UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 FORM 10-K

 (Mark One)

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended:

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period
from ____________to _____________

 Commission File No. 001-32898

 CBAK ENERGY TECHNOLOGY,
INC.

 (Exact Name of Registrant
as Specified in Its Charter)

 Nevada

 88-0442833

 (State or other jurisdiction of

 (I.R.S. Employer

 incorporation or organization)

 Identification No.)

 CBAK Industrial Park, Meigui Street, Huayuankou

 Economic Zone, Dalian City, Liaoning Province, China

 116450

 (Address of principal executive offices)

 (Zip Code)

 (86) (411)-3918-5985

 (Registrant's telephone number, including
area code)

 Securities registered pursuant
to Section 12(b) of the Act:

 Title of each class

 Trading Symbol(s)

 Name of each exchange on which registered

 Common Stock, $0.001 par value

 CBAT

 The Nasdaq Stock Market LLC

 Securities registered pursuant to Section 12(g)
of the Act: None

 Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No

 Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
No

 Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes No

 Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
 No

 Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company,"
and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large Accelerated Filer

 Accelerated Filer

 Non-Accelerated Filer

 Smaller reporting company

 Emerging growth company

 If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.

 Indicate by check mark whether the registrant
has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.

 If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.

 Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's
executive officers during the relevant recovery period pursuant to §240.10D-1(b).

 Indicate by check mark whether registrant is
a shell company (as defined in Rule 12b-2 of the Act) Yes No

 As of June 30, 2023 (the last business day of
the registrant's most recently completed second fiscal quarter), the aggregate market value of the shares of the registrant's
common stock held by non-affiliates (based upon the closing sale price of $1.22 per share) was approximately $ 95.2 million. Shares of
the registrant's common stock held by each executive officer and director and by each person who owns 10% or more of the outstanding
common stock have been excluded from the calculation in that such persons may be deemed to be affiliates of the registrant. This determination
of affiliate status is not necessarily a conclusive determination for other purposes.

 There was a total
of 89,919,190 shares of the registrant's common stock outstanding as of March 14, 2024.

 DOCUMENTS INCORPORATED
BY REFERENCE

 None.

 Annual Report on Form 10-K

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments

 Item 1C.

 Cybersecurity

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety Disclosures

 Item 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6.

 [Reserved]

 Item 7.

 Management's Discussion And Analysis Of Financial Condition And Results Of Operations

 Item 7A.

 Quantitative And Qualitative Disclosures About Market Risk

 Item 8.

 Financial Statements and Supplementary Data

 Item 9.

 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item 10.

 Directors, Executive Officers and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships and Related Transactions, And Director Independence

 Item 14.

 Principal Accountant Fees and Services

 Item 15.

 Exhibits, Financial Statement Schedules

 Item 16.

 Form 10-K Summary

 i

 INTRODUCTORY NOTE

 Use of Terms

 Except as otherwise indicated by the context and for the purposes
of this report only, references in this report to:

 "Company",
 "we", "us" and "our" are to the combined business of
 CBAK Energy Technology, Inc., a Nevada corporation, and its consolidated subsidiaries;

 "BAK Asia" are to our Hong Kong subsidiary, China
 BAK Asia Holdings Limited;

 "CBAK New Energy" are to our PRC subsidiary, Dalian
 CBAK New Energy Co., Ltd., a company that was previously named Dalian CBAK Trading Co., Ltd.
 until December 12, 2023;

 "CBAK Power" are to our PRC subsidiary, Dalian CBAK
 Power Battery Co., Ltd.;

 "CBAK Shangqiu" are to our PRC subsidiary, CBAK
 New Energy (Shangqiu) Co., Ltd.;

 "CBAK Suzhou" are to our 90% owned PRC subsidiary,
 CBAK New Energy (Suzhou) Co., Ltd.;

 "CBAK Energy" are to our PRC subsidiary, Dalian
 CBAK Energy Technology Co., Ltd.;

 "BAK Investments" are to our Hong Kong subsidiary,
 BAK Asia Investments Limited;

 "CBAK Nanjing" are to our PRC subsidiary, CBAK New
 Energy (Nanjing) Co., Ltd;

 "Nanjing CBAK" are to our PRC subsidiary, Nanjing
 CBAK New Energy Technology Co., Ltd.;

 "Nanjing BFD" are to our PRC subsidiary, Nanjing
 BFD New Energy Technology Co., Ltd., a company that was previously named Nanjing Daxin New
 Energy Automobile Industry Co., Ltd. until February 24, 2023;

 "Hitrans Holdings" are to our Cayman Islands subsidiary,
 Hitrans Holdings Co., Ltd., a company that was previously named CBAK Energy Technology, Inc.
 until February 29, 2024;

 "Nacell Holdings" are to our Hong Kong subsidiary,
 Hong Kong Nacell Holdings Company Limited;

 "CBAK Energy Investments" are to our Cayman Islands
 subsidiary, CBAK Energy Investments Holdings;

 "CBAK Energy Lithium Holdings" are to our Cayman
 Islands subsidiary, CBAK Energy Lithium Battery Holdings Co., Ltd., a company that was previously
 named Hitrans Holdings until February 29, 2024;

 "Hitrans" are to our
 67.33% owned PRC subsidiary, Zhejiang Hitrans Lithium Battery Technology (we hold 67.33%
 of registered equity interests of Hitrans, representing 72.99% of paid-up capital), through
 CBAK Power previously. On March 10, 2023, CBAK Power entered into an agreement with Nanjing
 BFD to transfer the 67.33% equity interests CBAK Power holds in Hitrans to Nanjing BFD. As
 of the date of this report, the registration of the equity transfer with the local government
 is still in process. Following the transaction, Nanjing BFD shall become the controlling
 shareholder of Hitrans, while CBAK Power no longer holds any of Hitrans's equity interests.

 "Haisheng" are to Hitrans's wholly-owned PRC
 subsidiary, Shaoxing Haisheng International Trading Co., Ltd.;

 "RMB" are to Renminbi, the legal currency of China;

 "U.S. dollar", "$" and "US$"
 are to the legal currency of the United States;

 "SEC" are to the United States Securities and Exchange
 Commission;

 "Securities Act" are to the Securities Act of 1933,
 as amended; and

 "Exchange Act" are to the Securities Exchange Act
 of 1934, as amended.

 ii

 Special Note Regarding Forward Looking Statements

 Statements contained in this report include "forward-looking
statements" within the meaning of such term in Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking
statements involve known and unknown risks, uncertainties and other factors which could cause actual financial or operating results,
performances or achievements expressed or implied by such forward-looking statements not to occur or be realized. Forward-looking statements
made in this report generally are based on our best estimates of future results, performances or achievements, predicated upon current
conditions and the most recent results of the companies involved and their respective industries. Forward-looking statements may be identified
by the use of forward-looking terminology such as "may," "will," "could," "should," "project,"
"expect," "believe," "estimate," "anticipate," "intend," "continue,"
"potential," "opportunity" or similar terms, variations of those terms or the negative of those terms or other
variations of those terms or comparable words or expressions.

 Readers are urged to carefully review and consider
the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties
of the risks and factors that may affect our business, financial condition and results of operations and prospects. New risks emerge
from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business
or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any
forward-looking statements we may make. The forward-looking statements made in this report speak only as of the date hereof and we disclaim
any obligation to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or
future events.

 Disclosures Related to Our China-Based Operations

 CBAK Energy Technology, Inc. is a holding company
incorporated in Nevada, the United States, with no material operations of its own. We conduct our business through our operating subsidiaries
in China. This structure involves unique risks to investors, and you may never directly hold equity interests in the operating entities.

 There are significant legal and operational risks
and uncertainties associated with having substantially all operations in China. The PRC government has significant authority to exert
influence on the ability of a company with substantial operations in China, like us, to conduct its business, accept foreign investments
or be listed on a U.S. stock exchange. For example, we face risks associated with PRC regulatory approvals of offshore offerings, anti-monopoly
regulatory actions, cybersecurity and data privacy, as well as with U.S. regulations, for instance, the risk relating to lack of inspection
from the U.S. Public Company Accounting Oversight Board, or PCAOB, on our auditors, which is further discussed below under "—The
Holding Foreign Companies Accountable Act" and in various risk factors in "Item 1A. Risk Factors." The PRC government
may also intervene with or influence our operations as the government deems appropriate to further regulatory, political and societal
goals. The PRC government publishes from time to time new policies that can significantly affect our industry in which we operate and
we cannot rule out the possibility that it will not in the future further release regulations or policies regarding our industry that
could adversely affect our business, financial condition and results of operations. Any such action, once taken by the PRC government,
could cause the value of our common stock to significantly decline or in extreme cases, become worthless.

 The PRC legal system is a civil law system based
on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value.
China has not developed a fully integrated legal system, and recently enacted laws, rules and regulations may not sufficiently cover
all aspects of economic activities in China or may be subject to a significant degree of interpretation by PRC regulatory agencies and
courts. In particular, because these laws, rules and regulations are relatively new, and because of the limited number of published decisions
and the non-precedential nature of these decisions, and because the laws, rules and regulations often give the relevant regulator significant
discretion in how to enforce them, the interpretation and enforcement of these laws, rules and regulations involve uncertainties and
can be inconsistent and unpredictable. Therefore, it is possible that our existing operations may be found not to be in full compliance
with relevant laws and regulations in the future. In addition, the PRC legal system is based in part on government policies and internal
rules, some of which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, we may not
be aware of our violation of these policies and rules until after the occurrence of the violation.

 iii

 The PRC government has initiated a series of
regulatory actions and made a number of public statements on the regulation of business operations in China, including cracking down
on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using a variable interest
entity ("VIE") structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly
enforcement. We do not believe that our subsidiaries in China are directly subject to these regulatory actions or statements, as we have
not carried out any monopolistic behavior, we have never adopted a VIE structure, and our business does not involve any restricted industry
or implicate cybersecurity.

 For additional information, see "Risk
Factors—Risks Related to Doing Business in China—The PRC government exerts substantial influence over the manner in which
we conduct our business activities. Its oversight and discretion over our business could result in a material adverse change in our operations
and the value of our common stock. Changes in laws, regulations and policies in China and uncertainties with respect to the PRC legal
system could materially and adversely affect us. In addition, rules and regulations in China can change quickly" on page 17, "Risk
Factors—Risks Related to Doing Business in China—Changes in U.S. and Chinese regulations or in relations between the United
States and China may adversely impact our business, our operating results, our ability to raise capital and the value of our securities.
Any such changes may take place quickly and with very little notice" on page 19 and Risk Factors—Risks Related to Doing Business
in China—There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations" on page
20.

