Microvast (NASDAQ: MVST) reported second-quarter revenue of $87.3 million, a 4.5% decline compared to the same period in 2025, driven by lower U.S. sales and a significant $2.7 million tariff refund issued to a customer.
Profitability Pressures and Financial Performance
CFO Rodney Worthen noted that the $4.1 million year-over-year revenue drop was largely impacted by the tariff refund, which was recorded as a reduction in current-period revenue. Gross profit for the quarter landed at $25.8 million, resulting in a gross margin of 29.5%, down from 34.7% in the previous year. This contraction was attributed to elevated raw-material costs and lower production utilization, which hampered fixed-cost absorption.
The company recorded a GAAP net loss of $12 million for the quarter. On an adjusted basis, the net loss reached $5.3 million, a sharp reversal from the $16.3 million profit reported a year prior. Furthermore, non-GAAP adjusted EBITDA fell to $3.6 million, down significantly from $25.9 million in Q2 2025.
Rising Operating Expenses
Operating expenses grew by 16.1% year-over-year, totaling $27.5 million. A major contributor was a 24.2% increase in general and administrative expenses, fueled by $2.6 million in additional legal and professional-service fees. Research and development spending also rose by $1.1 million (14.8%) due to expanded product development and labor costs, while selling and marketing expenses climbed 38.5% amid customer-retention initiatives.
Regional Sales and Six-Month Performance
For the first half of 2026, revenue dropped 28.8% to $60 million, primarily due to a 24.3% decrease in sales volumes—falling to 717 megawatt-hours from 947 megawatt-hours. Regionally, Europe emerged as a bright spot, with sales rising 35% in the second quarter to account for 61% of total revenue. Conversely, U.S. sales struggled under the weight of tariff-related impacts, and Asia-Pacific sales plummeted 23% during the quarter, reflecting geopolitical shifts and a preference for lower-cost products in India.
Cash Flow and Liquidity
Net cash used in operating activities reached $33.3 million for the first half of 2026, compared to $44.3 million generated in the first half of 2025. Microvast ended the quarter with $143.1 million in cash equivalents and restricted cash, after accounting for capital expenditures related to the Huzhou Phase 3.2 expansion and the acquisition of a U.S. office building.
Operational Outlook and Solid-State Innovation
CEO Yang Wu confirmed that equipment installation for the Huzhou Phase 3.2 expansion is complete, with production expected to ramp up in 2026 and eventually add 2 gigawatt-hours of annual capacity. Meanwhile, the company is making strides in its solid-state battery program, successfully testing a 17-layer monolithic stack that produced approximately 72 volts without liquid electrolyte.
Microvast’s solid-state architecture is currently focused on robotics, aiming to reduce the need for heavy electronics. Early prototypes have demonstrated promising stability, with one cell showing no signs of ignition or smoke during hot-box testing up to 200 degrees Celsius. Additionally, an all-solid-state silicon-sulfur prototype achieved a specific capacity exceeding 1,000 milliamp-hours per gram.
Looking ahead, the company prioritizes the Huzhou expansion and the start of pack-line assembly in Clarksville, Tennessee, by year-end. However, full-scale construction of the Tennessee facility remains subject to securing additional financing or strategic partnerships.
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