Thoughts on Microvast, Potential US Domestic Battery Manufacturing leader

Disclosure: “I own $200,000+ worth of MVST shares, and warrants”

Microvast is a vertically integrated battery manufacturer that manufactures batteries from raw materials to complete battery systems. What makes them interesting is that they are essentially America’s largest cell producer. The caveat here is that the main factory is in China. This has not been without controversy, them having won the second largest grant ($200M) from the DOE Bipartisan Infrastructure Law fund with GM brought attention from Republicans. They claim 61% of revenue came from China, the DOE claims the did their due diligence, Microvast said their largest order ever will be from the Tennessee plant and us an all US supply chain.

I mentioned largest cell producer because at first I thought this claim by their executives was false, but technically Tesla does NOT yet produce their own cells and seem to be having trouble with manufacturing dry cells. They just announced an expansion that really will be serviced by Panasonic. Other car OEMs are reliant on China (BYD/CATL) or Korean manufacturers.

The reason why this is the beginning argument is because the politics can’t be ignored. It is becoming apparent that the battery supply chain is a matter of national security. Having overseas companies setting up shop is good economically short term but potentially problematic long term. We just saw how CATL’s European factories were being raided after accusations of using illegal Chinese labor. In America, there are reports of Korean manufacturers having zero upward mobility for non-Koreans, and preferential sourcing materials from Korea/China. In comparison Microvast has passed ethical sourcing requirements in Europe, and in the America have given preference to hiring veterans, including at the executive level. It is inevitable that America will have its own UAW/Vet backed large scale domestic battery manufacturer.

Microvast was founded with the CEO’s personal funds from selling a separator business to Dow Chemical and funds from the International Finance Corporation. They did receive funding from Chinese banks for the China factory. The recently had another raise but from western investors and used the money to build 3 facilities in America and 1 in Europe. In addition a grant with GM for another factory.

The stock has gone through hell, valued at less than $500 Million with over $400 Million in cash, $2.5 Billion in contracted revenue which potentially includes supplying the USPS EV’s through Oshkosh’s Investment in Microvast. Projected manufacturing capacity I believe is about 30+ GWh if inclusive of the separator plant in collaboration with GM.

The purpose of this post is to hear people’s personal opinions so I cannot show you ALL of my work but I created a DCF model based on predictions from Morgan Stanley (they published their own through Adam Jonas) which I think is outdated and conservative because it does NOT consider revenue from the 20GWh plant or IRA. I found the MS model to be overly aggressive when it came to discounts against the company as well with weird anomalies like incorrect GWh and multiples. For example they showed the EBIDTA multiples industry average as 25X+ but used 10x for MVST. I asked Adam for explanation with no response. Oppenheimer maintains a $8 PT.

Value Per Share based on terminal EBITDA multiple (2026 Exit)

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I do believe long term they will continue to be given preferential treatment from the DOE, DoD, etc. I dollar cost average on a daily bases. It is the only stock I haven't sold during this downturn