 The Holding Foreign Companies Accountable Act

 In December 2021, the SEC adopted rules (the
"Final Rules") to implement the Holding Foreign Companies Accountable Act (the "HFCAA"). The HFCAA includes requirements
for the SEC to identify issuers who file annual reports with audit reports issued by independent registered public accounting firms located
in foreign jurisdictions that the Public Company Accounting Oversight Board ("PCAOB") is unable to inspect or investigate
completely because of a position taken by a non-U.S. authority in the accounting firm's jurisdiction ("Commission-Identified
Issuers"). The HFCAA also requires that, to the extent that the PCAOB has been unable to inspect an issuer's independent
registered public accounting firm for three consecutive years since 2021, the SEC shall prohibit the issuer's securities registered
in the United States from being traded on any national securities exchange or over-the-counter markets in the United States. On June
22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, legislation entitled
"Consolidated Appropriations Act, 2023" (the "Consolidated Appropriations Act") was signed into law, which contained,
among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable Act and amended the HFCAA by requiring
the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections
for two consecutive years instead of three.

 On December 16, 2021, the PCAOB issued a report
to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms
headquartered in mainland China and Hong Kong, including our former auditor, Centurion ZD CPA & Co. In May 2022, the SEC conclusively
listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 10-K for the fiscal year
ended December 31, 2021. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed
mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public
accounting firms. For this reason, we were not identified as a Commission-Identified Issuer after we filed on April 15, 2023 the annual
report on Form 10-K for the fiscal year ended December 31, 2022 and do not expect to be identified as a Commission-Identified Issuer
under the HFCAA after we file this annual report on Form 10-K. Each year, the PCAOB will determine whether it can inspect and investigate
completely audit firms in mainland China and Hong Kong, among other jurisdictions. If PCAOB determines in the future that it no longer
has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we continue to use an accounting
firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be
identified as a Commission-Identified Issuer following the filing of the annual report on Form 10-K for the relevant fiscal year. Our
current auditor, ARK Pro CPA & CO, is headquartered in Hong Kong. There can be no assurance that we would not be identified as a
Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject
to the prohibition on trading under the HFCAA, as amended.

 For additional information, see " Risk
Factor—Risks Related to Doing Business in China—The PCAOB had historically been unable to inspect our former auditor in relation
to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our former auditor
in the past has deprived our investors of the benefits of such inspections. Our common stock may be prohibited from trading in the United
States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting
of our common stock, or the threat of its being delisted, may materially and adversely affect the value of your investment. "
 on page 16.

 iv

 Permissions Required from the PRC Authorities for Our Business
Operations and Securities Offering

 In addition to regular business licenses, we
are required to obtain the pollutants discharge permit to operate our business in the PRC. We believe that our PRC operating subsidiaries
have obtained all requisite permissions for our operations in all material aspects from relevant Chinese authorities and none of the
requisite permissions for our operations in all material aspects have been denied by the Chinese authorities. However, we cannot assure
you that our PRC subsidiaries are always able to successfully update or renew the licenses or permits required for the relevant business
in a timely manner or that these licenses or permits are sufficient to conduct all of our present or future business. If our PRC subsidiaries
(i) do not receive or maintain required permissions or approvals, (ii) inadvertently conclude that such permissions or approvals are
not required, or (iii) applicable laws, regulations, or interpretations change and our PRC subsidiaries are required to obtain such permissions
or approvals in the future, we could be subject to fines, legal sanctions or an order to suspend our PRC operating subsidiaries'
business, which may materially and adversely affect the business, financial condition and results of operations of us.

 In connection with our previous issuance of securities,
under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we believe that we and our PRC subsidiaries,
(i) are not required to obtain permissions from the China Securities Regulatory Commission ("CSRC"), (ii) are not required
to go through cybersecurity review by the Cyberspace Administration of China (the "CAC"), and (iii) have not received or
were denied such requisite permissions by any PRC authority. We cannot guarantee that the regulators will agree with us. As of the date
hereof, we have not been involved in any investigations for cybersecurity review made by the CAC, and we have not received any inquiry,
notice, warning, or sanctions in such respect.

 However, the PRC government has recently indicated
an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers.
The CSRC published the Trial Measures and Listing Guidelines on February 17, 2023, designed to regulate overseas securities offerings
by PRC domestic companies. On February 24, 2023, the CSRC, together with the Ministry of Finance, National Administration of State Secrets
Protection and National Archives Administration of China, revised the Provisions on Strengthening Confidentiality and Archives Administration
for Overseas Securities Offering and Listing, which were issued by the CSRC and National Administration of State Secrets Protection and
National Archives Administration of China in 2009, or the "Provisions." The revised Provisions were issued under the title
the "Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic
Companies," and came into effect on March 31, 2023 together with the Trial Measures.

 Given the recent nature of the introduction of
the above Trial Measures, Listing Guidelines, and Revised Provisions, there remains significant uncertainty as to the enactment, interpretation
and implementation of regulatory requirements related to overseas securities offerings and other capital markets activities. Notwithstanding
the foregoing, as of the date of this report, we are not aware of any PRC laws or regulations in effect requiring that we obtain permission
from any PRC authorities to issue securities to foreign investors, and we have not received any inquiry, notice, warning, or sanction
from the CSRC, the CAC, or any other PRC authorities that have jurisdiction over our operations.

 For additional information, see "Risk
Factor—Risks Related to Doing Business in China—The PRC government has increasingly strengthened oversight in offerings conducted
overseas or on foreign investment in China-based issuers, which could result in a material change in our operations and our common stock
could decline in value or become worthless." on page 17.

 v

 Cash and Asset Flows Through Our Organization

 Under relevant PRC laws and regulations, we are
permitted to provide funding from the proceeds of our overseas fund raising activities to our PRC subsidiaries only through loans or
capital contributions. In the fiscal years ended December 31, 2022 and 2023, we transferred nil and $0.2 million to our PRC subsidiaries
as capital contribution, respectively. As of December 31, 2023, CBAK Energy Technology, Inc., the Nevada issuer, had made cumulative
capital contributions of $138.64 million to our existing PRC subsidiaries, which were accounted as long-term investments by us.

 Before Hitrans was acquired by us in November
2021, it declared dividends twice. In January 2020, Hitrans declared dividends for the years ended December 31, 2018 and 2019. A dividend
of $2,958,048 was declared and paid to its shareholder Zhejiang Meidu Graphene Technology Co., Ltd. For other shareholders, a total dividend
of $2,480,944 was declared in January 2020 but remains unpaid as of the date of this report. In March 2018, Hitrans declared a dividend
of $1,333,135 for the year ended December 31, 2017, among which $533,254 was paid in July 2018 and the remaining $799,881 was paid in
2019. Except for the above dividends, we and our PRC subsidiaries have not previously declared or paid any cash dividend or dividend
in kind, and have no plan to declare or pay any dividends in the near future. We currently intend to retain most, if not all, of our
available funds and any future earnings to operate and expand our business.

 Under PRC laws and regulations, we are subject
to various restrictions on intercompany fund transfers and foreign exchange control. To the extent our cash is in the PRC or held by
a PRC entity, the funds may not be available for the distribution of dividends to our investors, or for other use outside of the PRC,
due to the restrictions and limitations on our ability imposed by the PRC government to transfer cash. The PRC government imposes controls
on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of mainland China. Our
PRC subsidiaries receive substantially all revenue in RMB. Our PRC subsidiaries may pay dividends only out of their accumulated after-tax
profits, if any, upon satisfaction of relevant statutory conditions and procedures and determined in accordance with Chinese accounting
standards and regulations. If the PRC foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy
the foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders. Additionally, we may make
loans to our PRC subsidiaries subject to the approval from or registration with PRC governmental authorities and limitation on amount,
or we may make additional capital contributions to our PRC subsidiaries. PRC regulation of loans to and direct investment in PRC entities
by offshore holding companies and governmental control of currency conversion may delay or prevent us from using our funds to make loans
or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect the liquidity of our PRC subsidiaries
and our ability to fund and expand our business in the PRC, and cause the value of our securities to significantly decline or become
worthless. We cannot assure you that the PRC government will not intervene in or impose restrictions on our ability to make intercompany
cash transfers.

 For additional information, see "Risk
Factors—Risks Related to Doing Business in China—The PRC government exerts substantial influence over the manner in which
we conduct our business activities. Its oversight and discretion over our business could result in a material adverse change in our operations
and the value of our common stock. Changes in laws, regulations and policies in China and uncertainties with respect to the PRC legal
system could materially and adversely affect us. In addition, rules and regulations in China can change quickly" On page 17 and
"Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to, and direct investment in, PRC entities
by offshore holding companies and governmental control of currency conversion may restrict or prevent CBAK Energy Technology, Inc. from
making additional capital contributions or loans to its PRC subsidiaries" on page 22.

 Summary of Risk Factors

 Investing in our securities involves a high degree
of risk. The following is a summary of significant risk factors and uncertainties that may affect our business, which are discussed in
more detail below under "Item 1A. Risk Factors" included in this Annual Report on Form 10-K:

 The PCAOB had
 historically been unable to inspect our former auditor in relation to their audit work performed
 for our financial statements and the inability of the PCAOB to conduct inspections of our
 former auditor in the past has deprived our investors of the benefits of such inspections.
 Our common stock may be prohibited from trading in the United States under the HFCAA in the
 future if the PCAOB is unable to inspect or investigate completely auditors located in China.
 The delisting of our common stock, or the threat of its being delisted, may materially and
 adversely affect the value of your investment.

 The PRC government exerts substantial
 influence over the manner in which we conduct our business activities. Its oversight and
 discretion over our business could result in a material adverse change in our operations
 and the value of our common stock. Changes in laws, regulations and policies in China and
 uncertainties with respect to the PRC legal system could materially and adversely affect
 us. In addition, rules and regulations in China can change quickly with little advance notice.

 vi

 The PRC government
 has increasingly strengthened oversight in offerings conducted overseas or on foreign investment
 in China-based issuers, which could result in a material change in our operations and our
 common stock could decline in value or become worthless.

 Changes
 in U.S. and Chinese regulations or in relations between the United States and China may adversely
 impact our business, our operating results, our ability to raise capital and the value of
 our securities. Any such changes may take place quickly and with very little notice.

 There
 are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.

 CBAK
 Energy Technology, Inc., as a holding company incorporated in Nevada, the United States,
 without material operations of its own, relies on dividends and other distributions on equity
 paid by its PRC operating subsidiaries for its cash needs.

 Investors
 may experience difficulties in effecting service of legal process, enforcing foreign judgments
 or bringing original actions in China based upon U.S. laws, including the federal securities
 laws or other foreign laws against us or our management.

 Our
 independent auditors have expressed substantial doubt about our ability to continue as a
 going concern.

 The
 acquisition of a controlling interest in Hitrans may fail to result in anticipated benefits
 but has involved significant investment of financial and other resources.

 There
 are inherent risks associated with new product development and our efforts to develop and
 market new products could fail.

