Hexagon Purus Forgoes IRA Windfall for a Financial Lifeline

OSLO, NORWAY – December 10, 2025 – In a move that lays bare the immense pressures facing today’s clean energy companies, Hexagon Purus announced it has amended its critical battery supply agreement, securing immediate financial relief at a potentially steep long-term cost. The Norwegian firm has successfully eliminated a looming $12.9 million pre-payment to its supplier, Panasonic Energy, but in exchange, it has relinquished its claim to a trove of valuable U.S. Inflation Reduction Act (IRA) incentives.

This high-stakes trade-off provides a crucial cash-flow lifeline for a company navigating a difficult year, while simultaneously securing its supply of essential battery cells for the burgeoning American zero-emission truck market. However, it also raises critical questions about its long-term cost competitiveness and strategic positioning in a market supercharged by the very government credits it has just signed away.

A Deal Born from Necessity

The context for this strategic pivot is a year of significant financial headwinds for Hexagon Purus. After posting 42% revenue growth in 2024, the company has seen its performance falter dramatically throughout 2025. The first quarter saw revenue plummet 44% year-over-year, accompanied by a staggering negative EBITDA margin of -105%. The second quarter brought little relief, with revenue declining a further 63% compared to the prior year period.

Faced with mounting losses and a shrinking cash balance, which stood at NOK 527 million (approx. USD 50 million) at the end of Q2, management initiated an aggressive cost-reduction program, including a 30% reduction in its workforce. While third-quarter results showed a sequential revenue improvement, the company still posted a substantial loss after tax of NOK 364 million (approx. USD 34 million).

It is against this stark financial backdrop that the amended battery deal must be viewed. The agreement with Panasonic, first signed in April 2023, originally included a pre-payment schedule totaling approximately $43 million to secure production capacity from Panasonic’s new plant in Kansas. This obligation was reduced once in late 2024, and today’s announcement wipes the remaining $12.9 million balance off the books entirely. For a company focused on preserving cash and reaching a targeted EBITDA breakeven point by 2026, removing this multi-million-dollar cash outlay is not just beneficial—it's a tactical necessity.

The Billion-Dollar Question: Ceding IRA Credits

While the immediate benefit is clear, the long-term cost of this relief is embedded in the fine print regarding the Inflation Reduction Act. The deal explicitly states that any IRA incentives generated from the production of battery cells will now accrue solely to the supplier, Panasonic. This is no small concession.

The IRA's Advanced Manufacturing Production Credit, known as Section 45X, is a cornerstone of U.S. industrial policy designed to onshore clean energy supply chains. It provides a tax credit of $35 per kilowatt-hour (kWh) for battery cells produced and sold in the United States. This subsidy is a powerful economic driver, dramatically lowering the effective cost of production for manufacturers.

To understand the magnitude of what Hexagon Purus has relinquished, consider the potential scale. While the exact volume of the supply agreement is undisclosed, a hypothetical supply of just 1 gigawatt-hour (GWh) of battery cells annually would generate $35 million in tax credits. For a multi-year, multi-GWh agreement needed to supply a fleet of heavy-duty trucks, the forgone value could easily run into the hundreds of millions of dollars over the life of the credit, which extends into the next decade. Panasonic, a global industrial giant, will now capture this entire financial windfall.

This decision places Hexagon Purus in a challenging competitive position. Rivals in the U.S. market who structure their supply agreements differently—or build their own domestic manufacturing—will be able to leverage these credits to lower their costs, offer more aggressive pricing, or reinvest in research and development. Hexagon Purus must now find a way to compete without that significant advantage.

Securing the Chain, Solidifying a Partnership

Despite the hefty price, the amendment delivers one invaluable asset: certainty. The deal ensures a continued, stable supply of high-quality lithium-ion battery cells from one of the world's most reputable manufacturers. In the volatile world of clean energy manufacturing, where component shortages can derail production schedules and break companies, a secure supply chain is paramount.

The cells are slated to come from Panasonic’s massive new facility in Kansas, with deliveries commencing in early 2026. This partnership de-risks a critical dependency for Hexagon Purus as it scales its battery systems and vehicle integration solutions for the North American market. Having a locked-in supply from a Tier-1 partner like Panasonic provides a level of operational security that allows the company to confidently meet its commitments to customers, such as its existing agreement to supply battery-electric trucks for Hino.

For investors, this aspect of the deal represents the 'opportunity' side of the risk-opportunity equation. By prioritizing a stable supply from a proven partner over a future, albeit large, financial incentive, Hexagon Purus is betting that execution and market presence are more valuable than potential margin. The company has effectively chosen to secure its ability to play in the game, even if it means starting with a financial handicap.

Navigating the High-Stakes US Market

The strategic calculus behind this agreement underscores the complexities of the U.S. zero-emission vehicle market. Demand is undeniable, propelled by powerful state-level regulations like California’s Advanced Clean Truck and Advanced Clean Fleet rules, which are being adopted by a growing number of states. This creates a mandatory, expanding market for the very solutions Hexagon Purus provides.

By renegotiating its Panasonic deal, Hexagon Purus ensures it has the components needed to capitalize on this regulatory-driven demand wave. However, by forgoing the IRA credits, it may be forced to operate on thinner margins than its competitors. The success of this strategy now hinges entirely on the company's ability to execute flawlessly, leveraging its technology and vehicle integration expertise to deliver value that outweighs its structural cost disadvantage.

Investors and market watchers will now be observing closely to see if this trade-off was a masterstroke of pragmatic leadership or a costly long-term error. The path to profitability in 2026 may be clearer from a cash-flow perspective, but the climb just became significantly steeper.