Executive Summary / Key Takeaways

• U Power Limited is undergoing a significant strategic transformation, shifting from a traditional vehicle sourcing business to a developer and provider of proprietary UOTTA battery-swapping technology and AI-integrated energy solutions for electric vehicles (EVs).
• The company's EV business has demonstrated explosive growth, with revenues surging from RMB3.1 million in 2022 to RMB41.8 million in 2024, now constituting 94.50% of total revenue, signaling a successful pivot.
• UCAR's UOTTA technology offers rapid battery replacement, targeting commercial EVs to alleviate range anxiety, and is being expanded globally through strategic partnerships in Southeast Asia, South America, and Europe.
• Despite promising technological advancements and international expansion, UCAR faces substantial financial challenges, including historical losses and "substantial doubt about our ability to continue as a going concern."
• Investors must weigh the high growth potential in the EV battery-swapping and AI energy solutions market against significant operational risks, intense competition, and regulatory uncertainties, particularly those associated with operating in China.

The Charge Towards a Smart Energy Future: UCAR's Strategic Evolution

U Power Limited, established in 2013, initially carved out a niche as a vehicle sourcing service provider in China, facilitating sales between wholesalers and small to medium-sized dealers in lower-tier cities. This foundational period allowed the company to build a network of approximately 100 wholesalers and 30 SME dealers. However, recognizing the transformative potential of electric mobility, UCAR embarked on a pivotal strategic shift in 2020, redirecting its focus towards the burgeoning electric vehicle (EV) market and the development of its proprietary UOTTA battery-swapping technology. This evolution positions UCAR not merely as an EV player, but as an aspiring leader in comprehensive, AI-powered energy solutions that seamlessly connect EVs with advanced energy infrastructure.

The global push for electrification, particularly in commercial vehicles, presents a significant tailwind for UCAR's strategy. Frost & Sullivan projects the sales volume of electric commercial vehicles in China to grow from 218.90 thousand units in 2022 to 431 thousand units in 2026, representing an 18.50% compound annual growth rate (CAGR). More critically for UCAR, the market size by revenue for battery swapping solutions for electric commercial vehicles in China is expected to skyrocket from approximately RMB2,297.60 million in 2022 to RMB176,615.10 million in 2026, a staggering 68.10% CAGR. This robust market expansion forms the bedrock of UCAR's ambitious growth narrative.

Technological Edge: UOTTA and the AI Integration

At the heart of UCAR's investment thesis lies its UOTTA technology, an intelligent modular battery-swapping system designed to provide a comprehensive power solution for EVs. This technology is not just about swapping batteries; it's an integrated ecosystem comprising vehicle-mounted supervisory control units that monitor real-time battery status, customized vehicle control units (VCUs) that upload real-time EV data (battery status, location, safety) to a central data platform via Bluetooth and/or Wi-Fi, and a sophisticated data management platform. This platform collects and synchronizes EV information, assisting drivers in locating the nearest compatible UOTTA battery-swapping stations when battery levels are low. The UOTTA battery-swapping stations themselves are engineered for precise positioning, rapid disassembly, compact integration, and flexible deployment, enabling battery replacement within minutes.

The tangible benefits of UOTTA technology are particularly compelling for commercial-use EVs. Drivers of commercial vehicles, such as ride-hailing passenger EVs, small logistics EVs, and light and heavy electric trucks, experience heightened "range anxiety" and a strong motivation to minimize recharging downtime. UCAR's system directly addresses this by offering quick battery swaps, a significant advantage over traditional charging methods that can take hours. This operational efficiency can lead to increased vehicle utilization and reduced operational costs for fleet operators, potentially translating into stronger customer loyalty and recurring revenue streams for UCAR.

UCAR's commitment to innovation is evident in its intellectual property portfolio, which includes 46 issued patents and 14 pending patent applications in China related to EV battery-swapping technology. The company's research and development team, comprising 25 personnel led by industry veterans Mr. Rui Wang and Mr. Zhanduo Hao (each with over 20 years of experience in the electric power sector), is actively developing AI-integrated solutions for energy grids and transportation systems. These AI solutions aim to support autonomous EV driving, optimize energy replenishment efficiency, and connect EV assets with advanced AI-powered transportation systems, enabling peak and off-peak energy load balancing. The strategic intent is to transform EVs into dynamic energy assets, leveraging Web 3.0 blockchain and token-based economics through initiatives like the "Battery-Bank" and "Battery-Token" solutions.