 Our
 failure, if any, to keep up with rapid technological changes and evolving industry standards
 may cause our products to become obsolete and less marketable, resulting in loss of market
 share to our competitors.

 Maintaining
 our R&D activities and manufacturing operations require significant capital expenditures,
 and our inability or failure to maintain our operations could have a material adverse impact
 on our market share and ability to generate revenue.

 We
 face intense competition from other battery manufacturers and cathode material and precursor
 producers, many of which have significantly greater resources.

 We
 are dependent on a limited number of customers for a significant portion of our revenues
 and this dependence is likely to continue.

 vii

 Our business depends on the growth in demand for light electric vehicles, electric vehicles, electric tools, energy storage, such as residential energy supply and UPS application, and other high-power electric devices.

 Our
 success, in part, depends on the success of manufacturers of the end applications that use
 our products, and our failure to gain acceptance of our products from such manufacturers
 could materially and adversely affect our results of operations and profitability.

 We
 do not have product liability insurance for claims against our product quality. Defects in
 our products could result in a loss of customers and decrease in revenue, unexpected expenses
 and a loss of market share.

 We
 do not have long-term purchase commitments from our customers, which may result in significant
 uncertainties and volatility with respect to our revenue from period to period.

 We
 rely significantly on technology and systems to support our production, supply chain, payments,
 financial reporting and other key aspects of our business. Any failure, inadequacy, interruption
 or security failure of those systems could have a material adverse effect on our business,
 reputation and brand, financial condition, and results of operations.

 System
 security risk issues, and disruption of our internal operations or information technology
 systems, could have a material adverse effect on our business, financial condition, and results
 of operations.

 We and our independent public accounting firm identified material weaknesses in our internal control over financial reporting as of December 31, 2023. If we fail to remediate the material weaknesses, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our shares may be adversely affected.

 Numerous
 factors, many of which are beyond our control, may cause the market price of common stock
 to fluctuate significantly.

 Techniques
 employed by short sellers may drive down the market price of the common stock of CBAK Energy
 Technology, Inc.

 Other
 risks identified in this report and in our other reports filed with the SEC, including those
 identified in "Item 1A. Risk Factors" below.

 Enforceability of Civil Liabilities

 There is uncertainty as to whether the courts of China would:

 recognize or enforce judgments of United States courts obtained
 against us or our directors or officers predicated upon the civil liability provisions of
 the securities laws of the United States or any state in the United States; or

 entertain original actions brought in each respective jurisdiction
 against us or our directors or officers predicated upon the securities laws of the United
 States or any state in the United States.

 The recognition and enforcement of foreign judgments
are provided for under PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements
of PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on reciprocity between
jurisdictions. China does not have any treaties or other form of reciprocity with the United States that provide for the reciprocal recognition
and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign
judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law or national
sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment
rendered by a court in the United States. Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC
law against us in the PRC, if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other procedural
requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete claim, a factual
basis and a cause for the suit. However, it would be difficult for foreign shareholders to establish sufficient nexus to the PRC by virtue
only of holding our shares of common stock.

 viii

 ITEM 1. BUSINESS.

 Overview of Our Business

 We are a manufacturer of new energy high
power lithium and sodium batteries that are mainly used in light electric vehicles, electric vehicles, energy storage such as
residential energy supply & uninterruptible power supply (UPS) application, and other high-power applications. Our primary
product offering consists of new energy high power lithium and sodium batteries. In addition, after completing the acquisition of
81.56% of registered equity interests (representing 75.57% of paid-up capital) of Hitrans in November 2021, we entered the business
of developing and manufacturing NCM precursor and cathode materials. Hitrans is a leading developer and manufacturer of ternary
precursor and cathode materials in China, whose products have a wide range of applications on batteries that would be applied to
electric vehicles, electric tools, high-end digital products and storage, among others.

 We acquired most of our operating assets of CBAK
Power, including customers, employees, patents and technologies from our former subsidiary BAK International (Tianjin) Ltd. ("BAK
Tianjin"). We acquired these assets in exchange for a reduction in accounts receivable from our former subsidiaries that were disposed
of in June 2014.

 As of December 31, 2023, we report financial
and operational information in two segments: (i) production of high-power lithium and sodium battery cells, and (ii) manufacture and
sale of materials used in high-power lithium battery cells.

 We generated revenues of $204.4 million and $248.7 million for the
fiscal years ended December 31, 2023 and 2022, respectively. We had a net loss of $8.5 million and $11.3 million in the fiscal years ended
December 31, 2023 and 2022, respectively. As of December 31, 2023, we had an accumulated deficit of $134.6 million and net assets of $113.5
million. We had a working capital deficiency, accumulated deficit from recurring net losses and significant short-term debt obligations
maturing in less than one year as of December 31, 2023.

 Favorable Policies for New Energy Industry

 The clean energy industry is of strategic importance
in China and many other countries. With the global emphasis on the new energy industry, we anticipate securing more potential orders
from our clients.

 The Chinese government has been providing support
for the development of new energy facilities and vehicles for several years. Considering our major operations are in China, the policy
support to the new energy industry is crucial to our business. With the growing demand for high-power lithium-ion and sodium-ion products,
we are optimistic about our future prospects.

 Starting in 2015, the Chinese government has
been providing consumers with subsidies for purchases of electric vehicles. Subsidies vary depending on electric vehicles' endurance
mileages, battery pack energy density, energy consumption level and others, as a result of which new energy vehicles providing long driving
range and high technical performance get higher subsidies. Between 2017 and 2020, the Chinese government gradually decreased subsidy
levels for electric vehicles year by year. On April 23, 2020, the Chinese government extended these subsidies for another two years with
a planned reduction of 10%, 20% and 30% in 2020, 2021 and 2022, respectively. Ultimately, these subsidies were discontinued entirely
on December 31, 2022.

 On the other hand, for the purposes of establishing
a long-term mechanism for the administration of energy conservation and new energy vehicles, and promoting the development of the automobile
industry, the Chinese government has implemented several policies to stimulate the production of new energy vehicles. On December 26,
2017, the Chinese government issued a policy to exempt purchase tax levied on electric vehicles for three years until 2020. In March
2020, the Chinese government extended such purchase tax exemption to 2022. In September 2022, the Chinese government again extended the
purchase tax exemption to the end of 2023. On June 21, 2023, the Chinese government announced the extension of the purchase tax exemption
from December 31, 2022 to December 31, 2027.

 On September 28, 2017, China's Ministry of Industry
and Information Technology introduced the Measures for Parallel Administration policy. This policy monitors Average Fuel Consumption
Credits and New Energy Vehicle Credits for passenger vehicle manufacturers. If a manufacturer has negative credits, high-fuel consumption
vehicle production will be suspended. Positive credits can be transferred among affiliated enterprises, while negative credits require
compensation or purchasing of positive new energy vehicle credits. This policy incentivizes automakers to produce more new energy vehicles,
and it became effective on April 1, 2018.

 On October 20, 2020, the State Council of PRC
issued a new round of "Development Plan for New Energy Vehicles Industry (2021-2035)" ("Plan"), which is a successor
to the previously published "Development Plan for Energy Conservation and New Energy Vehicles Industry (2012-2020)". The
Plan acknowledges various challenges faced by Chinese new energy vehicle manufacturers and emphasizes the need to enhancing R&D ability,
expanding infrastructure and promoting industry-wide integration. The Plan further outlined the policy and administrative support that
would be provided to the industry, reaffirming the importance of new energy vehicle development for China.

 On January 21,
2021, the Ministry of Transport of PRC issued a new policy named "the 14 th Five-year Development Plan for Green Transport" (the "14 th
 Five-year Plan"), which aims to accelerate the adoption of new energy and clean energy
vehicles for urban buses, taxis and logistical vehicles. The 14 th Five-year
Plan mandates that, in designated national ecological experimental zones and air pollution control zones, new energy vehicles must comprise
at least 80% of buses, taxis and logistical vehicles.

 On October 24, 2021, the State Council of PRC
issued a new policy named the "Action Plan to Peak Carbon Dioxide Emissions before 2030" (the "Action Plan"),
which further underscores the significance of promoting clean energy generation facilities and expanding charging networks for new energy
vehicles. The Action Plan reflects the determination of the Chinese government in reducing carbon dioxide emissions and providing support
to the development of the new energy industry.

 On November 15,
2021, the Chinese Ministry of Industry and Information Technology introduced a new policy named "the 14 th
 Five-year Plan for Green Industrial Development." This policy sets forth a target to
achieve significant progress in battery recycling for energy storage and power battery sectors by 2025.

 On April 25, 2022, China's General Office
of the State Council issued a new guideline named "Guideline on Further Stimulation and Recovery of Consumption." This guideline
highlights the necessity of promoting green energy vehicles in the public transportation space.

 We believe these energy efficiency policies will foster healthy development
in the new energy vehicles market in the long term. In the short term, the extension of the purchase tax exemption policy alleviates pressure
on electric vehicle manufacturers, benefiting the Chinese EV battery market. China's new energy market has experienced rapid growth.
According to the Chinese Ministry of Industry and Information Technology (the "MIIT"), there are 9.587 million new energy
vehicles manufactured and 9.495 million sold in 2023, representing 35.8% and 37.9% increases from 2022. However, the electric vehicle
market is highly competitive and faces increased downward pressure on pricing. We believe this situation presents growth potential for
the light electric vehicle market, including electric bicycles, as well as the energy storage market. A research report from China Energy
Storage Alliance shows a 300% increase in installed capacity in the energy storage market compared to 2022. We plan to maintain
our focus on cylindrical batteries for residential energy supply & UPS and other energy storage markets, while allocating resources
to higher energy density products for the light electric vehicle market. We are also researching new products to meet EV market demand.
Our strategies involve closely monitoring market changes and adjusting operations as needed.

 Expansion of Manufacturing Capabilities

 We have three major
manufacturing centers for new energy batteries, including lithium and sodium batteries in Nanjing, Dalian and Shangqiu,
and a manufacturing plant for precursors and cathode materials in Shaoxing.

 In June 2020, our wholly-owned subsidiary, BAK
Asia entered into a framework investment agreement with Jiangsu Gaochun Economic Development Zone Development Group Company ("Gaochun
EDZ"), a company affiliated with the local government of Gaochun Economic Development Zone in Nanjing, Jiangsu, PRC. According
to the agreement, we intended to develop certain lithium battery projects within Gaochun EDZ which are expected to have a total production
capacity of 20 GWh per year after completion (the "Nanjing Project"). As of December 31, 2023, we had received government
subsidies in an amount of RMB47.1 million (approximately $6.6 million) from Gaochun EDZ. We plan to utilize the targeted
total capacity of 20 GWh per year to produce lithium batteries for the light electric vehicle (LEV), electric vehicle, and energy storage
sectors. The Company expects to achieve such capacity expansion under the Nanjing Project through two phases of construction. In Phase
I, we secured plant rentals and completed interior construction by 2021, featuring two production lines. One line is dedicated to manufacturing
model 32140 lithium batteries, while the other is versatile, capable of producing either model 32140 lithium or sodium batteries. Our
production capacity for Phase I stands at 2 GWh annually when both lines are assigned to lithium battery production. However, allocating
one line exclusively for sodium battery production reduces the capacity to 1.5 GWh per year. The completed Phase I plants spans roughly
27,173 square meters, and as of December 31, 2023, the two production lines constructed during Phase I have been put into operation.
Phase II, scheduled for completion by the end of 2027, aims to add another three large manufacturing facilities and augment our annual
production capacity by an additional 18 GWh. As of December 31, 2023, the initial major plant has reached the ceiling construction stage,
with interior construction ongoing. However, the actual production capacities and construction schedules for Phase II may be adjusted
based on market reception of our new battery offerings.

