Solid Power, Inc. (SLDP)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the condensed consolidated financial statements and related notes thereto included elsewhere in this Report. The following discussion contains forward-looking statements that reflect future plans, estimates, beliefs, and expected performance. For additional discussion, see “Cautionary Note Regarding Forward-Looking Statements” above. The forward-looking statements are dependent upon events, risks, and uncertainties that may be outside of our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed elsewhere in this Report, and in “Part I, Item 1A. Risk Factors” of the 2025 Form 10-K, as such descriptions may be updated or amended in future filings we make with the SEC. Unless indicated otherwise, the following discussion and analysis of results of operations and financial condition and liquidity relates to our current continuing operations and should be read in conjunction with the consolidated financial statements and notes thereto of this Report and the 2025 Form 10-K. We do not undertake, and expressly disclaim, any obligation to publicly update any forward-looking statements, whether as a result of new information, new developments, or otherwise, except to the extent that such disclosure is required by applicable law.

Overview

Solid Power is a U.S.-based leader in solid-state battery technology and manufacturing processes. Our core technology is a sulfide-based solid electrolyte material, which replaces the liquid or gel electrolyte used in traditional lithium-ion battery cells. We believe our electrolyte technology has the potential to enable a step-change improvement in battery cell performance beyond what is currently achievable in conventional lithium-ion battery cells, including improved energy density, battery life, and safety performance. We are currently targeting the battery electric vehicle market due to the size and perceived demand for next generation battery technology but believe our technologies can have a broader application as the market matures.

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2026 Development Objectives

We made progress on our 2026 development objectives as the solid-state battery landscape continues to evolve. Below is a summary of recent progress towards our goals.

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Key Factors Affecting Operating Results

We are a research and development-stage company and have not generated cash flows through the sale of our electrolyte or licensing of our cell designs to adequately cover our costs. Our ability to commercialize our products depends on several factors that present significant opportunities but also pose material risks and challenges, including those discussed in the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” sections of this Report, which are incorporated by reference.

Prior to reaching commercialization, we must improve our products to ensure they meet the performance requirements of our customers. We also will have to negotiate commercial agreements with our customers on terms and conditions that are mutually acceptable. To satisfy anticipated demand, we will need to scale production of our electrolyte. All of these will take time, require capital, and affect our operating results. Since many factors are difficult to quantify, our actual operating results may be different than currently anticipated.

Revenue generated to date has primarily come from performance on research and development licensing agreements, line installation agreement, and government contracts. We will need to continue to deploy substantial capital to expand our production capabilities and engage in research and development programs. We also expect to continue to incur administrative expenses as a publicly traded company.

In addition to meeting our development goals, commercialization and future growth and demand for our products are highly dependent upon consumers adopting EVs. The market for new energy vehicles is still rapidly evolving due to emerging technologies, competitive pricing, government regulation and industry standards, and changing consumer demands and behaviors.

Basis of Presentation

We currently conduct our business through one operating segment and one reportable segment. As a research and development company with no commercial operations, our activities to date have been limited and were conducted primarily in the United States and the Republic of Korea. Our historical results are reported under U.S. generally accepted accounting principles and in U.S. dollars.

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Results of Operations

Comparison of the Three and Six Months Ended June 30, 2026 to the Three and Six Months Ended June 30, 2025

During the three and six months ended June 30, 2026, our capital and operational investments supported our key 2026 development objectives.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Report. The following discussion contains forward-looking statements that reflect future plans, estimates, beliefs, and expected performance. For additional discussion, see “Cautionary Note Regarding Forward-Looking Statements” above. The forward-looking statements are dependent upon events, risks, and uncertainties that may be outside of our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed elsewhere in this Report under “Part I, Item 1A. Risk Factors,” as such descriptions may be updated or amended in future filings we make with the SEC. Unless indicated otherwise, the following discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated statements and notes thereto in this Report. We do not undertake, and expressly disclaim, any obligation to publicly update any forward-looking statements, whether as a result of new information, new developments or otherwise, except to the extent that such disclosure is required by applicable law.

Overview

Solid Power is a U.S.-based leader in solid-state battery technology and manufacturing processes. Our core technology is a sulfide-based solid electrolyte material, which replaces the liquid or gel electrolyte used in traditional lithium-ion battery cells. We believe our electrolyte technology has the potential to enable a step-change improvement in battery cell performance beyond what is currently achievable in conventional lithium-ion battery cells, including improved energy density, battery life, and safety performance. We are currently targeting the EV market due to the size and perceived demand for next generation battery technology but believe our technologies can have a broader application as they mature.

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Key Factors Affecting Operating Results

We are a research and development-stage company and have not generated cash flows through the sale of our electrolyte or licensing of our cell designs to adequately cover our costs. Our ability to commercialize our products depends on several factors that present significant opportunities but also pose material risks and challenges, including those discussed in the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” sections of this Report, which are incorporated by reference.