Competitive Landscape and Strategic Positioning

UCAR operates in a highly competitive and rapidly evolving industry, facing both direct and indirect rivals. Direct competitors include established EV manufacturers like NIO , BYD , Tesla , and XPeng , all vying for market share in the electric vehicle and associated energy solutions space.

NIO , for instance, is known for its premium EVs and a battery-as-a-service model that includes battery swapping. While NIO targets a luxury segment with advanced features and a comprehensive user ecosystem, UCAR's UOTTA technology appears to emphasize a more cost-effective and operationally efficient solution, particularly for commercial fleets. UCAR's focus on rapid, minutes-long battery replacement could offer a distinct advantage in urban environments where quick turnaround is critical, potentially allowing for faster market penetration in specific segments. However, NIO's (NIO) stronger brand recognition and diversified product lines may give it an edge in overall market influence and growth rates.

BYD , a vertically integrated giant in EV and battery production, excels in mass-market adoption and cost leadership. UCAR's specialized focus on battery swapping infrastructure could differentiate it by offering flexible energy solutions that appeal to users seeking convenience and efficiency, contrasting with BYD's strengths in manufacturing scale. While BYD (BYDDY) likely leads in market share and overall financial health due to its extensive operations, UCAR's targeted approach to battery infrastructure innovation could provide a competitive edge in deployment speed and operational adaptability.

Global EV leader Tesla , with its high-performance vehicles and extensive Supercharger network, represents a different competitive challenge. UCAR's battery swapping model could offer significantly faster energy replenishment compared to Tesla's charging paradigm, potentially leading to lower operating costs for fleet operators. However, Tesla's (TSLA) pioneering brand, advanced software capabilities, and superior financial performance in terms of growth and profitability present a formidable benchmark.

XPeng , another Chinese EV player, focuses on smart vehicles with advanced autonomous features. UCAR's battery swapping services could offer notably faster energy solutions, positioning it as more operationally efficient in service delivery. While XPeng leads in innovation and growth rates within its niche, UCAR's emphasis on battery ecosystems could exploit weaknesses in XPeng's (XPEV) service infrastructure.

UCAR's strategic response to this competitive environment involves forging numerous partnerships and expanding internationally. The company has cooperation agreements with major Chinese automobile manufacturers like FAW Jiefang Qingdao Automotive Co., Ltd. and HUBEI TRI-RING Motor Co., Ltd. to jointly develop UOTTA-powered electric trucks. It has also engaged with a battery-swapping station manufacturer for joint development and production. Recent international expansion includes joint ventures in Thailand and Portugal, the inauguration of Southeast Asia's first operational AI-integrated battery-swapping station in Phuket, and market entries into Macau and Singapore through Electric Service Provider (ESP) agreements. Partnerships with Beijing Foton, NV Gotion (GOHI), and IoTeX further underscore its global ambitions and commitment to integrating AI and Web 3.0 technologies. These collaborations aim to leverage local market expertise and accelerate the deployment of UCAR's solutions across diverse geographies and applications, from heavy trucks to agricultural drones and two- and three-wheeled vehicles.

Financial Performance and Liquidity: A Transformative Journey

UCAR's financial performance reflects its ongoing business transformation. The company has successfully pivoted its revenue streams, with the EV business becoming the dominant contributor. In fiscal year 2022, vehicle sourcing generated RMB4.4 million, accounting for 56.80% of total revenue. By 2024, this segment's revenue had dwindled to RMB0.1 million, representing a mere 0.10% of total revenue. Conversely, the EV business surged from RMB3.1 million (39.20% of total revenue) in 2022 to RMB17.1 million (86.30%) in 2023, and further to RMB41.8 million (94.50%) in 2024. This dramatic shift underscores the company's commitment to its new strategic direction and the market's increasing adoption of its EV solutions.

