Company: GGR
Filing Date: 2025-03-31
Form Type: 20-F
Source: 0001886190-25-000017
Chunk: 91

Company: Gogoro Inc.
Filing Date: 2025-03-31
Form: 20-F
Item: Item 5
Chunk 91
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 an anticipated pace and is expected to exceed revenue directly associated with the sale of Gogoro vehicles on a full year basis for the first time in 2025.

Cost of Revenues and Gross Margin

Costs of revenues increased by $3.8 million, or 1.3%, from $298.9 million for the year ended December 31, 2023 to $302.7 million for the year ended December 31, 2024. This increase was primarily driven by a combination of factors: (i) a $11.5 million derecognition expenses on components removed from battery packs during the battery upgrade and $20.7 million of directly attributable costs associated with our battery upgrade initiatives, (ii) a $1.4 million customer care package related to motor upgrade, and (iii) an increase in operating and maintenance cost, such as electricity expenses and depreciation expenses of leasing assets, resulting from the expanding user base of battery swapping energy services. This increase was partially offset by the lower sales volume of scooters.

Gross margin decreased from 14.6% to 2.6% in the year ended December 31, 2024, as compared to the year ended December 31, 2023. This decrease in gross margin was driven by several factors: (i) a $32.3 million related to battery upgrade initiatives, (ii) an increase in sales of lower margin entry-level models, (iii) higher excess capacity costs due to reduced sales volume, (iv) the full-year impact of a $4.6 million hardware revenue carve-out due to deferring hardware revenue to battery swapping service as part of multiple product and solution offerings to our customers; the deferred revenue will be recognized as battery swapping service revenue prorated over a period up to 36 months from the date of delivery of the vehicle; and (v) a lower margin contribution from Gogoro OEM parts. This unfavorable change was partially offset by improved cost efficiencies in Gogoro's battery swapping services and enhancements in other operational efficiencies.

Additionally, in the past few quarters, we have been undertaking a program to carry out one-time, voluntary upgrades on certain battery packs which are expected to take several quarters to complete and will continue through 2025. These upgrades provide multiple benefits - more efficient deployment of our resources than replacing battery packs, increasing lifetime capacity of each battery pack (including extending its first mobility use-case useful life) and solidifying the extra lifetime capacity of each battery pack to validate our second-life thesis