Prior to reaching commercialization, we must improve our products to ensure they meet the performance requirements of our customers. We also will have to negotiate commercial agreements with our customers on terms and conditions that are mutually acceptable. To satisfy anticipated demand, we will need to scale production of our electrolyte. All of these will take time, require capital, and affect our operating results. Since many factors are difficult to quantify, our actual operating results may be different than currently anticipated.

Revenue generated to date has primarily come from performance on research and development licensing agreements, the line installation agreement, and government contracts. We will need to continue to deploy substantial capital to expand our production capabilities and engage in research and development programs. We also expect to continue to incur administrative expenses as a publicly traded company.

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In addition to meeting our development goals, commercialization and future growth and demand for our products are highly dependent upon consumers adopting EVs. The market for new energy vehicles is still rapidly evolving due to emerging technologies, competitive pricing, government regulation and industry standards, and changing consumer demands and behaviors.

Basis of Presentation

We currently conduct our business through one operating segment and one reportable segment. As a research and development company with no commercial operations, our activities to date have been limited and conducted primarily in the United States and the Republic of Korea. Our historical results are reported under U.S. generally accepted accounting principles (“GAAP”) and in U.S. dollars.

Results of Operations

During the year ended December 31, 2025, our capital and operational investments supported our 2025 development objectives.

Revenue and Grant Income

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Revenue recognized for the year ended December 31, 2025 consisted of performance on our non-government contracts as well as certain government contracts. Grant income recognized consisted of performance on the Assistance Agreement. Revenue and grant income increased $1.6 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily driven by the performance on our Assistance Agreement.

We recognized $15.8 million and $17.4 million of collaborative revenue for the years ended December 31, 2025 and 2024, respectively, which primarily consisted of performance on the SK On Agreements. During the year ended December 31, 2025, we completed factory acceptance testing and neared completion of site acceptance testing of the SK On Line under the line installation agreement. We have substantially completed the deliverables for site acceptance testing of the SK On Line and expect site acceptance to be complete in the first quarter of 2026.

We recognized $6.0 million and $2.7 million of government revenue for the years ended December 31, 2025 and 2024, respectively. Government revenue and government grant income consisted primarily of grant income from the Assistance Agreement. During the year ended December 31, 2025, we conducted detailed design of the continuous electrolyte production pilot line. Grant income is recognized on the non-capital costs of the project. While there can be no assurance that we will continue to receive funding under our government contracts and grants in the amounts we expect or at all, we may continue to recognize grant income as we execute on the Assistance Agreement and construct a pilot electrolyte line using a continuous manufacturing process.

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Operating Expenses

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Operating expenses decreased $2.9 million in the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to a decrease in our selling, general and administrative costs as a result of a decrease in external contractors and outside consultants.

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Direct Costs

Direct costs consisted of costs incurred to support execution of our collaborative and government agreements. Direct costs remained consistent for the year ended December 31, 2025 compared to December 31, 2024. The majority of the direct costs during the years ended December 31, 2025 and 2024 were driven by the services provided and equipment purchased by Dahae Energy Co., Ltd. (“Dahae”), a strategic partner serving as installer of the SK On Line. Direct costs during the year ended December 31, 2025 included materials and internal labor to support site acceptance testing at SK On’s facility under the line installation agreement.

We expect direct costs to continue to correlate with our recognized revenue as we complete site acceptance testing and continue to execute on the project milestones supporting construction of our continuous electrolyte production pilot line.

Research and Development

Research and development-related operating expenses largely consisted of employee compensation and employee benefit costs incurred to maintain our skilled workforce, including engineers, scientists, operators, chemists, and technicians. Total research and development costs remained consistent during the year ended December 31, 2025 compared to the same period ended December 31, 2024.

Selling, General and Administrative

Selling, general and administrative expenses were largely comprised of employee compensation and personnel related costs for our administrative functions as well as costs driven by insurance and regulatory requirements. Selling, general and administrative expenses decreased by $2.4 million in the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to a decrease in stock-based compensation expense as a result of forfeitures of unvested stock options and restricted stock units. The decrease of selling, general and administrative expenses was also driven by the decision to reduce external contractor and consultant support.

Overall, we expect operating expenses for 2026 to remain consistent with 2025 as we continue to execute on our objectives and focus on cost reduction efforts to offset overall rising costs.

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Nonoperating Income and Expense

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Nonoperating income and expense includes interest income, the non-cash impact from the change in the fair value of our warrant liabilities, and other irregular items, such as the gain or loss on asset sales and impacts from transacting in foreign currency. For the year ended December 31, 2025, nonoperating income and expense decreased $2.8 million compared to the year ended December 31, 2024 primarily due to a decrease in in

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