Total revenue for UCAR grew from RMB7.80 million in 2022 to RMB44.29 million in 2024. Despite this impressive revenue growth in its new core business, UCAR has faced significant profitability challenges. The company reported substantial net losses: -RMB45.92 million in 2022, -RMB19.34 million in 2023, and -RMB47.92 million in 2024. Its gross profit margin for the trailing twelve months (TTM) stands at 11.25%, with operating and net profit margins deeply negative at -131.08% and -108.35%, respectively. This indicates that while revenue is growing, the costs associated with developing and scaling the EV and battery-swapping business are substantial, leading to ongoing operational losses.

Liquidity and capital resources are critical considerations for UCAR. As a Cayman Islands holding company, UCAR relies on dividend payments from its PRC operating subsidiaries for cash requirements. While PRC regulations permit dividend payments from accumulated profits, they also mandate setting aside statutory reserves, which are not distributable as cash dividends except in liquidation. The company has explicitly stated its intention to retain future earnings to finance business expansion and does not anticipate paying cash dividends in the foreseeable future.

UCAR has actively raised capital to fund its growth initiatives. In January 2025, a registered direct offering and concurrent private placement generated approximately $5 million. Another offering in July 2025 raised about $1.38 million. These capital infusions are crucial for market expansion, business development, and working capital. However, the company's historical losses have led to "substantial doubt about our ability to continue as a going concern," highlighting the need for continued capital access and a clear path to profitability.

Outlook and Key Risks

UCAR's outlook is characterized by ambitious growth targets in the rapidly expanding EV battery-swapping and AI-integrated energy solutions markets. The company's strategic vision is to become a leading provider of comprehensive AI-powered energy solutions. Its aggressive international expansion, evidenced by recent partnerships and station inaugurations in Thailand, Mexico, Hong Kong, Macau, Singapore, and Portugal, signals a strong intent to capture global market share. The focus on commercial EVs, where the UOTTA technology offers a clear value proposition, aligns with projected industry growth.

However, this ambitious outlook is tempered by several significant risks. Operating in China, UCAR is subject to evolving economic, political, and social conditions, as well as regulatory uncertainties. Chinese authorities could intervene in operations or influence overseas listings, potentially impacting the company's corporate structure and the value of its shares. While UCAR's PRC counsel believes it is not currently subject to certain cybersecurity reviews, "There remains uncertainty, however, as to how the Cybersecurity Review Measures will be interpreted or implemented." Furthermore, the company faces the risk of delisting from Nasdaq under the Holding Foreign Companies Accountable Act (HFCAA) if its auditors cannot be inspected by the PCAOB for two consecutive years, although its current Singapore-based auditor has been inspected.

The integration of AI technologies, while strategic, also carries inherent risks. The AI industry is in its early stages, marked by rapid technological changes, evolving standards, and intense competition. UCAR acknowledges "there is no assurance that our AI strategy will be successful or that we will be able to effectively compete in this rapidly evolving field." The ability to recruit and retain specialized AI talent is also a competitive and costly challenge. Moreover, developing regulatory frameworks for AI could increase compliance costs or limit deployment. These factors collectively underscore the high-risk, high-reward nature of UCAR's strategic pivot.

Conclusion

U Power Limited stands at a critical juncture, having successfully transitioned from a traditional vehicle sourcing business to a dynamic player in the global EV battery-swapping and AI-integrated energy solutions market. The exponential growth in its EV segment, driven by the proprietary UOTTA technology and strategic international partnerships, paints a compelling picture of future potential. The company's focus on commercial EVs and its innovative approach to AI and Web 3.0 integration position it to capitalize on significant industry tailwinds.

However, the path to sustained profitability remains challenging, as evidenced by ongoing losses and the acknowledged "going concern" risk. Investors must carefully consider the inherent complexities of operating in the Chinese regulatory environment, the competitive pressures from established and emerging EV players, and the uncertainties associated with pioneering AI technologies. UCAR's ability to convert its technological differentiation and strategic partnerships into consistent financial performance and a clear path to profitability will be the ultimate determinant of its long-term investment viability.