EnerSys (ENS) Investor Update summary

Strategic rationale and project overview

• Announced a $665 million investment in a 500,000 sq ft lithium-ion cell gigafactory in Greenville, SC, with $199 million in DOE funding, $200 million in state/local incentives, and IRA tax credits; construction starts in 2025 with commercial production in 2028.

• Factory will supply 5 GWh of lithium-ion cells annually, dedicated to internal needs across all business lines, including a specialized line for Department of Defense (DoD) applications.

• Project aims to de-risk supply chain, reduce costs, avoid tariffs, and support U.S. electrification and defense initiatives, unlocking incremental revenue opportunities.

• Partnership with Verkor brings proven gigafactory expertise, leveraging their coating and electrode technology to minimize technical risk.

• Facility designed for future expansion up to 8–10 GWh on the current site.

Financial and operational details

• Investment spread over four years, with most spending in fiscal 2026–2027; project not expected to pressure net debt leverage.

• IRR expected above 20% with payback within three years post-completion; conservative financial modeling with contingencies included.

• Ramp to 1 GWh in first year of operation, reaching full 4–5 GWh capacity within 18–24 months after launch.

• Margins expected to improve due to make-versus-buy savings and incremental business, with lithium margins targeted to align with other maintenance-free offerings.

• Expansion beyond 5 GWh would require 12–18 months lead time, with building construction as the main constraint.

Technology and supply chain

• ENS1 prismatic cell format optimized for all business lines, using high-performance, automotive-grade chemistry and offering 2,500 cycles and 250 Wh/kg energy density.

• Verkor partnership de-risks high-speed coating, electrode manufacturing, and cell assembly, using proven technology from their Dunkirk gigafactory.

• Supply chain strategy focuses on domestic and NATO-compliant sourcing, with dual sourcing and traceability via Circulor.

• Less than 10 major equipment suppliers, with system integrators managing sub-suppliers; coating process is the most technically challenging step.

• No separator manufacturing on site; separators sourced pre-coated from suppliers.