-high power versions boast energy densities of up to 300 Wh/l and 100 Wh/kg. Furthermore, these batteries are designed for exceptional longevity, offering lifespans of up to 30,000 charging/discharging cycles, which can match the lifespan of the commercial vehicles they power, thereby reducing the total cost of ownership for customers.

In the energy storage sector, Elong Power leverages its mature Battery Management System (BMS), Energy Management System (EMS), and PACK technologies, primarily utilizing lithium iron phosphate materials known for their higher ignition point and enhanced safety. Its new generation of liquid-cooled smart energy storage products features large-capacity 315Ah battery cells with over 10,000 cycles, which is projected to reduce electricity costs by approximately 30% over the equipment's lifecycle. These systems achieve an energy density of 290 kWh/m² for individual containers and incorporate intelligent temperature control that maintains cell temperature differences within 3°C, extending system life by over 20% and reducing energy consumption by about 20%. The modular liquid cooling design also significantly reduces total floor area by approximately 50%, cutting civil engineering and cable costs.

Elong Power's research and development initiatives are crucial to maintaining this technological edge. The company is actively exploring new materials like sodium ion battery materials and lithium iron manganese phosphate, alongside high-energy density silicon carbon negative electrode materials and low-temperature long-cycle electrolytes. A dedicated technology center focuses on material development, battery safety (including research into solid-state electrolyte systems), new application development (such as 40°C ultra-low temperature batteries), and process automation to enhance production efficiency and reduce costs. This comprehensive approach to innovation and vertical integration, from core battery chemistry to power control electronic devices, strengthens the company's competitive moat by enabling flexible supply chain management, faster new technology development, and superior quality and cost control.

A Challenging Financial Landscape: The Cost of Transformation

Despite its technological prowess and strategic pivot, Elong Power's financial performance in 2024 reflects significant operational headwinds and the substantial costs associated with its business transformation. For the year ended December 31, 2024, the company reported a dramatic 87.50% decrease in revenue to $0.40 million, primarily driven by an 89.60% decline in battery pack and cell sales volume. This sharp decline was attributed to product upgrades, production line modifications, a strategic redirection of resources towards the energy storage business, and time dedicated to the reverse merger transactions.

The company incurred a net loss of $30.11 million in 2024, a substantial increase from the $7.45 million net loss in 2023. Gross loss for 2024 stood at $3.46 million. Even after accounting for $2.59 million in idle capacity costs, the underlying operational profitability from core product sales remained deeply negative, indicating significant challenges in its manufacturing and sales efficiency. General and administrative expenses surged to $13.01 million in 2024, largely due to $10.30 million in professional fees related to the Business Combination.

Elong Power's liquidity position is precarious, with a working capital deficit of $9.90 million, a shareholders' deficit of $16.50 million, and an accumulated deficit of $68.90 million as of December 31, 2024. These factors raise substantial doubt about the company's ability to continue as a going concern. While financing activities provided $10.60 million in cash in 2024, including $7.00 million from PIPE financing, the company's ability to fund future operations and planned expansions remains highly dependent on securing additional equity investment in 2025 and the successful execution of its strategic initiatives.

Competitive Arena: Battling Giants with Specialized Solutions

The market for high-power lithium-ion batteries and energy storage systems is intensely competitive, characterized by rapid technological changes and evolving industry standards. Elong Power faces formidable competition from global giants such as CATL (300750.SZ), BYD (BYDDY), Panasonic (PCRFY), and LG Energy Solution (LGESF), many of whom possess significantly greater financial, personnel, technical, and manufacturing resources. These larger competitors can often respond more quickly to market opportunities and new technologies, and are actively developing alternative battery chemistries.

Elong Power's competitive strategy centers on its specialized focus and technological advantages. Its ultra-fast charging capabilities and long-lifespan batteries for commercial and specialty vehicles offer a distinct performance edge, particularly for customers prioritizing operational efficiency and total cost of ownership. In the ESS market, its modular liquid-cooled products, with their high energy density, extended cycle life, and advanced safety features, aim to differentiate it from broader market offerings.