 Our sales have continued to grow in recent years.
Our model 26650 batteries produced in our Dalian manufacturing center have gained popularity in European and American markets. As a result,
our Dalian facilities had experienced client demand that exceeded then-existing supply. As of December 31, 2023, we had three production
lines in Dalian, with a total capacity of 1 GWh per year.

 In addition to adding one more production line
in our Dalian facilities, we rented a manufacturing center in Shangqiu, Henan, China to acquire an additional annual capacity of 0.5
GWh per year with two production lines for model 26700 lithium batteries.

 Our Hitrans facilities currently have a manufacturing
capacity of 13,000 tons for NCM precursors and 3,000 tons for NCM cathode materials. Hitrans is actively engaged in constructing a new
manufacturing plant, slated for completion in June 2024 and expected to be operational in the first half of 2025. Upon completion, this
new facility will increase Hitrans' NCM precursor production capacity by an additional 37,000 tons.

 Additionally, we continue to renovate our existing
facilities, upgrade equipment, add new equipment, improve product functionality, and enhance the raw materials and components used for
production.

 Development of New Battery Models

 Currently, our primary battery product offering
consists of model 26650, 26700 and 32140 lithium cells, and 32140 sodium cells. Model 26650, 26700 and 32140 batteries can be used in
light electric vehicles, electric vehicles, electric tools, energy storage (such as residential energy supply & uninterruptible power
supply (UPS) application), and other high-power applications. Our sodium cells can be used in ultra-low temperature conditions and have
fast-charging capability. Actual testing data shows that our model 32140 sodium cells retain 85% capacity under -40 and could
be charged to 90% capacity within 10 minutes.

 To maintain our competitive position, we are
expanding the range of our cylindrical battery models to include larger products, such as model 40140 and 46120. Larger cylindrical
batteries typically offer superior performance at lower manufacturing costs. As of December 31, 2023, the model 40140 was in the A-sample
stage, which precedes the B-sample stage and mass production, while the model 46120 was in the B-sample stage. We anticipate that the
development of the model 40140 will progress to the B-sample stage, and the model 46120 will be ready for mass production by the end
of 2024. Based on different client demand, we may produce sodium versions of these models.

 Acquisition of a Raw Materials Manufacturer

 On July 20, 2021, CBAK Power, a wholly-owned
Chinese subsidiary of the Company, entered into a framework agreement relating to CBAK Power's investment in Zhejiang Hitrans Lithium
Battery Technology Co., Ltd, pursuant to which CBAK Power agreed to acquire 81.56% of registered equity interests (representing 75.57%
of paid-up capital) of Hitrans (the "Acquisition"). The Acquisition was completed on November 26, 2021.

 CBAK Power paid approximately RMB40.74 million
($6.4 million) in cash to acquire 21.56% of registered equity interests (representing 21.18% of paid-up capital) of Hitrans from Hitrans
management shareholders. In addition, CBAK Power entered into a loan agreement with Hitrans to lend Hitrans approximately RMB131 million
($20.6 million) (the "Hitrans Loan") by remitting approximately RMB131 million ($20.6 million) into the account of Shaoxing
Intermediate People's Court to remove the freeze on Zhejiang Meidu Graphene Technology Co., Ltd. ("Meidu Graphene")'s
60% of registered equity interests (representing 54.39% of paid-up capital) of Hitrans which freeze was imposed as a result of a lawsuit
for Hitrans's failure to make payments in connection with the purchase of land use rights, plants, equipment, pollution discharge
permit and other assets (the "Assets"). CBAK Power assigned RMB118 million ($18.5 million) of the Hitrans Loan to Mr. Junnan
Ye as consideration for the acquisition of 60% of registered equity interests (representing 54.39% of paid-up capital) of Hitrans from
Mr. Ye who, acting as an intermediary, first purchased the 60% of registered equity interests (representing 75.57% of paid-up capital)
of Hitrans from Meidu Graphene. After such assignment, Hitrans shall repay Mr. Ye at least RMB70 million ($10.84 million) within two
months of obtaining title to the Assets and the rest RMB48 million ($7.43 million) by December 31, 2021, along with a fixed interest
of RMB3.5 million ($0.54 million) which can be reduced by up to RMB1 million ($0.15 million) if the loan is repaid before its due date.
Hitrans shall repay the remaining approximately RMB13 million ($2.01 million) of the Hitrans Loan to CBAK Power at an interest rate of
6% per annum. As of January 29, 2022, Hitrans repaid all the loan principal of RMB118 million ($18.5 million) and interest of RMB3.5
million ($0.54 million) to Mr. Ye.

 Prior to the Acquisition,
CBAK Power and Hangzhou Juzhong Daxin Asset Management Co., Ltd. ("Juzhong Daxin") entered into a framework investment agreement
(the "Letter of Intent") for a potential acquisition of Hitrans, and CBAK Power paid RMB20 million ($3.10 million) to Juzhong
Daxin as a security deposit under the Letter of Intent. On July 27, 2021, Juzhong Daxin returned RMB7 million ($1.1 million) of the security
deposit to CBAK Power. Juzhong Daxin has refused to refund an additional RMB3 million ($0.5 million), claiming that the amount was a
justified risk premium for their facilitation of the acquisition. CBAK Power believes this assertion is baseless and has initiated legal
proceedings against Juzhong Daxin to recover the outstanding RMB3 million. As of December 31, 2023, CBAK Power had not recovered the
RMB3 million from Juzhong Daxin.

 As part of the Acquisition, Hitrans obtained
title to the Assets. Upon the closing of the Acquisition, CBAK Power became the largest shareholder of Hitrans holding 81.56% of its
registered equity interests (representing 75.57% of paid-up capital). As required by applicable Chinese laws, CBAK Power is obliged to
make capital contributions for the portion of Hitrans's registered capital subscribed but unpaid in accordance with the articles
of association of Hitrans.

 On July 8,
2022, Hitrans held a shareholder meeting to pass a resolution to increase the registered capital of Hitrans from RMB40 million to
RMB44 million (approximately $6.2 million) and to accept an investment of RMB22 million (approximately $3.1 million) from Shaoxing
Haiji Enterprise Management & Consulting Partnership ("Shaoxing Haiji") and another investment of RMB18 million
(approximately $2.5 million) from Mr. Haijun Wu (collectively, the "Management Shareholder Investments"). Under the
resolution, 10% of the Management Shareholder Investments (RMB4 million or $0.5 million) will be counted towards Hitrans's
registered capital and the remaining 90% (RMB36 million or $5.1 million) will be treated as additional paid-in capital. 25% of the
Management Shareholder Investments was required to be in place before August 15, 2022. As of September 30, 2022, RMB10 million
(approximately $1.4 million), representing 25% of the Management Shareholder Investments was received. Another 25% (RMB10 million)
and 50% (RMB20 million) of the Management Shareholder Investments were required to be received before December 31, 2022 and June 30,
2024, respectively. As of December 31, 2023, the 25% (RMB10 million) of the Management Shareholder Investments were received.
Shaoxing Haiji and Mr. Haijun Wu are currently in negotiations with other shareholders of Hitrans to extend the payment due date for
the remaining unpaid 25% and 50% of the Management Shareholder Investments to May 31, 2029. In addition, in 2022, CBAK Power
injected an additional RMB60 million (approximately $8.7 million) in Hitrans comprising RMB6 million ($0.9 million) towards
Hitrans's registered capital and RMB54 million ($7.8 million) as additional paid-in capital.

 On December 8, 2022, CBAK Power entered into
agreements with five investors (together, the "Hitrans Investors") to transfer an aggregate of 6.8183% equity interests CBAK
Power holds in Hitrans to these Hitrans Investors. Among the five investors, four of them invested RMB5 million (approximately $0.7 million)
each to obtain 1.1364% equity interests, respectively, while the fifth investor paid RMB10 million (approximately $1.5 million) to acquire
2.2727% equity interests. Following the above financing and transfer transactions, CBAK Power's equity interests in Hitrans decreased
to 67.33%, representing 69.12% of paid up capital, as of December 31, 2022 and 72.99% of paid-up capital as of December 31, 2023.

 Trends in End Applications of Our Products

 Our business, financial condition and results of operations depend
on whether end-application manufacturers are willing to use our products. We target the battery markets for light electric vehicles, electric
vehicles, energy storage (such as residential energy supply & UPS application), and other high-power electric devices. However, our
revenues derived from a specific end-application have been fluctuating depending on various factors such as governmental policies, technological
changes, evolving industry standards and customer needs and preferences. After the acquisition of Hitrans, we have broadened our target
markets to include battery manufacturers, offering them cathode materials and precursors.

 During the period from 2017 to 2019, our largest
electric vehicle customers included Dongfeng Autos, Dayun Motor and Yema Auto. Our battery sales in the electric vehicle market have
decreased significantly during the period of 2018–2021 as a result of changes to the Chinese government's new energy vehicle
subsidy policies. More specifically, under the subsidy policies, new energy vehicles receive different subsidies based on their driving
range and technical performance. New energy vehicles providing long driving range and high technical performance qualify for higher subsidies
and the Chinese government has gradually raised the performance thresholds for electric vehicles to receive subsidies over the years.
During 2019-2021, as the battery packs comprising our primary model 26650 batteries were only able to support energy vehicles that qualify
for the lowest level of subsidies, electric vehicle producers had reduced incentives to purchase batteries from us. However, we have
been looking for opportunities to re-enter the electric vehicle battery market by continuing to develop batteries suitable for electric
vehicles and actively cooperating with previous electric vehicle customers in battery pack after-sales service and technical support.
As a result of our efforts, we generated approximately $2.9 million and $4.7 million in revenues from electric vehicle customers in 2023
and 2022, respectively. Our largest revenue-generating market has been the energy storage market. We have established partnerships with
several leading players in this sector, resulting in ample orders to adequately utilize our production lines.

