Microvast (NASDAQ:MVST) reported second-quarter revenue of $87.3 million, a 4.5% decline compared to the same period in 2025, driven by a $2.7 million tariff refund to a customer and softening U.S. sales. The battery manufacturer also faced significant bottom-line pressure from rising raw-material costs and underutilized production capacity.
Financial Performance and Margin Pressures
CFO Rodney Worthen noted that the $4.1 million revenue shortfall was primarily attributed to the $2.7 million tariff refund, which was accounted for as a reduction in current-period revenue. Consequently, gross profit settled at $25.8 million, resulting in a gross margin of 29.5%—a notable drop from the 34.7% reported in the prior-year quarter.
The bottom line reflected this volatility, with a GAAP net loss of $12 million. The adjusted net loss reached $5.3 million, contrasting sharply with the $16.3 million adjusted net profit achieved a year earlier. Non-GAAP adjusted EBITDA plummeted to $3.6 million from $25.9 million in Q2 2025.
Rising Operational and R&D Expenses
Operating expenses climbed 16.1% year-over-year to $27.5 million. A significant portion of this growth was linked to general and administrative costs, which rose by $2.7 million (24.2%) due to a surge in legal and professional service fees. Furthermore, research and development spending increased by $1.1 million (14.8%) as the company prioritized new product development and faced higher labor costs. Selling and marketing expenses also saw an uptick of $1.3 million (38.5%) tied to customer-retention efforts.
Half-Year Results and Regional Trends
For the first six months of 2026, revenue fell by $60 million (28.8%) year-over-year. This decline was largely fueled by a 24.3% reduction in sales volume, dropping to approximately 717 megawatt-hours from 947 megawatt-hours. Adjusted EBITDA for the first half turned negative at $1.9 million, down from a positive $54.4 million in the same period last year.
Regionally, the landscape was mixed. European sales surged 35% in Q2, accounting for 61% of total revenue. Conversely, U.S. sales declined, impacted by the tariff refund and inventory adjustments by the company’s largest customer. Asia-Pacific sales faced a 23% quarterly decline, hampered by shifting geopolitical dynamics and a move toward lower-cost product alternatives in the Indian market.
Liquidity and Capital Expenditure
Microvast utilized $33.3 million in operating cash during the first half of 2026. Investing activities accounted for $3.3 million, covering the purchase of a U.S. office building and capital expenditures for the Huzhou Phase 3.2 manufacturing facility. The company ended the quarter with $143.1 million in cash equivalents and restricted cash.
Strategic Outlook: Huzhou Expansion and Solid-State Tech
CEO Yang Wu confirmed that the installation and commissioning of equipment for the Huzhou Phase 3.2 expansion are complete, with production capacity expected to ramp up throughout 2026. This project is slated to add 2 gigawatt-hours of annual capacity.
The company also highlighted progress in its solid-state battery program. Microvast has successfully scaled a 17-layer monolithic stack that produces 72 volts without liquid electrolyte. Laboratory testing showed the prototype retaining 88.5% capacity after 200 cycles. Additionally, an all-solid-state silicon-sulfur prototype achieved specific capacity exceeding 1,000 milliamp-hours per gram. While pack-line assembly in Clarksville, Tennessee, is scheduled for initial output by year-end, the company noted that full-scale construction remains contingent on securing further financing or strategic partnerships.