Microvast Warns Cash Won't Cover Debts as Q3 Revenue Falls 63%

Microvast reported third-quarter revenue of $45.8 million, down 62.8% from $123.3 million a year earlier, and warned its cash will not cover obligations over the next 12 months without new financing, refinancing or deeper cost cuts. Usable cash across all entities stood at roughly $71.3 million at the end of October. Total debt was $177.0 million.

The Houston-based battery maker for commercial vehicles posted the weakest quarter in seven periods of SEC-derived data tracked by MLQ. Revenue fell from $87.3 million in the second quarter. Sales volume dropped 62.2% to about 189.6 MWh from 501.7 MWh.

Why did revenue collapse?

Several long-standing customers in Europe and Asia-Pacific cut orders amid weaker demand for heavy-duty trucks, port equipment and mining machinery. U.S. sales also fell. The company said its largest customer pulled purchases into 2025 ahead of tariff changes.

One significant European customer was recently acquired, adding uncertainty to future orders. Microvast said it has limited visibility into revenue for the next several quarters.

What happened to margins?

Gross margin fell to 5.2% from 37.6% a year earlier and 29.5% in the second quarter. A $9.3 million write-down of obsolete inventory, mostly specialized energy-storage components, cut 20.4 percentage points from the margin. Lower volume left fixed factory costs spread over far fewer units.

Operating expenses more than doubled to $69.0 million. The figure includes $35.7 million of impairments on production lines and construction in progress in China, Germany and the United States. Operating loss reached $66.7 million against a $14.9 million profit a year earlier.

The net loss was $76.8 million, or $0.20 a share, compared with $1.5 million a year earlier. Adjusted EBITDA swung to a loss of $60.8 million from a profit of $21.9 million.

How serious is the debt problem?

Microvast held $124.4 million of cash and restricted cash at Sept. 30, of which $84.8 million was unrestricted. But cash held in China and Europe cannot currently be moved to fund U.S. operations, leaving about $71.3 million usable across all entities at the end of October.

Near-term obligations include:

• $41.7 million of convertible bonds due by Jan. 31, 2027
• $84.0 million of short-term bank loans at its Chinese subsidiaries

The company said a missed payment would trigger default and acceleration of substantially all its bank borrowings and bonds, plus enforcement of security over its main Chinese operating subsidiary.

Microvast had already flagged substantial doubt about its ability to continue as a going concern in its second-quarter release. It now says its plans to address that doubt cannot be deemed probable of being implemented.

What is management doing?

Chief Executive Yang Wu said: "The material decline in sales, gross margin and operating performance during the quarter have significantly constrained our liquidity." The company is focused on "reducing costs, preserving liquidity, and negotiating with our lenders in an attempt to refinance, extend or restructure our near-term debt obligations," Wu said.

Microvast gave no numeric guidance. It is cutting operating costs and the workforce in some operations and deferring capital spending. The new Huzhou Phase 3.2 line in China will run below design capacity unless volumes rise. Full construction at the Clarksville, Tennessee plant depends on new financing or partners. In August, the company had said Clarksville pack assembly was on schedule for initial operations by year-end.

What comes next?

The company's fate now rests on lender negotiations and refinancing before the January 2027 convertible bond maturity, with the Clarksville build-out and any volume recovery at Huzhou contingent on securing fresh capital.