 Our Corporate History and Structure

 CBAK Energy Technology, Inc. was incorporated
in the State of Nevada on October 4, 1999. The shares of common stock of CBAK Energy Technology, Inc. traded in the over-the-counter
market through the Over-the-Counter Bulletin Board between 2005 and May 31, 2006. On May 31, 2006, CBAK Energy Technology, Inc. obtained
approval to list its common stock on the Nasdaq Global Market, and trading commenced on the same date under the symbol "CBAK."
Effective November 30, 2018, the trading symbol for the common stock of CBAK Energy Technology, Inc. changed from CBAK to "CBAT."
Effective June 21, 2019, CBAK Energy Technology, Inc.'s common stock started trading on the Nasdaq Capital Market.

 We currently conduct our business primarily through
(i) CBAK Power, a wholly-owned subsidiary in China that we own through BAK Asia, an investment holding company formed under the laws
of Hong Kong on July 9, 2013; (ii) Nanjing CBAK, a 100% owned subsidiary of CBAK Nanjing (as further described below); (iii) CBAK Shangqiu,
a wholly owned subsidiary in China that we own through CBAK Power; (iv) Nanjing BFD, a 100% owned subsidiary of CBAK Nanjing; and (v)
Hitrans, a subsidiary of CBAK Power, where CBAK Power owns 67.33% of registered equity interests (representing 72.99% of paid-up capital):

 CBAK Power, wholly-owned by BAK Asia, located in Dalian, China,
incorporated on December 27, 2013, focuses on the development and manufacture of high-power lithium batteries.

 CBAK Shangqiu, wholly-owned by CBAK Power, located in Shangqiu,
China, incorporated on July 25, 2023, focuses on the development and manufacture of high-power lithium batteries.

 CBAK Energy, wholly-owned by BAK Asia, located in Dalian, China,
incorporated on November 21, 2019. CBAK Energy does not have any significant operations as of the date of this report.

 CBAK Suzhou, 90% owned by CBAK
Power, located in Suzhou, China, incorporated on May 4, 2018, used to focus on the development and manufacture of new energy high power
battery packs. CBAK Suzhou currently does not employee any local staff. Since its lease expired in October 2019, CBAK Suzhou has stopped
using the facilities located at its registered address. Some of its business has been transferred to our subsidiaries in Dalian and CBAK
Suzhou's remaining assets are temporarily stored in our facilities in Dalian. We plan to dissolve CBAK Suzhou as soon as practicable.

 Hitrans, 67.33% owned by CBAK Power, located in Shangyu, Shaoxing,
China, incorporated on December 16, 2015, principally engaged in the business of research and development, production and sales of cathode
materials and precursors for NCM lithium batteries.

 Guangdong Meidu Hitrans Resources Recycling Technology Co.,
Ltd. ("Guangdong Hitrans"), 80% owned by Hitrans, located in Dongguan, Guangdong, China, incorporated on July 6, 2018, principally
engaged in the business of wastes recycling. Guangdong Hitrans was dissolved on January 30, 2024.

 Haisheng, wholly-owned by Hitrans, located in Shangyu, Shaoxing,
China, incorporated on October 9, 2021, principally engaged in the business of cathode raw materials trading.

 CBAK Nanjing, wholly-owned by BAK Investments located in Nanjing,
China, incorporated on July 31, 2020. CBAK Nanjing does not have any significant operations as of the date of this report.

 Nanjing CBAK, wholly owned by CBAK Nanjing, located in Nanjing,
China, incorporated on August 6, 2020, focuses on the development and manufacture of larger-sized cylindrical lithium batteries.

 CBAK
New Energy, wholly-owned by BAK Investments, located in Dalian, China, incorporated on August 14, 2013, previously named Dalian CBAK
Trading Co., Ltd. until December 12, 2023, was transferred from BAK Asia to BAK Investments on December 26, 2023. On March 5, 2024, CBAK
New Energy was transferred from BAK Investments to Nacell Holdings. CBAK New Energy does not have any significant operations as of the
date of this report.

 Nanjing BFD, wholly-owned by CBAK Nanjing, incorporated on November
9, 2020, formally known as Nanjing Daxin, renamed on March 8, 2023, focuses on the development and manufacture of sodium-ion batteries.
Nanjing BFD's original business of the development and manufacture of electric bicycle, motorcycle and automotive spare parts will
be gradually marginalized.

 Daxin New Energy Automobile Technology (Jiangsu) Co., Ltd. ("Jiangsu
Daxin"), wholly-owned by Nanjing BFD, incorporated on August 4, 2021, focuses on the development and manufacture of electric bicycle,
motorcycle and automotive spare parts. Jiangsu Daxin was dissolved on December 22, 2023.

 Hitrans
Holdings, our wholly owned subsidiary, incorporated on July 28, 2021 under the laws of the Cayman Islands, previously named "CBAK
Energy Technology, Inc.," was renamed as "Hitrans Holdings Co., Ltd." on February 29, 2024. Hitrans Holdings owns 100%
equity interests of Nacell Holdings.

 Nacell Holdings, a direct, wholly owned subsidiary of Hitrans
 Holdings, was incorporated on July 7, 2023 under the laws of Hong Kong. Nacell Holdings had
 no significant operations as of the date of this report.

 CBAK Energy Lithium Holdings,
our wholly owned subsidiary, incorporated on July 12, 2023 under the laws of the Cayman Islands in the name of "Hitrans Holdings,"
was renamed as "CBAK Energy Lithium Holdings" on February 29, 2024.

 CBAK Energy Investments, our wholly owned subsidiary, was incorporated
 on February 26, 2024 under the laws of the Cayman Islands. CBAK Energy Investments does not have any significant operations as of
 the date of this report.

 Almost all of our business operations are conducted primarily through
our Chinese subsidiaries. The chart below presents our current corporate structure:

 Our Products

 The use of new materials has enabled the configuration
of high-power lithium battery cells to contain much higher energy density and higher voltage and have a longer life cycle and shorter
charge time than other types of lithium-based batteries. These special attributes, coupled with intrinsic safety features, are suitable
for batteries used for high-power applications, such as electric cars, electric bicycles, electric tools, and energy storage such as
residential energy supply and uninterruptible power supply, or UPS application.

 We currently are manufacturing the following high power lithium batteries,
which can be used for various applications:

 Battery Cell Type

 End applications*

 High-power lithium battery

 Electric bus [6,000-20,000]

 Electric car [1,500-3,5000]

 Hybrid electric vehicle [500-2000]

 Light electric vehicle [10-150]

 Cordless power tool [10-30]

 Energy Storage including Residential Energy Supply and UPS [>30]

 *
 Bracketed numbers denote number of cells per particular battery.

 On November 29, 2021, we announced the
completion of the acquisition of 81.56% equity interests of Hitrans. We since then have incorporated the manufacture and sale of the
following materials used in high power lithium batteries as part of our operations:

 Material Type

 End applications*

 Cathode

 High-power NCM lithium battery

 Precursor

 NCM cathode materials

 Precursors are in general made from nickel salts,
cobalt salts and manganese salts, and are used in manufacturing cathode materials. Cathode materials are crucial raw materials to manufacture
lithium-ion batteries.

 Key High Power Lithium Battery Applications

 End-product applications that are driving the demand for high power
lithium batteries include electric vehicles, such as electric cars, electric buses, hybrid electric cars and buses; light electric vehicles,
such as electric bicycles, electric motors, electric tricycles, smaller-sized electric cars; and energy storage applications including
but not limited to residential energy supply and uninterruptible power supply, and other high-power applications.

 Electric Vehicles

 An electric vehicle, sometimes referred to as
an electric drive vehicle, uses one or more electric motors for propulsion. Electric vehicles include electric cars, electric buses,
electric trains, electric lorries, electric airplanes, electric boats, and hybrid electric vehicles, plug in hybrid electric vehicles
and electric spacecraft. Electric cars and electric buses are propelled by one or more electric motors powered by rechargeable battery
packs. Electric cars and buses have the potential to significantly reduce city pollution by having zero tail pipe emissions. Electric
cars and buses are also expected to have less dependence on oil. World governments are pledging significant funds to fund the development
of electric vehicles and their components due in part to these advantages. Due to these factors, as well as lithium batteries'
relatively environmentally-friendly, light-weight and high-capacity features, the demand for lithium batteries in the field of electric
cars and buses is increasing.

 Due to such recent trends as renewed concerns
relating to the availability and price of oil, increased legal fuel-efficiency requirements and incentives, and heightened interest in
environmentally-friendly or "green" technologies, hybrid electric vehicles are likely to continue to attract substantial
interest from vehicle manufacturers and consumers. Hybrid electric vehicles include automobiles, trucks, buses, and other vehicles that
combine a conventional propulsion system with a rechargeable energy storage system to achieve better fuel economy than conventional vehicles.
As these vehicles tend to be large and heavy, their rechargeable energy storage system generally consists of a large quantity of rechargeable
high-power lithium cells.

 2014 was considered
the inaugural year for China's new energy vehicle (NEV) industry, with explosive growth seen in 2017. Despite a slight decline in 2019,
the production and sales of NEVs continued to surge in 2018, 2020, and 2021. According to the Ministry of Industry and Information Technology
of China, production in China reached 1,270,000 units in 2018, up 43.4% year-on-year, with sales reaching 1,256,000 units, up 61.7% year-on-year.
In 2019, production and sales dropped to 1,242,000 units and 1,206,000 units, down 2.3% and 4.0% year-on-year, respectively. However,
2020 saw a rebound, with production and sales reaching 1,366,000 units and 1,267,000 units, up 10.0% and 5.1% from 2019. In 2021, both
production and sales of NEVs reached record highs of 3,545,000 units and 3,521,000 units, respectively, nearly 1.6 times higher than
the previous year. This growth trend continued in 2022, with 7,058,000 units manufactured and 6,887,000 units sold, marking increases
of 96.9% and 93.4%, respectively. In 2023, production and sales figures climbed to 9,587,000 units and 9,495,000 units, up by 35.8% and
37.9%, respectively. The subsidy policy on NEVs was discontinued on December 31, 2022.
However, the purchase tax exemption policy aimed at boosting NEV purchases was extended from the end of 2023 to 2027. Looking ahead,
we anticipate that the NEV market will gradually become highly competitive, with NEVs gaining increasing popularity in the long term.

 Light Electric Vehicles

 Light electric vehicles include bicycles, scooters,
and motorcycles, tricycles and smaller-sized electric cars. Due to their relatively small size and light design, approximately
10-150 high-power lithium cells can be used to power light electric vehicles. We believe that the electric bicycle market in China is
significant.

 Light electric vehicles have drawn great attention
from the international market as a solution to the global environment and energy problems. With governments in China, Japan, Europe,
South Asia, and North America promoting the application of light electric vehicles, this market has been growing considerably. China
has the world's biggest electric bicycle market, promoted by the adoption of new "national standard" of electric bicycles
by the Chinese government, which leads to a nation-wide upgrading of electric bicycles from old "national standard." Additionally,
the popularity of the concept of shared electric bicycles in China further creates momentum to the growth of the market. The pandemic
of Covid-19 has stimulated the development of food delivery industry that increases the demand for shared electric bicycles.

