Microvast (MVST) Q1 2025: EMEA Revenue Jumps 108% as Margin Expansion Fuels Profitability

2025-05-12 | By EarningsIQ Research

Microvast delivered a standout quarter, propelled by a 108% surge in EMEA revenue and a 15.7 point jump in gross margin, achieving net profitability for the first time in its history. The company’s disciplined operational execution and aggressive push into commercial vehicle electrification, especially in Europe, are reshaping its financial profile and positioning it for sustainable growth. With a robust innovation pipeline and new capacity coming online, Microvast is targeting further market share gains and margin resilience through 2025.

Summary

• EMEA Electrification Drives Growth: European commercial vehicle partnerships fueled record revenue and a step-change in profitability.
• Margin Expansion Signals Operating Leverage: Cost controls, higher utilization, and product mix drove a dramatic improvement in gross margin.
• Capacity and Innovation Set Stage for 2025: New gigawatt-hour production and solid-state battery advances underpin long-term market opportunity.

Performance Analysis

Microvast’s Q1 2025 results mark a pivotal inflection point, with revenue up 43% year over year and gross profit more than doubling, reflecting both surging demand and improved cost structure. The company’s EMEA segment, now 52% of total revenue, delivered 108% growth, overtaking APAC and the US as the primary engine for expansion. Gross margin reached 36.9%, a 15.7 percentage point improvement, driven by operational discipline and a richer product mix targeting higher-value commercial vehicle applications.

Operating expenses fell 38% year over year, the result of reduced share-based compensation and ongoing cost rationalization, enabling the shift to net profitability. Adjusted EBITDA swung positive to $28.5 million, highlighting the scalability of Microvast’s vertically integrated model, which spans cell R&D, manufacturing, and system integration for electrified transport and stationary storage.

• EMEA Revenue Concentration: EMEA now represents the majority of revenue, underscoring the strategic importance of European commercial vehicle OEMs.
• Cost Discipline and Utilization: Lower operating expenses and higher plant utilization rates combined to unlock significant operating leverage.
• Cash Flow Turns Positive: Operating cash flow reached $7.2 million, with total cash rising to $123 million, supporting ongoing investment and expansion.

The financial turnaround is clear: Microvast’s ability to grow top line while compressing costs and expanding margins signals a maturing business model with increasing resilience to sector volatility.

Executive Commentary

Strategic Positioning

1. EMEA Commercial Vehicle Electrification

The EMEA region has become Microvast’s growth engine, with partnerships across leading bus and light commercial vehicle OEMs such as Kinlong, BlackBlock, and VDO. The company’s batteries are now deployed in a wide array of platforms, validating product reliability and performance in demanding fleet applications. The launch of an EMEA training center further anchors Microvast’s local presence and customer support capabilities.

2. Vertically Integrated Technology Model

Microvast’s business model is built on vertical integration, spanning cell R&D, proprietary manufacturing, and system-level engineering. This structure enables rapid technology commercialization, cost control, and customization for diverse end markets—key competitive levers as battery specs and formats proliferate across mobility and stationary storage.

3. Manufacturing Expansion and Capacity Ramp

The Huzhou Phase 3.2 expansion, set to add up to 2 GWh of annual capacity, is on track for qualified production in Q4 2025. This new line is designed to support both current and next-generation battery technologies, ensuring Microvast can meet rising demand without sacrificing margin or delivery timelines.

4. Advanced Battery Innovation Pipeline

R&D remains central, with progress in all solid-state battery development and proprietary 3D printing for customizable cell formats. Early results from the bipolar stacked cell architecture show promise for system-level efficiency gains, positioning Microvast to address emerging high-performance applications and sustain technology differentiation.

Key Considerations

Microvast’s Q1 performance underscores a business in transition—from high-growth, capital-intensive scale-up to a profit-generating, innovation-driven market leader. The balance between margin expansion, capacity investment, and technology leadership will define its trajectory through 2025 and beyond.

Key Considerations:

• European Demand Outpaces Other Regions: EMEA’s rapid electrification of commercial fleets is outstripping APAC and US markets, but also exposes Microvast to regional regulatory and supply chain risks.
• Margin Sustainability: The jump in gross margin is notable, but maintaining this level as new capacity ramps and product mix evolves will require continued operational discipline.
• Product Pipeline Execution: Timely commercialization of solid-state and next-gen cell architectures will be critical for long-term differentiation and premium pricing.
• Working Capital and Receivables: The rise in net receivables suggests working capital management will remain a focus as sales cycles and customer payment terms fluctuate.

Risks

Microvast faces several material risks, including exposure to global supply chain volatility, regional trade disruptions, and execution risk around new capacity and product launches. The company’s reliance on EMEA for growth could amplify the impact of any regulatory or macroeconomic shocks in the region. Ongoing cost discipline and capital allocation will be essential to navigate potential headwinds and maintain profitability.

Forward Outlook

For Q2 2025, Microvast guided to:

• Continued strong EMEA revenue growth
• Gross margin maintenance near 30% target

For full-year 2025, management maintained guidance:

• Revenue of $450 million to $475 million (18% to 25% YoY growth)
• Full-year gross margin of approximately 30%

Management highlighted several factors that will shape results:

• Phase 3.2 Huzhou expansion coming online in Q4 2025
• Continued innovation in solid-state and bipolar cell technologies
• Strategic partnerships and market share expansion in EMEA and North America

Takeaways

Microvast’s Q1 marked a structural shift to profitability, driven by EMEA demand and margin expansion. The company is now positioned to leverage scale, technology, and operational discipline for sustained growth.

• Profitability Inflection: The transition to net profit and positive EBITDA reflects successful scaling and cost control, validating the business model’s leverage as revenue grows.
• EMEA as Strategic Center: European partnerships have become the core revenue driver, but also concentrate geographic risk and operational dependency on regional trends.
• Innovation and Capacity Execution: Investors should watch the pace of new product commercialization and the successful ramp of new production lines as key indicators for long-term upside and risk.

Conclusion

Microvast has crossed a critical profitability threshold, underpinned by EMEA momentum and disciplined execution. The coming quarters will test the company’s ability to sustain margins, manage working capital, and deliver on its innovation roadmap as it scales to meet global electrification demand.

Industry Read-Through

Microvast’s results reflect a broader acceleration in European commercial vehicle electrification, with OEMs rapidly scaling EV bus and light vehicle deployments. The sharp margin improvement and positive cash flow signal that vertical integration and tight cost control can drive profitability in battery manufacturing, a sector often plagued by capital intensity and price competition. For peers, the quarter underscores the importance of regional focus, differentiated technology, and operational flexibility as the energy transition accelerates. Watch for similar margin and utilization inflections among other battery and electrification suppliers with strong European exposure and advanced product portfolios.

MVST Industrials Batteries Electrification EMEA Commercial Vehicles Vertical Integration Solid-State