Fluence Energy, Inc. Class A Common Stock

Stakeholder relations · Investor relations and market confidence

The dual class structure of our common stock may adversely affect the trading market for our Class A common stock. Certain stockholder advisory firms and large institutional investors may prefer companies that do not have multiple share classes or may have investment guidelines that preclude them from investing in companies that have multiple share classes.

Reputation and brand · Esg environmental social governance performance

Companies across industries are facing increasing scrutiny from a variety of stakeholders related to their ESG and sustainability practices. Expectations regarding voluntary ESG initiatives and disclosures may result in increased costs (including but not limited to increased costs related to compliance, stakeholder engagement, contracting, and insurance), changes in demand for certain products.

Tax and financial reporting · Tax compliance and changes in tax law

Changes in tax laws or regulations could materially adversely affect our business, financial condition, results of operations, and prospects. Changes in corporate tax rates, tax incentives for renewable energy projects, the realization of net deferred tax assets relating to our U.S. operations could have a material impact on the value of our deferred tax assets.

Legal and litigation · Product liability and warranty claims

We offer standard limited assurance type product warranties, as well as extended service type warranties. Our limited warranties cover defects in materials and workmanship of our products for normal use and service conditions typically between one and five years following commercial operation date. As a result, we bear the risk of warranty claims long after we have sold the product and recognized revenue.

Industry regulation · Licensing and permits

If we fail to comply with our obligations under license or technology agreements with third parties, we may be required to pay damages, and we could lose license rights that are critical to our business. If we fail to comply with our obligations under license and technology agreements with AES and Siemens, we could lose license rights, including to patents and patent applications.

Legal and litigation · Intellectual property disputes

As a technology company selling commercial products, we run the risk of being sued by third parties for infringement, misappropriation, dilution, or other violation of their intellectual property or proprietary rights. Some of these companies, including some of our competitors, as well as non-practicing entities, own or have rights to large numbers of patents, copyrights, trademarks, and trade secrets.

Tax and financial reporting · Internal controls and compliance programs

We have identified material weaknesses in our internal control over financial reporting. As of September 30, 2024, we determined that a material weakness in the internal control over revenue recognition exists. The Company did not consistently apply controls in its revenue recognition process related to the evaluation of contract terms.

Human capital and workforce · Talent acquisition and retention

Competition for highly qualified personnel is intense in the energy storage industry. We depend on the continued services of our senior management and highly-skilled employees across all levels and departments of our organization to run and grow our business. We have experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications.

Supply chain and procurement · Raw material availability and cost volatility

We are subject to risk from availability and fluctuating market prices of certain commodity raw materials, including, but not limited to, steel, aluminum, copper, nickel, iron phosphate, graphite, manganese, lithium carbonate, lithium hydroxide, and cobalt. Significant price changes or reduced availability for our raw materials and components has a deleterious effect on supply chain certainty with potential knock on effects for reduced operating margin.

Core operations · Quality control and product defects

The energy storage solutions we develop are complex and have in the past and may in the future contain bugs, vulnerabilities, as well as design and manufacturing-related defects and errors. Defective and non-conforming products have a harmful impact on the operational reliability and certainty of our customer projects.

Core operations · Operational disruption and business continuity

Compromises, interruptions, and shutdowns of our systems, including those managed by third parties, whether intentional or inadvertent, could lead to delays in our business operations and, if significant or extreme, affect our results of operations.

Core operations · Capacity utilization and efficiency

Although we continued to progress on track to meet our internal corporate initiatives related to mass manufacturing, the manufacturing process for our expected full commercial scale in the future is still being refined and improved. There are risks associated with scaling up manufacturing to larger commercial volumes including technical or other such problems with process scale-up, process reproducibility, stability issues, quality consistency.

Market position and competition · Market cyclicality and demand volatility

Our order intake and results of operations are difficult to predict quarter to quarter and have in the past and may in the future fluctuate significantly. In fiscal year 2024, we saw a higher amount of our order intake in the second half of the fiscal year. The variability in our order intake in the most recent quarters was primarily driven due to the ambiguity regarding the timing of the proposed domestic content guidelines released by the U.S. Department of the Treasury.

Innovation and product development · Intellectual property protection and infringement

If we are unable to obtain, maintain, and enforce adequate protection for our intellectual property or if the scope of our intellectual property protection is not sufficiently broad, others may be able to develop and commercialize technology and intellectual property substantially similar to ours, and our ability to successfully commercialize our technology or intellectual property may be adversely affected.

Market position and competition · Competitive pressure and market share loss

We operate in an increasingly competitive business environment for our energy storage solutions, services, and digital application offerings. Certain of our competitors have financial, technical, manufacturing, marketing, and other resources that are greater than ours. We have seen increase in competition and continue to expect competition in the energy storage industry to increase due to increased demand from customers and recent regulatory changes and incentives.

Cybersecurity and data protection · Data privacy and protection regulations

Failure to comply with data privacy and data security laws, regulations, and industry standards could have a material adverse effect on our reputation, results of operations, financial condition or have other adverse consequences. We are subject to various laws, related regulations, and industry standards involving data privacy and information security.

Cybersecurity and data protection · Data breaches and cyber attacks

We are vulnerable to potential harm and damages from computer viruses, natural disasters, fire, power loss, telecommunications failures, personnel misconduct or theft, human error, unauthorized access, physical or electronic security breaches, cyber-attacks (including malicious and destructive code, misconfigurations, bugs or other vulnerabilities in commercial software).

Social and demographic · Public perception and reputation

As the markets for energy storage and related SaaS products for renewables and storage become increasingly competitive, marketing initiatives are becoming increasingly difficult and expensive. Any factor that diminishes our reputation or that of our management, including failing to meet the expectations of or provide quality products and services to our customers on a timely basis, or any adverse publicity, litigation, or regulatory proceeding, could make it substantially more difficult for us to attract new customers.

International and currency · International operations and emerging markets

We offer and sell our energy storage solutions, services, and digital application offerings globally and have operations in a number of different countries. Operating globally requires significant resources and management attention and subjects us to business, financial, regulatory, geopolitical, and other related risks.

Credit and liquidity · Access to capital and financing

An increase in interest rates or a reduction in the availability of tax equity, project debt capital, or project financing in the global financial markets could make it difficult for end customers to finance the cost of a battery energy storage system and could reduce the demand for our energy storage solutions.