 In India, Southeast Asia and European markets,
thanks to the carbon emission and pollution reduction policies promoted by local governments, electric vehicles have been viewed as a
solution to replace traditional gasoline-powered vehicles. Unlike electric vehicles whose market has already been fully competitive,
we believe that light electric vehicles including electric bicycles still have great growth potential.

 Residential Energy Supply & Uninterruptible Power Supplies
("UPS")

 Energy storage primarily involves the storage
of electric energy using batteries, inductors, and capacitors. Battery energy storage is widely used for storing power for residential
buildings, outdoor applications, emergency backup, electric vehicles, and for storing excess energy generated by power plants. Uninterruptible
Power Supplies (UPS) and residential energy storage units are examples of energy storage applications. UPS systems provide emergency
power from a separate source when the main utility power is unavailable, while portable power banks serve outdoor needs. Residential
energy storage units offer a reliable power supply for entire households, a popular choice in some European regions.

 Sales and Marketing

 Currently, our marketing and promotional efforts
are primarily undertaken by our marketing department in both Dalian and Nanjing. We plan to build an extensive sales and service network
in China, as we expand our presence into the regions where China's main lithium battery productions are located, such as Tianjin
City, Shandong Province, Guangdong Province and Jiangsu Province.

 We also engage in marketing activities such as
attending industry-specific conferences and exhibitions to promote our products and brand name. We believe these activities are beneficial
to promoting our products and brand name among key industry participants.

 Suppliers

 The primary raw materials used in the manufacture
of lithium-ion batteries include electrode materials, cases and caps, foils, electrolyte and separators. The primary raw materials used
in our materials business include cobaltous sulfates, manganese sulfates, lithium hydroxides, lithium carbonates and liquid nickel sulfates.
The cost of these raw materials is a key factor in pricing our products. We source such raw materials from a number of suppliers across
China. We are seeking to identify alternative raw material suppliers to the extent there are viable alternatives and to expand our use
of alternative raw materials.

 We aim to maintain multiple supply sources for
each of our key raw materials to ensure that supply problems with any one supplier will not materially disrupt our operations. In addition,
we constantly strive to develop strategic relationships with new suppliers to secure a stable supply of materials and introduce competition
in our supply chain, thereby increasing our ability to negotiate better pricing and reducing our exposure to possible price fluctuations.

 Intellectual Property

 As of December 31, 2023, CBAK Power held 142 patents in the PRC, which
will expire between 2024 to 2042. Among the 142 patents, two were acquired by BAK Asia, from an unrelated third party at RMB1 and were
contributed as paid-in capital to CBAK Power. As of December 31, 2023, CBAK Energy held 8 patents in the PRC, all of which will expire
between 2030 and 2040; Nanjing CBAK held 29 patents in the PRC, all of which will expire between 2031 and 2043; Nanjing BFD held 18 patents
in the PRC, all of which will expire between 2028 and 2043; and Hitrans held 21 patents in the PRC, all of which will expire between 2028
and 2039.

 We have registered the following Internet and WAP domain name: www.cbak.com.cn.

 We also have unpatented proprietary technologies
for our product offerings and key stages of the manufacturing process. Our management and key technical personnel have entered into agreements
requiring them to keep confidential all information relating to our customers, methods, business and trade secrets during their terms
of employment with us and thereafter and to assign to us their inventions, technologies and designs they develop during their term of
employment with us.

 We have institutionalized our efforts to safeguard
our intellectual property rights by establishing an internal department that includes professionals such as attorneys, engineers, information
managers and archives managers responsible for handling matters relating to our intellectual property rights. We have published internally
a series of rules to protect our intellectual property rights.

 While our intellectual property rights in the
aggregate are important to our business operations, we do not believe that our business would be materially affected by the expiration
of any particular intellectual property right.

 Seasonality

 Seasonality does not materially affect our business
or operating results. As our battery cell and battery material products have a wide range of applications, we have not experienced significant
seasonal fluctuations in market demands or sales recently. Market demands for our products generally slightly drop during the Chinese
New Year holiday, a major national holiday in China.

 Customers

 Currently, major customers for our high power
lithium batteries business include Viessmann Faulquemont S.A.S, Northvolt Battery System Poland Sp. z.o.o., Anker Innovations, Shenzhen
ACE Battery Co., Ltd., PowerOAK, NSURE Energy, Hello Tech (Jackery) and JinPeng Group. We believe that our revenue and market share will
increase as we gradually expand our high-power battery production to meet the growing demand for these batteries.

 Geography of Sales

 Our revenues are generated from both domestic
and international customers, but the percentage contribution from each group varies significantly from year to year. The following table
sets forth certain information relating to our total revenues by location of our customers for the last two fiscal years:

 Fiscal Years ended

 % of Net

 % of Net

 Revenues

 Revenues

 (in thousands of U.S. dollars, except percentages)

 Mainland China

 $
 198,114,578

 $
 119,307,085

 USA

 36,525

 -

 5,216

 -

 Europe

 50,378,076

 78,575,290

 Others

 196,306

 6,550,774

 Total

 $

 $

 Competition

 We face intense competition from high-power lithium battery makers
and raw materials manufacturers in China. The following table sets forth our major competitors in the battery market broken down by battery
models as well as in the materials market, as of December 31, 2023:

 Product Type

 Competitors

 Model 26650/26700

 China:

 Shandong Goldencell; EVPS; Power Long Battery

 Model 32140

 China:

 Gotion Hi-tech; EVE Battery

 Cathode & Precursor

 China:

 Beijing Easpring; Ronbay Technology; Huayou Cobalt

 We believe that we are able to leverage our cutting-edge
battery manufacturing techniques and R&D capabilities to compete favorably with our competitors. Compared to Chinese battery makers,
we believe we have higher consistency and safety in product quality, which enables us to compete favorably with local competitors.

 Research and Development

 The development of advanced electric vehicles
and new-type energy storage in China has created a significant demand for the R&D of next-generation advanced lithium, sodium and
other type of batteries and their key materials, which must be characterized by high energy density, high security, long-lasting life,
and low cost. Furthermore, the training of technical talent in this field is equally important.

 We have an advanced R&D center in Dalian for research and development
of lithium batteries, receiving almost all the R&D achievements, equipment and staff of BAK Tianjin. BAK Tianjin began
its R&D manufacturing and distribution of high-power lithium battery and battery modules in December 2006, for use in electric cars,
electric bicycles, residential energy supply & UPS, and other applications. We are setting up a larger R&D center as part of our
Nanjing Project, and we anticipate that eventually our battery R&D department will be headquartered in Nanjing.

 Our R&D personnel developed model 32140 lithium
cell in house which has become one of the best cylindrical battery models in the world. Furthermore, our R&D team successfully developed
model 32140 sodium cell, making us one of only a few companies in the world that are capable of mass producing sodium-ion batteries.
Our sodium cells can be used in ultra low temperature conditions and have fast-charging capability. Actual testing data shows that our
model 32140 sodium cells retain 85% capacity under -40 and could
be charged to 90% capacity within 10 minutes.

 To maintain
our competitive position, we are expanding the range of our cylindrical battery models to include larger options, such as models
40140 and 46120. Larger cylindrical batteries typically offer superior performance at lower manufacturing costs. As of December 31,
2023, the model 40140 was in the A-sample stage, which precedes the B-sample stage and mass production, while the model 46120 was in
the B-sample stage. We anticipate that the development of the model 40140 will progress to the B-sample stage, and the model 46120
will be ready for mass production by the end of 2024. Based on different client demand, we may produce sodium versions of these
models.

 In addition to
our efforts to develop new batteries at lower cost and higher energy density, we are also focusing on the research and development of
high-nickel low-cobalt materials featuring high energy density, low cost and broader applications. We operate an advanced R&D center
in Shaoxing that is focused on battery materials. Additionally, we invested significant R&D resources to develop single-crystal high-voltage
products as well as high-rate materials which can enable a 15C discharge rate.

 Human Capital

 We had a total of approximately 1,456 employees
as of December 31, 2023, all of whom are full-time employees. The following table sets forth the number of our employees by function.

 Function

 Number

 Production

 Research and development

 Sales and marketing

 General and administrative

 Total

 1,456

 Our employees are not represented by a labor organization or covered
by a collective bargaining agreement. We have not experienced any work stoppages.

 We believe we maintain good relations with our employees.

 Available Information

 We make available free of charge, on or through
our website,  our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and
other filings pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and amendments to such filings, as soon as reasonably
practicable after each is electronically filed with, or furnished to, the SEC. The SEC maintains a website that contains our reports,
proxy and information statements, and our other SEC filings. The address of the SEC's website is www.sec.gov. Information appearing
on our website is not part of any report that we file with the SEC.

 Regulations

 Company Law

 The establishment, operation and management of
corporate entities in mainland China are governed by the Company Law of the People's Republic of China, or the China Company Law,
which was adopted by the Standing Committee of the National People's Congress ("SCNPC") in December 1993, implemented
in July 1994, and subsequently amended in December 1999, August 2004, October 2005, December 2013 and October 2018. Under the China Company
Law, companies are generally classified into two categories: limited liability companies and companies limited by shares. The China Company
Law also applies to foreign-invested limited liability companies and foreign-invested companies limited by shares. Pursuant to the China
Company Law, where laws on foreign investment have other stipulations, such stipulations shall prevail. In December 2021, the SCNPC issued
the draft amendment to the China Company Law for comment. The draft amended China Company Law has made roughly 70 substantive changes
to the 13 chapters and 218 articles of the current Company Law (rev. 2018). It would (i) refine special provisions on state-funded companies;
(ii) improve the company establishment and exit system; (iii) optimize corporate structure and corporate governance; (iv) optimize the
capital structure; (v) tighten the responsibilities of controlling shareholders and management personnel; and (vi) strengthen corporate
social responsibility.

 Foreign Investment Law

 On March 15, 2019, the National People's
Congress approved the Foreign Investment Law of the PRC, or the "Foreign Investment Law," which came into effect on January
1, 2020, repealing simultaneously the Law of the PRC on Sino-foreign Equity Joint Ventures, the Law of the PRC on Wholly Foreign-owned
Enterprises, and the Law of the PRC on Sino-foreign Cooperative Joint Ventures. The Foreign Investment Law adopts the management system
of pre-establishment national treatment and negative list for foreign investment. Regulations for the Implementation of the Foreign Investment
Law of the PRC came into effect on January 1, 2020. Policies in support of enterprises shall apply equally to foreign-funded enterprises
according to laws and regulations. Pursuant to Foreign Investment Law and the Negative List, promulgated jointly by MOFCOM and NDRC on
December 27, 2021, and became effective on January 1, 2022, foreign investors shall not invest in sectors that forbid foreign investment
as specified in the Negative List. In sectors under the Negative List where foreign investment is restricted, foreign investors shall
comply with the special administrative measures for restrictive access set in the Negative List on equity ratio, senior management, etc.,
when making investments. Where a foreign investor or enterprise with foreign investment invests in a field other than those in the Negative
List, it shall register by the principle of consistency of domestic and foreign investment. Fair competition for foreign investment enterprises
to participate in government procurement activities shall be protected. The Foreign Investment Law also stipulates the protection of
intellectual property rights and trade secrets.