However, Elong Power's smaller operational scale compared to industry leaders like CATL and BYD presents a vulnerability, potentially leading to higher operating costs and lower margins. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, Elong Power's strong product features suggest it competes effectively in targeted segments. The company also faces customer concentration risks, with Customer J and Customer K accounting for 42% and 22% of accounts receivable, respectively, in 2024, and supplier concentration risks, with Supplier A representing 40% of net purchases. These concentrations highlight potential dependencies that could impact its competitive standing and financial stability.

Strategic Vision and Forward Momentum: The Path to Growth

Elong Power's strategic roadmap is firmly set on expanding its presence in the energy storage market and broadening its global reach. Management anticipates that the repositioning towards energy storage systems will lay a foundation for long-term growth. A substantial portion of new energy storage system orders, totaling RMB 2.60 million, received in 2024, is slated for production and delivery in the first half of 2025, which will contribute to future revenue recognition. Additionally, a significant energy storage equipment sales agreement valued at USD 67.61 million, initially expected for 2024, is now projected for completion in 2025.

The company plans to continue its robust investment in R&D to further enhance battery performance and reduce costs, focusing on new battery units, modules, and increasing the energy density of existing products. Operational efficiency is also a key strategic pillar, with plans to increase reliance on automated production. Expansion of manufacturing capacity is underway, with the Ganzhou factory expected to achieve an annual production capacity of 2.3 GWh of battery cells and the Zibo factory targeting 3 GWh of lithium battery PACK systems after planned expansions.

Geographic expansion is another critical component of Elong Power's strategy, with intentions to grow globally, particularly in the Southeast Asian market, the U.S., and Europe. A recent strategic cooperation agreement with Indonesia's Consumer Protection Agency in July 2025 underscores this international ambition, aiming to address electricity access and promote new energy development in the region.

Significant Headwinds: Risks on the Horizon

Despite its strategic ambitions, Elong Power faces a confluence of significant risks that could materially impact its investment thesis. The "going concern" warning in its latest financial statements highlights fundamental liquidity and profitability challenges. The company's Class A Ordinary Shares are also at risk of delisting from Nasdaq, having received notices in March 2025 for failing to meet the minimum market value of listed securities ($50 million) and minimum bid price ($1) requirements. A further notice in July 2025 cited non-compliance due to the untimely filing of its Form 20-F for the fiscal year ended December 31, 2024.

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Operational risks include identified material weaknesses in internal controls over financial reporting, specifically concerning an inexperienced accounting team, lack of IT environment controls, and inadequate inventory controls in third-party warehouses. The company is also exposed to substantial litigation, with an estimated aggregate of $5.78 million (RMB 42.20 million) in claims related to contractual disputes and product quality issues, including court orders for significant payments.

Furthermore, as a company with substantially all operations in China, Elong Power is subject to evolving and complex PRC laws and regulations, including potential government oversight and the risk of delisting under the Holding Foreign Companies Accountable Act (HFCAA) if its auditor is not subject to PCAOB inspections for two consecutive years. The dual-class share structure concentrates 82.50% of voting control with CEO Xiaodan Liu and her affiliates, limiting the influence of other Class A shareholders.

Conclusion

Elong Power Holding Limited is embarking on a transformative journey, seeking to establish itself as a leading provider in the rapidly expanding energy storage sector while maintaining its position in high-power electric vehicle batteries. Its proprietary fast-charging, long-lifespan, and advanced liquid-cooled ESS technologies represent a compelling competitive advantage, offering tangible benefits in performance, safety, and cost efficiency. The company's strategic pivot, supported by ongoing R&D and planned capacity expansions, positions it to capitalize on the global energy transition.

However, the path forward is fraught with considerable challenges. The severe financial losses, liquidity concerns, and Nasdaq compliance issues underscore the high-stakes nature of this transformation. Investors must weigh the significant potential of Elong Power's technological leadership and strategic market expansion against the immediate financial vulnerabilities, the complexities of the competitive landscape, and the inherent risks of its operational environment. The successful execution of its ESS strategy, coupled with effective remediation of its financial and governance challenges, will be paramount in determining Elong Power's long-term viability and investment appeal.