As reported by the Futu Wealth App, Xy Elec Storage (08328) announced that on December 6, 2024, it had entered into a sales agreement, whereby its wholly-owned subsidiary Xy Power (Suzhou) agreed to sell a battery production line to Xuli New Energy Technology (Zhangjiagang) for a cash consideration of RMB 26.2 million.

The battery production line is currently installed in the factory property located at No. 99, Huarun Road, Jinfeng Town, Zhangjiagang City, Suzhou, Jiangsu Province, China, used for the production of lithium battery products, including pouch battery production line, square battery production line, experimental production line, ternary battery production line, and other supporting production equipment. The related factory property is owned by the group and used to install the group's battery production line.

With the increase in overall supply and advancements in production technology, the average selling price of China's lithium battery products continues to decline. Directors believe that outsourcing lithium battery products to large specialized manufacturers will be more cost-effective for the group. This not only reduces the delivery time/production cost of lithium battery products used by the group, but also releases operating funds needed to maintain raw materials for lithium battery products, equipment, and manpower for operating battery production lines; reduces R&D costs for lithium battery products; and lowers the maintenance and continuous upgrade expenses of capital assets required to produce lithium battery products. The sales agreement allows the group to sell battery production lines no longer needed in the group's production processes.

After the sale of the battery production line, the group will still retain the battery pack production line and can utilize lithium battery packs and energy storage systems provided by other battery manufacturers. The group remains fully committed to researching, producing, and selling energy storage products business, including battery packs and energy storage systems. The sale of the battery production line also provides the group with the opportunity to purchase solid-state batteries from Xuli New Energy Technology (Zhangjiagang) in the future or jointly develop solid-state batteries with Xuli New Energy Technology (Zhangjiagang).