 Notice on the Implementation of Foreign Investment
Law and the Registration of Foreign-funded Enterprises was issued by the SAMR on December 31, 2019. According to such notice, the SAMR
conducts business registration, and the applicant shall apply for the registration of foreign-funded enterprises through the enterprise
registration system. The registration authority shall conduct a formal examination on relevant application materials.

 The Measures for Reporting Foreign Investment
Information were adopted by the MOFCOM on December 19, 2019, approved by the SAMR, and became effective on January 1, 2020. According
to such measures, when a foreign investor directly or indirectly conducts investment activities in China, the foreign investor or foreign-invested
enterprise shall submit investment information to the competent department of commerce in accordance with the measures.

 None of our PRC subsidiaries' business falls within the Negative
List, and therefore, all of our PRC subsidiaries are able to conduct their business without being subject to restrictions imposed by
foreign investment laws and regulations in China.

 Regulations Relating to Intellectual Property

 Copyright

 China has adopted comprehensive legislation governing intellectual
property rights, including trademarks and copyrights. China is a signatory to the primary international conventions on intellectual property
rights and has been a member of the Agreement on Trade Related Aspects of Intellectual Property Rights since its accession to the WTO
in December 2001.

 In September 1990, the SCNPC promulgated the Copyright Law of the
People's Republic of China, effective in June 1991 and amended in 2001, 2010 and 2020 respectively. The amended Copyright Law extends
copyright protection to internet activities, products disseminated over the internet and software products. In addition, there is a voluntary
registration system administered by the Copyright Protection Centre of China.

 In order to further implement the Computer Software Protection Regulations,
promulgated by the State Council in December 2001 and amended in 2011 and 2013 respectively, the National Copyright Administration issued
Computer Software Copyright Registration Procedures in February 2002, which specify detailed procedures and requirements with respect
to the registration of software copyrights.

 Trademark

 According to the Trademark Law of the People's Republic of China,
promulgated by the SCNPC in August 1982, and amended in 1993, 2001, 2013 and 2019 respectively, the Trademark Office of China National
Intellectual Property Administration is responsible for the registration and administration of trademarks and is also responsible for
resolving trademark disputes in China. Registered trademarks are valid for ten years from the date the registration is approved. A registrant
may apply to renew a registration within twelve months before the expiration date of the registration. If the registrant fails to apply
in a timely manner, a grace period of six additional months may be granted. If the registrant fails to apply before the grace period
expires, the registered trademark shall be deregistered. Renewed registrations are valid for ten years. In April 2014, the State Council
issued the revised Implementation of the Trademark Law, which specified the requirements of applying for trademark registration and review.

 Patent

 According to the Patent Law of the People's Republic of China
promulgated by the SCNPC in 1984 and amended in 1992, 2000, 2008 and 2020, respectively, a patentable invention or a utility model must
meet three criteria: novelty, inventiveness and practicability. A patent is valid for a twenty-year term for an invention and a ten-year
term for a utility model or design, starting from the application date.

 Domain Names

 In May 2012, the China Internet Network Information Center issued
the Implementing Rules for Domain Name Registration setting forth the detailed rules for registration of domain names. In August 2017,
China's Ministry of Industry and Information Technology promulgated the Administrative Measures on Internet Domain Names, or the
Domain Name Measures. The Domain Name Measures regulate the registration of domain names, such as the top-level domain name ".cn".

 Regulations Relating to Foreign Exchange

 Pursuant to the Foreign Exchange Administration Regulations, as amended
in August 2008, the RMB is freely convertible for current account items, including the distribution of dividends, interest payments,
trade and service-related foreign exchange transactions, but not for capital account items, such as direct investments, loans, repatriation
of investments and investments in securities outside the PRC, unless SAFE's prior approval is obtained and prior registration with
SAFE is made. In May 2013 SAFE promulgated the Circular of the SAFE on Printing and Distributing the Administrative Provision on Foreign
Exchange in Domestic Direct Investment by Foreign Investors and Relevant Supporting Documents which provides for and simplifies the operational
steps and regulations on foreign exchange matters related to direct investment by foreign investors, including foreign exchange registration,
account opening and use, receipt and payment of funds, and settlement and sales of foreign exchange.

 Pursuant to the Circular on Relevant Issues concerning Foreign Exchange
Administration of Overseas Investment and Financing and Return Investments Conducted by Domestic Residents through Overseas Special Purpose
Vehicles or the SAFE Circular 37, promulgated by SAFE and which became effective on July 4, 2014, (a) a PRC resident shall register with
the local SAFE branch before he or she contributes assets or equity interests in an overseas special purpose vehicle, or Overseas Special
Purpose Vehicles (SPV), that is directly established or controlled by the PRC Resident for the purpose of conducting investment or financing;
and (b) following the initial registration, the PRC Resident is also required to register with the local SAFE branch for any major change,
in respect of the Overseas SPV, including, among other things, a change of the Overseas SPV's PRC Resident shareholder(s), name
of the Overseas SPV, term of operation, or any increase or reduction of the Overseas SPV's registered capital, share transfer or
swap, and merger or division. Pursuant to SAFE Circular 37, failure to comply with these registration procedures may result in penalties.

 Pursuant to the Circular of the State Administration of Foreign Exchange
on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies, or the SAFE Notice 13, which
was promulgated on February 13, 2015 and with effect from June 1, 2015, the foreign exchange registration under domestic direct investment
and the foreign exchange registration under overseas direct investment is directly reviewed and handled by banks in accordance with the
SAFE Notice 13, and the SAFE and its branches shall perform indirect regulation over the foreign exchange registration via banks.

 Regulations Relating to Dividend Distributions

 According to the PRC Company Law and Foreign Investment Law, each
of our PRC subsidiaries, as a foreign invested enterprise, or FIE, are required to draw 10% of its after-tax profits each year, if any,
to fund a common reserve, which may stop drawing its after-tax profits if the aggregate balance of the common reserve has already accounted
for over 50% of its registered capital. These reserves are not distributable as cash dividends. Furthermore, under the EIT Law, which
became effective in January 2008, the maximum tax rate for the withholding tax imposed on dividend payments from PRC foreign invested
companies to their overseas investors that are not regarded as "resident" for tax purposes is 20%. The rate was reduced to
10% under the Implementing Regulations for the EIT Law issued by the State Council. However, a lower withholding tax rate might be applied
if there is a tax treaty between China and the jurisdiction of the foreign holding companies, such as tax rate of 5% in the case of Hong
Kong companies that holds at least 25% of the equity interests in the foreign-invested enterprise, and certain requirements specified
by PRC tax authorities are satisfied.

 Regulations Relating to Overseas Listings

 On July 6, 2021, the General Office of the Central Committee of the
Communist Party of China and the General Office of the State Council jointly issued the "Opinions on Severely Cracking Down on
Illegal Securities Activities According to Law," or the Opinions. The Opinions emphasized the need to strengthen the administration
over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective
measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept
overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters.

 On December 24, 2021, the China Securities Regulatory Commission,
or the CSRC, issued Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies
(Draft for Comments) (the "Administration Provisions"), and the Measures for the Overseas Issuance of Securities and Listing
Record-Filings by Domestic Enterprises (Draft for Comments) (the "Measures"), which were published for public comments only,
for which the comment period expired on January 23, 2022.

 The Administration Provisions and Measures (collectively, the "Draft
Rules Regarding Overseas Listing") for overseas listings lay out specific requirements for filing documents and include unified
regulation management, strengthening regulatory coordination, and cross-border regulatory cooperation. Domestic companies seeking to
list abroad must carry out relevant security screening procedures if their businesses involve such supervision. Companies endangering
national security are among those off-limits for overseas listings.

 However, on February 17, 2023, the CSRC promulgated the Trial Administrative
Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting guidelines, which
came into effect on March 31, 2023. The Trial Measures and its supporting guidelines are formal regulations issued based on the Draft
Rules Regarding Overseas Listing. The State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies
(Draft for Comments), although still in draft form, has effectively been replaced by the Trial Measures and its supporting guidelines.
The Trial Measures and its supporting guidelines, reiterate the basic principles of the Draft Rules Regarding Overseas Listing and impose
substantially the same requirements for the overseas securities offering and listing by domestic enterprises. Pursuant to the Trial Measures,
domestic companies that seek to offer or list securities overseas, both directly and indirectly, shall complete filing procedures with
the CSRC pursuant to the requirements of the Trial Measures within three working days following its submission of initial public offerings
or listing application. If a domestic company fails to complete the required filing procedures or conceals any material fact or falsifies
any major content in its filing documents, such domestic company may be subject to administrative penalties, such as orders to rectify,
warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons
may also be subject to administrative penalties, such as warnings and fines.

 According to the Notice on the Administrative Arrangements for the
Filing of the Overseas Securities Offering and Listing by Domestic Companies from the CSRC, or the CSRC Notice, which was promulgated
on February 17, 2023 and became effective on the same day, the domestic companies that have already been listed overseas before the effective
date of the Overseas Listing Trial Measures (i.e. March 31, 2023) shall be deemed as existing issuers (the "Existing Issuers").
Existing Issuers are not required to complete the filing procedures immediately, and they shall be required to file with the CSRC for
any subsequent offerings. The Opinions, the Trial Measures and any related implementing rules to be enacted may subject us to additional
compliance requirements in future financial activities.

 In August 2006, six PRC regulatory authorities, including the CSRC,
jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, amended
in June 2009. The M&A Rules, among other things, require that if an overseas company established or controlled by PRC companies or
individuals, or PRC Citizens, intends to acquire equity interests or assets of any other PRC domestic company affiliated with the PRC
Citizens, such acquisition must be submitted to the MOFCOM for approval. The M&A Rules also require that an Overseas SPV formed for
overseas listing purposes and controlled directly or indirectly by the PRC Citizens shall obtain the approval of the CSRC prior to overseas
listing and trading of such Overseas SPV's securities on an overseas stock exchange.

 Based on current PRC laws and regulations, our corporate structure
and arrangements are not subject to the M&A Rules. However, there are substantial uncertainties as to how the M&A Rules will
be interpreted or implemented in the context of an overseas offering, and its opinions summarized above are subject to any new laws,
rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules.

