Production and operations update
As disclosed in previous market releases, the Company’s manufacturing process has been materially impacted by quality issues in a key externally supplied essential component of the battery stack, specifically glass-filled HDPE sheets. The componentry did not meet specifications, and the technical solution has been complex to solve, with multiple batches failing quality checks. A number of alternative suppliers engaged over the last four months also failed to meet specifications and quality assessments.
As a result, production of customer-grade batteries was intermittent and significantly interrupted for most of H1 FY24, which has had a direct impact on delaying projects and the associated revenues.
Redflow has worked on a resolution with the supplier, qualification of alternative suppliers and accelerated a more fundamental battery design iteration using an injection moulding approach that eliminates the need for this specific material.
This issue now appears to be resolved following a rigorous design of a new part (including use of third-party engineers) and extensive analysis and testing. Redflow is also testing substitute glass filled HDPE sheets from other alternative suppliers as a further back up.
Following the resolution of these issues, customer production is planned to recommence and ramp up from 1 February 2024.
Despite the setback that has delayed anticipated revenue over the last two quarters, Redflow’s focus on ensuring battery quality and the decision to prioritise a robust, long-term solution before the production ramp-up for the large projects announced is required and beneficial to the Company’s future success.
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