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 2025, 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 DoD applications.

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

• Partnership with Verkor brings proven gigafactory technology and expertise in electrode manufacturing and high-speed cell production, leveraging their coating process to minimize 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 supported by DOE, state/local incentives, and IRA tax credits.

• Expected IRR over 20% and payback within three years post-completion; project not expected to pressure net debt leverage.

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

• Make-versus-buy strategy expected to improve margins, capture incremental business, and unlock new revenue, especially from defense and new energy storage markets.

• Modular plant design allows for phased equipment installation and flexible capacity allocation across business lines.

Technology and supply chain

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

• Verkor partnership enables transfer of proven high-speed coating and cell assembly technology, reducing scale-up risk; Verkor will manufacture and supply electrodes to EnerSys specifications.

• 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.

• Environmental and community engagement underway, with workforce development and 14 local partnerships established.