Saietta Group PLC (AIM:SED), the electric drivetrain (eDrive) technology specialist, has updated on a series of developments, including a £600,000 proposed sale of a redundant production line at its Sunderland site.
Saietta said it had been unable to reach commercial terms to produce steering pumps at the facility. "The envisaged contract manufacturing deal, although not for the development of any of the company's products, was scheduled to have contributed materially to group revenue over the medium term, albeit at modest margins," investors were told.
In Tuesday's update, Saietta said its joint venture, Saetta VNA, remains in active discussions with its lead OEM customer for the mass production of its proprietary AFT and RFT technology.
Notable milestones include the receipt of purchase orders for both technologies for a three-wheel eDrive vehicle, with pilot production already underway for AFT and slated to begin for RFT.
Additionally, the company is targeting an initial purchase order for its AFT technology for a four-wheel eDrive vehicle by the end of March 2024.
At the same time, Saietta is negotiating with another OEM for the sale of its RFT eDrive technology for a two-wheel vehicle, aiming for a proof of concept confirmation by the same March deadline.
Financially, Saietta is operating with positive cash reserves sufficient until the end of March 2024 and is actively discussing funding requirements.
"The strength of relationship with our lead OEM and the market opportunity for our eDrive solutions remains very compelling," said CEO David Woolley.
"Being unable to agree terms on a contract manufacturing opportunity is no reflection on the quality of the company's products.
"The sale of the redundant production line in our manufacturing hub in Sunderland (UK) makes sense for Saietta in comparison to a relatively low-margin contract to manufacture a non-core product under license.
"This route allows Saietta to remain 100% focused on our strategic focus of providing proprietary eDrive solutions to manufacturers of lightweight electric vehicles.
"Whereas it does mean that Saietta will not benefit from contract manufacturing revenue from August 2024, it will deliver the significant immediate benefit of pulling forward £600,000 of income and cash into the financial year ending March 2024."