What changed in Envirotech Vehicles, Inc.'s 10-K — 2024 vs 2025

Item 1. BUSINESS Overview We are a provider of purpose-built zero-emission electric vehicles focused on reducing the total cost of vehicle ownership and helping fleet operators unlock the benefits of green technology.

Our vehicles are manufactured by original equipment manufacturers ("OEM") located in China, Malaysia and the Philippines and can be marketed, sold, warrantied and serviced through our developing distribution and service network. Our vehicles include options for telemetrics for remote monitoring, electric power-export and various levels of grid-connectivity.

On October 30, 2024, we entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Maddox Industries, LLC, a Puerto Rico limited liability company (“Maddox Industries”), and Jason Maddox, the sole member of Maddox Industries (the “Seller”), pursuant to which, subject to the terms and conditions of the Purchase Agreement, we purchased from the Seller all of the issued and outstanding membership interests (the “Purchased Interests”) in Maddox Industries (the “Maddox Acquisition”).

In connection with the Maddox Acquisition, our Board of Directors (the “Board”) also appointed Jason Maddox as our President in October 2024.

As consideration for the Purchased Interests, at the closing of the Maddox Acquisition on December 18, 2024 (the “Closing”), the Company issued 3,100,000 shares of the Company’s common stock, par value $0.00001 per share (the “common stock”), to the Seller (the “Stock Consideration”).

In addition, during the six-month period following the Closing (the “Earnout Period”), the Seller was eligible to receive up to six monthly cash payments in an aggregate amount of up to $1 million (each such monthly payment, an “Earnout Payment”), with the Earnout Payment for each calendar month being equal to the aggregate amount of gross revenue received by Maddox Industries in respect of any closing receivable, as specified in the Purchase Agreement, during such calendar month, subject to an aggregate limit of $1 million with respect to all Earnout Payments payable under the Purchase Agreement.

See Note 3 – Acquisitions to the consolidated financial statements for additional information regarding the Maddox Acquisition. Market Overview Concerns regarding climate change and other environmental considerations have led to the implementation of laws and regulations that restrict, cap, or tax, emissions in the automotive industry and throughout other industries.

In particular, the Environmental Protection Agency ("EPA"), Tier 4 emission standards, California Air Resources Board ("CARB") regulations, and European Union Stage I, II, III, IV, V and VI regulations require significant reductions in the level of emissions and particulate matter produced by diesel power systems and are increasing the costs associated with producing carbon-intensive fuels.

On June 25, 2020, CARB passed a first-in-the-world rule, generally referred to as the Advanced Clean Truck regulation (the “Advanced Clean Truck Regulation”), requiring truck manufacturers to sell increasing percentages of zero-emission medium and heavy-duty trucks, starting with the 2024 model year. Numerous other states have adopted California’s standards established under this rule.

More recently, on April 28, 2023, CARB issued the Advanced Clean Fleets rule (the “Advanced Clean Fleets Rule”) that would require owners of medium- and heavy-duty vehicle fleets to begin their transition toward zero-emission vehicles starting in 2024.

However, in January 2025, CARB withdrew its request to the EPA for waiver of the Clean Air Act’s federal preemption provisions for the Advanced Clean Fleets Rule, and now the status of this rule remains uncertain. 2 Table of Contents On January 20, 2025, President Trump signed Executive Order 14154 “ Unleashing American Energy ” (“Executive Order 14154”), which may have direct implications on the policies and regulations that impact the automotive and transportation industries.

This executive order seeks to rescind waivers granted by the EPA for California's zero emission vehicle regulations with a focus on eliminating any “electric vehicle mandates” and terminating “state emission waivers that function to limit sales of gasoline-powered vehicles” (which would include the Advanced Clean Truck Regulation) and modify and/or eliminate the greenhouse gas standards for trucks discussed above.

As a result, the status of the U.S. and state emission regulations discussed above remain uncertain. Moreover, federal support for electric vehicle adoption generally may be in jeopardy under the Trump administration, as President Biden’s executive orders directing the federal government to transition to an all-electric fleet of cars and trucks have been rescinded.

Additionally, the Trump administration has halted all federal funding for electric vehicle infrastructure and has ordered the termination of federal subsidy programs for EVs. These developments threaten the incentive structure needed for EVs.

Even so, other regulations are expected to increase both the cost and size of emission-compliant diesel power products, primarily due to the need to incorporate additional combustion and after-treatment components.

A variety of market factors are contributing to the increased use of alternative fuels and growth of alternative fuel technology, including economics, energy independence, environmental concerns, and the widespread availability of alternative fuels.

