On September 27, 2022, Microvast Power Systems Co., Ltd. (“MPS”), one of the Company’s subsidiaries, entered into a $111.5 million (RMB800 million) loan facilities agreement with a group of lenders led by a bank in China (the “2022 Facility Agreement”). The interest rate is prime plus 115 basis points where prime is based on the Loan Prime Rate published by the National Inter-bank Funding Center of China and is payable on a quarterly basis. The loan facilities can only be used for the manufacturing capacity expansion at the Company’s facility located in Huzhou, China. The 2022 Facility Agreement contains certain customary restrictive covenants, including but not limited to disposal of assets and dividend distribution without the consent of the lender, and certain customary events of default.

Capitalized interest, which was recorded in construction in progress, was $108 thousand and $246 thousand for the three months ended June 30, 2026 and 2025, respectively, and $270 thousand and $524 thousand for the six months ended June 30, 2026 and 2025, respectively.

MPS entered into two long-term working capital loan agreements with a Chinese bank in June 2025 and March 2026 and borrowed a total $29.5 million or RMB200 million (RMB100 million per each agreement). The term of these loans is two years with interest rates ranging from 2.70% to 2.80% per annum. The interest expense the three months ended June 30, 2026 and 2025 was $204 thousand and nil, respectively, and $301 thousand and nil for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, MPS had outstanding borrowings of $28.7 million (RMB195 million) under these agreements with the following repayment schedule:


Repayment Date						Repayment Amount
September 18, 2026						$147 thousand (RMB1.0 million)
December 19, 2026						$368 thousand (RMB2.5 million)
March 18, 2027						$147 thousand (RMB1.0 million)
June 19, 2027						$13.6 million (RMB92.5 million)
September 18, 2027						$147 thousand (RMB1.0 million)
March 18, 2028						$14.3 million (RMB97.0 million)

The Company's PRC subsidiaries have also entered into short-term loan agreements and bank facilities with certain banks in China. The original terms of these loans are with a maximum maturity of 12 months and the interest rates range from 2.40% to 4.85% per annum. The amount of interest expense was $498 thousand and $471 thousand for the three months ended June 30, 2026 and 2025, respectively, and $926 thousand and $861 thousand for the six months ended June 30, 2026 and 2025, respectively.


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Beginning balance	$	138,769	$	127,543	$	106,279	$	111,728
Proceeds from bank borrowings	17,635		31,384		69,356		59,571
Repayments of principal	(40,025)		(43,122)		(60,829)		(56,184)
Exchange difference	2,243		1,542		3,816		2,232
Ending balance	$	118,622	$	117,347	$	118,622	$	117,347

Certain assets of the Company have been pledged to secure the above bank facilities granted to the Company. The aggregate carrying amount of the assets pledged by MPS as of June 30, 2026 and December 31, 2025 is as follows (in thousands):