Iceberg Research

EOS Energy ($EOSE) Has Just Admitted it Lied About its Contracts

January 20, 2021

EOS released a new corporate presentation on its website. We note a complete change in the way it presents its “customers”. Contracts with IEP/Carson/Enersmart/Hecate were initially trumpeted as major orders in triumphant press releases. They are now described as follows.

Source: EOS 19-Jan-21 investor presentation

Let’s remember how EOS used to present its agreements before our report.

This is quite a difference. “Orders” have become “contract negotiation” or “open closing conditions”. We assume that after our report, a lawyer urgently stepped in and instructed EOS to change its wording. 

If you don’t have clients, well… just invent them. All these agreements were actually nothing more than general non-binding frameworks. This is unsurprising as IEP, Carson and EnerSmart are highly unlikely to have the financial substance to honour them. We also had strong doubts over the agreement with Hecate. Hecate clarified in a press article that its purchases were subject to offtake/funding agreements. This basically means Hecate declared its non-binding intention to buy batteries for contracts that Hecate has not signed. This raises a further question. Did Hecate lend its name to this charade as GM lent its name to Nikola? 

This confirms our conclusion that EOS announced all these major contracts to promote the company before its SPAC merger, and attract suckers retail investors. EOS’ representations are fundamentally misleading. These contracts won’t be honoured as there is nothing legally binding to honour in the first place, and IEP/Carson/EnerSmart are very unlikely to have the financial means to honour them.

EnerSmart’s co-CEO contacted us on 15-Jan. He clarified that EnerSmart’s Colorado entity was dissolved but a new entity had been incorporated in Delaware. We have corrected our report but this does not change the main point. We asked the co-CEO: does EnerSmart have the funding in place for the $20m contract with EOS? We are still waiting for an answer…

EOS’ Total Addressable Market

EOS’ supporters focus on the battery storage’s ‘staggering total addressable market (“TAM”)’ opportunity. The TAM narrative is behind almost all SPACs these days. We are not short the industry. We actually like the industry. We are short the company EOS. A company with inferior technology, up against the likes of Samsung, LG, Tesla, ABB which have both superior technology and a complete supply chain.

Renewal energy producers prefer lithium batteries to EOS’ zinc batteries for a simple reason: they would lose money with zinc batteries which have a round trip efficiency (“RTE”) 20 percentage points lower than lithium. Zinc batteries lose a substantial share of electricity at every charge/discharge cycle. How can this be a compelling proposition for producers to use these batteries, if it will make them less competitive than peers that use lithium? And that’s why EOS had almost zero revenue after 12 years of existence and had to invent dubious contracts to promote its SPAC. 

What about the risk of fire? Sure, zinc batteries are non-flammable. But the frequency of accidents caused by lithium batteries should not be exaggerated. Every day, billions of people carry a phone in their pocket with a lithium battery inside. How many accidents are there? Besides, solar plants are spacious areas where fire protection measures can be put in place easily. This has never been a convincing argument for renewable energy producers that remain focused on their bottom line. 

Someone highlighted that EOS signed an industrial partnership with Holtec which will allow EOS to produce its batteries on a larger scale. This implies there are real customers to buy these batteries. We think otherwise. Holtec is anything but a recent partner and was in fact an EOS shareholder before the SPAC merger last year, and stuck with its investment since 2018. Holtec itself is under criminal investigation for false misrepresentations in its 2014 tax credit application, as reported by Politico in June last year.

The end game for EOS is clear. Insiders and SPAC promoters will eventually exit this business and leave retail investors holding the bag. Retail investors think they have bought into the promising battery industry. In reality, they have bought into a company with failed technology and imaginary clients. EOS is one of the worst SPACs out there.


  1. Why would you try to short a company like EOSE that has insane momentum in the most exciting sector heading into 2021?! Did you see what happened to enphase when the huge short firm tried to short them back at $30 a year ago now they’re at $210. Have you seen that short firms reasoning for shorting. Enphase had insane amount of accounting fraud that multiple employees blew the whistle on. The market did not care at all about this and pushed it under the table and they soared 2 days later. What makes you think the market will value what you have to say at all when your short reasonings are nothing near to as good as the company that shorted enphase energy at $30. Just know things might not make sense to you as an investor and you can make up your own fair valuation but eose is held up by too many institutions to fall much more at this level. Your short report will get brushed under the table just like the company that tried to short enphase with actually great dd. This seems like the worst short you could take in the market. Why short anything in the energy sector in general it’s so hyped up every dip is bought so quick on all energy companies.

  2. Takes two sides to make a market! Thanks for your input. Curious as to why you guys would short this small cap stock that ticks all the boxes in a raging bull market, vs. waiting til later in the year to confirm/reject the growth trajectory of the business

    1. Because once EOS announces that its sales are negligible, which is guaranteed, the price will crash and it will be priced in. As for the SPAC market in general, it’s a bubble. Like 50 similar bubbles before, it will burst. But nobody knows exactly the day or the week it happens.

  3. Great work. You are a dynamo.

    On Wed, Jan 20, 2021 at 11:42 AM Iceberg Research wrote:

    > Iceberg Research posted: ” EOS released a new corporate presentation on > its website. We note a complete change in the way it presents its > “customers”. Contracts with IEP/Carson/Enersmart/Hecate were initially > trumpeted as major orders in triumphant press releases. They are now” >

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