As the price of crude oil remains volatile and the threats of climate change and air pollution increase as public concerns, we believe the search for more cost-effective and cleaner fuels has become more important. Electricity has emerged as a cleaner-fuel solution to these challenges.

The price of alternative fuels such as electricity is often substantially less than diesel or gasoline, and alternative fuels can result in the production of lower amounts of greenhouse gases and other air pollutants.

In addition, several public utilities in California and elsewhere have applied to their states’ public utility commissions for rate increases to be used for the purchase or leasing of electric vehicles and infrastructure. Additional requests have been made by the utilities to offer favorable costs for electric bus charging.

According to the Global EV Outlook 2024 report by the International Energy Agency (“IEA”), nearly 14 million new electric vehicles were registered globally in 2023. This amount was 3.5 million higher than in 2022, a 35% year-on-year increase. According to the IEA, electric vehicles sales accounted for 18% of all cars sold globally in 2023, up from 14% in 2022.

In 2024, electric car sales in the United States are projected to rise by 20% compared to the previous year, translating to almost half a million more sales, relative to 2023.

According to the 2024 Global Hybrid & Electric Cars industry profile report by MarketLine, the global market for hybrid and electric cars is set to follow a double-digit growth trend over the forecast period between 2023 and 2028.

The Asia-Pacific and European regions have been the leaders in electric vehicles adoption, accounting for 53% and 29% of the global market for hybrid and electric cars in 2023, respectively, with North America representing 15% of the market. Government policy, however, remains ever-changing and likely continues to play a foundational role in the rate of adoption around the world.

In China, the government has mandated that electric vehicles make up 40% of all auto sales by 2030. Meanwhile, we believe that tightening emissions standards and high fuel taxes in Europe will result in substantial increases in the market share of electric vehicles.

According to the Global EV Outlook 2024 report by the IEA, in 2023, just under 60% of new electric vehicle registrations were in China, compared to just under 25% in Europe and 10% in the United States. In the U.S., new electric vehicle registrations totaled 1.4 million in 2023, increasing by more than 40% compared to 2022.

The overall market for electric vehicles consists of multiple, discrete markets for various vehicle types, including passenger cars, buses, two-wheelers and others.

Passenger cars are the most prominent, but two-wheelers are far more prevalent, particularly in Asia, and buses and trucks, although smaller in number, are significantly higher in price and often purchased in bulk by major corporate customers or government or transit agencies. Charging infrastructure is another important factor in electric vehicles adoption rates.

According to Pew Research Center report, there were approximately 61,000 publicly accessible electric vehicles charging stations in the United States as of February 2024, with the number of charging stations more than doubling since 2020. S&P Global estimates that by 2030, the United States will need 2.13 million Level 2 and 172,000 Level 3 chargers.

In an effort to help address this need, in September 2022, the National Electric Vehicle Infrastructure Program, established and funded by the Infrastructure Investment and Jobs Act (the “IIJA”), which was signed into law on November 15, 2021, provided $5 billion in funding to all 50 U.S. states, D.C. and Puerto Rico to strategically deploy electric vehicles charging infrastructure and to establish an interconnected network to facilitate data collection, access, and reliability.

Additionally, the IIJA included $7.5 billion to build a national network of 500,000 chargers by 2030. However, in early 2025, the Trump administration issued a pause on all IIJA funding directed towards, among other programs, electric vehicles infrastructure development and subsidy programs. That funding remains paused subject to the review of the Office of Management and Budget (the “OMB”).

The OMB has released some paused IIJA funding, but funding for the programs focused on supporting the electric vehicles industry remains frozen. The future of key federal funding and electric vehicles tax credits from the IIJA and Inflation Reduction Act (the “IRA”) is uncertain as Congress moves forward with its tax reform bill expected to pass early summer 2025.

The House and Senate have both passed their respective budget resolutions on strict party-line votes, and the Republican majorities in both chambers of Congress have signaled that clean energy tax credits are possible targets for elimination to pay for extending the 2017 Tax Cuts and Jobs Act (TCJA) tax cuts and other key aspects of the Trump administration’s agenda.

The extent to which the IIJA funding and IRA tax credits, specifically those supporting electric vehicles, will be amended or eliminated remains unclear.

However, it is likely that some if not all of these funding avenues will be affected. 3 Table of Contents Commercial Vehicles In 2023, according to the IEA’s Global EV Outlook 2024 report by the IEA, nearly 50,000 electric buses and around 54,000 medium- and heavy-duty trucks were sold worldwide, representing about 3% of all bus sales and over 2.5% of truck sales worldwide.

China continues to dominate production and sales of electric (and fuel cell) trucks and buses, contributing to about 60% of global electric bus sales in 2023. However, the global market is growing and is expected to continue to grow in the foreseeable future.