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By Meg Flippin, Benzinga

U Power Limited (NASDAQ: UCAR), the Chinese EV power solution company making a name for itself thanks to its advanced UOTTA technology, shared a financial update for the first half of 2024, with revenue growing 595.7% year-over-year to RMB13.2 million.

U Power attributes that growth to increased usage from existing and new customers as the economy in China continues to recover following the COVID-19 pandemic. U Power’s UOTTA technology enables consumers and fleet operators to replace dead EV batteries with fully charged ones in under five minutes. The company also offers companies a battery-swapping ecosystem from building the infrastructure to managing it.

“We've been successful in transforming our vehicle sourcing business to provide EV battery power solutions in China,” said Jia Li, Chief Executive Officer and Chairman of U Power. “We believe that this shift has enhanced our competitiveness, and we expect it to expand our future revenue growth potential."

Revenue Shifts To Product Sales

Of the RMB13.2 million in revenue U Power earned during the first half of 2024, 93.9% came from product sales. In the year-ago first half, U Power had no product revenue. U Power said that positive change was thanks to the improving economy, which enabled it to sell more battery stations. Meanwhile, sourcing services revenue of RMB0.1 million was down 0.6% year-over-year. However, U Power confirmed that was because the company focused more on its charging and swapping-related products.

Meanwhile, battery-swapping services revenue of RMB0.7 million was up year-over-year from RMB0.5 million, driven by the deployment of U Power’s second battery-swapping station, which went live in March 2023 and remains operational. As of March 2023, U Power had a vehicle sourcing network of about 100 wholesalers and 30 dealers across China’s lower-tier cities. Last year it sold and delivered six battery-swapping stations to four customers. All told it has already sold eleven battery-swapping stations.

"Our financial results for the first half of fiscal year 2024 demonstrate our commitment to responsible financial management while simultaneously making strategic investments for our future growth,” said Bingyi Zhao, Chief Financial Officer of U Power. “Our R&D expenses decreased as we have successfully completed several key projects, and we remain committed to innovation and have strategically allocated resources to new and high-potential research initiatives. Our improved credit management practices have yielded positive results, as we generated an expected gain on credit of RMB0.5 million in the first half, compared to a loss in the same period last year.” U Power ended the first half with RMB40.5 million in cash and cash equivalents, up from RMB36.2 million at the end of 2023.

Deal Making On Display

In addition to reporting record revenue in the first six months of the year, U Power inked deals that give it inroads into other geographies. Take its deal with Velo Labs Technology Ltd., the global fintech company for starters. In August, the two entered into a memorandum of understanding to establish a battery infrastructure investment ecosystem in Thailand. The idea is to create a battery bank asset and fund trading platform based on Velo’s blockchain technology. Through the platform, U Power and Velo Labs hope to attract external funding to promote the large-scale development of the battery bank industry.

A battery bank is a collection of batteries that are connected and store energy together. The collaboration’s idea is to create battery bank stations for EVs around the country where drivers quickly swap out dead batteries for new ones. The trading platform would integrate battery assets from various UOTTA battery bank scenarios, including batteries for four-wheel and two-wheel electric vehicles, batteries from various battery swap stations and batteries used in energy storage projects.

Prior to that deal, U Power signed a memorandum of understanding with Pattaya AI Terminal Co., Ltd. to jointly drive the strategic development of green logistics and electric vehicle infrastructure in Thailand.

Another key deal for U Power is its deal with UNEX, which was also inked during the first half of the year. Through the partnership, the two will provide battery-swapping vehicles and swapping station services to Associação Nacional dos Transportes Rodoviários em Automóveis Ligeiros (ANTRAL). ANTRAL is an association of companies in Portugal, representing public passenger road transport companies operating light vehicles designated as taxis. Through their collaboration, UNEX and ANTRAL aim to significantly reduce greenhouse gas emissions in the transport sector by 2030, in line with the European Union's decarbonization targets and Portugal’s regulatory requirements for taxi vehicles.

“We believe we are well-positioned with the necessary working capital and strong foundation to support our growth plans, including the launch of operations in multiple international markets, and we are confident in the current financial state of the business,” said Zhao.

Featured photo by Denys Nevozhai on Unsplash.

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