 Regulations Relating to Employment

 The Labor Law of the People's Republic of China, or the Labor
Law, which became effective in January 1995 and was amended in 2018, and the Employment Contract Law of the People's Republic of
China, or the Employment Contract Law, effective in January 2008 and amended in 2012, require employers to provide written contracts
to their employees, restrict the use of temporary workers and aim to give employees long-term job security. Employers must pay their
employees' wages equal to or above local minimum wage standards, establish labor safety and workplace sanitation systems, comply
with state labor rules and standards and provide employees with appropriate training on workplace safety. In September 2008, the State
Council promulgated the Implementing Regulations for the PRC Employment Contract Law which became effective immediately and interprets
and supplements the provisions of the Employment Contract Law.

 Under the Labor Contract Law, an employer shall limit the number of
dispatched workers so that they do not exceed a certain percentage of its total number of workers. In January 2014, the MOHRSS issued
the Interim Provisions on Labor Dispatching, which became effective in March 2014, pursuant to which it provides that the number of dispatched
workers used by an employer shall not exceed 10% of the total number of its employees.

 The PRC governmental authorities have passed a variety of laws and
regulations regarding social insurance and housing funds from time to time, including, among others, the Social Insurance Law of the
People's Republic of China, the Regulation of Insurance for Labor Injury, the Regulations of Insurance for Unemployment, the Provisional
Insurance Measures for Maternal Employees, the Interim Administrative Provisions on Registration of Social Insurance and the Administrative
Regulations on the Housing Provident Fund. Pursuant to these laws and regulations, enterprises in the PRC shall provide their employees
with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, occupational injury insurance and medical
insurance, as well as housing fund and other welfare plans. Failure to comply with such laws and regulations may result in various fines
and legal sanctions and supplemental contributions to the local social insurance and housing fund regulatory authorities.

 Regulations Relating to Environmental Protection

 The Environmental Protection Law of the PRC, or the Environmental
Protection Law, was promulgated and effective on December 26, 1989, and most recently amended on April 24, 2014.

 As we conduct our manufacturing activities in
China, we are subject to the requirements of PRC environmental laws and regulations on air emission, wastewater discharge, solid waste
and noise. The major environmental regulations applicable to us include the PRC Environmental Protection Law, the PRC Law on the Prevention
and Control of Water Pollution and its Implementation Rules, the PRC Law on the Prevention and Control of Air Pollution and its Implementation
Rules, the PRC Law on the Prevention and Control of Solid Waste Pollution, and the PRC Law on the Prevention and Control of Noise Pollution.
We aim to comply with environmental laws and regulations. We have built environmental treatment facilities concurrently with the construction
of our manufacturing facilities, where waste air, wastewater and waste solids we generate can be treated in accordance with the relevant
requirements. We outsource the disposal of solid waste we generate in the Dalian facility to a third-party contractor. Certain key materials
used in manufacturing, such as cobalt dioxide, electrolyte and separators, have proven innocuous to worker's health and safety
as well as the environment. We are not subject to any admonitions, penalties, investigations or inquiries imposed by the environmental
regulators, nor are we subject to any claims or legal proceedings to which we are named as a defendant for violation of any environmental
law or regulation. We are not aware of any threatened claim, action or legal proceedings that would have a material adverse effect on
our business, financial condition or results of operations.

 Regulations Relating to Tax in the PRC

 Income Tax

 The PRC Enterprise Income Tax Law was promulgated in March 2007 and
was most recently amended in December 2018. The PRC Enterprise Income Tax Law applies a uniform 25% enterprise income tax rate to both
foreign-invested enterprises and domestic enterprises, except where tax incentives are granted to special industries and projects. Under
the PRC Enterprise Income Tax Law, an enterprise established outside China with "de facto management bodies" within China
is considered a "resident enterprise" for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise
income tax rate on its worldwide income. Under the implementation regulations to the PRC Enterprise Income Tax Law, a "de facto
management body" is defined as the body that exercises full and substantial control and overall management over the business, productions,
personnel, accounts and properties of an enterprise.

 In April 2009, the Ministry of Finance, or MOF, and SAT jointly issued
the Notice on Issues Concerning Process of Enterprise Income Tax in Enterprise Restructuring Business, or the Circular 59. In December
2009, SAT issued the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises,
or the Circular 698. Both Circular 59 and Circular 698 became effective retroactively as of January 2008. In March 2011, SAT issued the
Notice on Several Issues Regarding the Income Tax of Non-PRC Resident Enterprises, or the SAT Circular 24, effective in April 2011. By
promulgating and implementing these circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer
of equity interests in a PRC resident enterprise by a non-resident enterprise.

 In February 2015, SAT issued the Notice on Certain Corporate Income
Tax Matters on Indirect Transfer of Properties by Non-PRC Resident Enterprises, or the SAT Circular 7, to supersede existing provisions
in relation to the indirect transfer as set forth in Circular 698, while the other provisions of Circular 698 remain in force. SAT Circular
7 introduces a new tax regime that is significantly different from that under Circular 698. SAT Circular 7 extends its tax jurisdiction
to capture not only indirect transfers as set forth under Circular 698 but also transactions involving transfer of immovable property
in China and assets held under the establishment, and placement in China, of a foreign company through the offshore transfer of a foreign
intermediate holding company. SAT Circular 7 also addresses transfer of the equity interest in a foreign intermediate holding company
broadly. In addition, SAT Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and
introduces safe harbor scenarios applicable to internal group restructurings. However, it also brings challenges to both the foreign
transferor and transferee of the indirect transfer as they have to determine whether the transaction should be subject to PRC tax and
to file or withhold the PRC tax accordingly. In October 2017, SAT issued the Announcement on Issues Relating to Withholding at Source
of Income Tax of Non-resident Enterprises, or the SAT Circular 37, amended in June 2018. The SAT Circular 37 superseded the Non-resident
Enterprises Measures and SAT Circular 698 as a whole and partially amended some provisions in SAT Circular 24 and SAT Circular 7. SAT
Circular 37 purports to clarify certain issues in the implementation of the above regime, by providing, among others, the definition
of equity transfer income and tax basis, the foreign exchange rate to be used in the calculation of withholding amount, and the date
of occurrence of the withholding obligation. Specifically, SAT Circular 37 provides that where the transfer income subject to withholding
at source is derived by a non-PRC resident enterprise in installments, the installments may first be treated as recovery of costs of
previous investments. Upon recovery of all costs, the tax amount to be withheld must then be computed and withheld.

 Value-Added Tax

 The PRC Provisional Regulations on Value-Added
Tax were promulgated by the State Council on December 13, 1993, which became effective on January 1, 1994 and were subsequently amended
from time to time. The Detailed Rules for the Implementation of the PRC Provisional Regulations on Value-Added Tax (2011 Revision) was
promulgated by the Ministry of Finance on December 25, 1993 and subsequently amended on December 15, 2008 and October 28, 2011. On November
19, 2017, the State Council promulgated the Decisions on Abolishing the PRC Provisional Regulations on Business Tax and Amending the
PRC Provisional Regulations on Value-Added Tax. Pursuant to these regulations, rules and decisions, all enterprises and individuals engaged
in sale of goods, provision of processing, repair, and replacement services, sales of services, intangible assets, real property, and
the importation of goods within the PRC territory are VAT taxpayers. On March 21, 2019, the Ministry of Finance, the SAT, and the General
Administration of Customs jointly issued the Announcement on Relevant Policies on Deepen the Reform of Value-Added Tax. Sales revenue
represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price, starting from April 1, 2019, VAT rate was
lowered to 13%.

 ITEM 1A. RISK FACTORS.

 RISKS RELATED TO DOING BUSINESS IN
CHINA

 The PCAOB had historically been unable
to inspect our former auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to
conduct inspections of our former auditor in the past has deprived our investors of the benefits of such inspections. Our common stock
may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely
auditors located in China. The delisting of our common stock, or the threat of its being delisted, may materially and adversely affect
the value of your investment.

 Our current auditor, ARK Pro CPA & CO, as
well as our former auditor, Centurion ZD CPA & Co, the independent registered public accounting firms that issue the audit reports
included elsewhere in this annual report, as auditors of companies that are traded publicly in the United States and firms registered
with the PCAOB, are currently subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess
their compliance with the applicable professional standards. Both our current and former auditors are located in Hong Kong, a jurisdiction
where the PCAOB was historically unable to conduct inspections and investigations completely before 2022. As a result, we and investors
in our common stock were deprived of the benefits of such PCAOB inspections until 2022. The inability of the PCAOB to conduct inspections
of auditors in Hong Kong in the past has made it more difficult to evaluate the effectiveness of our independent registered public accounting
firms' audit procedures or quality control procedures as compared to auditors that are subject to the PCAOB inspections. On December
15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the
list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. However, if the PCAOB
determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and
Hong Kong, and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements
filed with the SEC, we and investors in our common stock would be deprived of the benefits of such PCAOB inspections again, which could
cause investors and potential investors in our common stock to lose confidence in our audit procedures and reported financial information
and the quality of our financial statements.

 Pursuant to the HFCAA, as amended, if the SEC
determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by
the PCAOB for two consecutive years, the SEC will prohibit our common stock from being traded on a national securities exchange or in
the over-the-counter trading markets in the United States.

 On December 16, 2021, the PCAOB issued a
report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public
accounting firms headquartered in mainland China and Hong Kong and our auditor was subject to that determination. In May 2022, the
SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 10-K
for the fiscal year ended December 31, 2021. On December 15, 2022, the PCAOB removed mainland China and Hong Kong from the list of
jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we were
not identified as a Commission-Identified Issuer after we filed on April 15, 2023 the annual report on Form 10-K for the fiscal year
ended December 31, 2022 and we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this
annual report on Form 10-K for the fiscal year ended December 31, 2023.

 Each year, the PCAOB will determine whether it
can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines
in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong
and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed
with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 10-K for the
relevant fiscal year. In accordance with the HFCAA, as amended, our securities would be prohibited from being traded on a national securities
exchange or in the over-the-counter trading market in the United States if we are identified as a Commission-Identified Issuer for two
consecutive years in the future. A prohibition of being able to trade in the United States would substantially impair your ability to
sell or purchase our common stock when you wish to do so, and the risk and uncertainty associated with delisting would have a negative
impact on the price of our common stock. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable
to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.

 The PRC government exerts substantial influence
over the manner in which we conduct our business activities. Its oversight and discretion over our business could result in a material
adverse change in our operations and the value of our common stock. Changes in laws, regulations and policies in China and uncertainties
with respect to the PRC legal system could materially and adversely affect us. In addition, rules and regulations in China can change
quickly. Nevertheless, the Chinese government has been actively promoting exports and adopting customs policies in line with those of
major global economies. In recent years, despite potentially rapid changes, domestic rules and regulations in China have significantly
supported the development of the clean energy industry. However, in the event of significant geopolitical conflicts, the Chinese government
may adjust its export promotion policies to restrict the sale of certain products to specific regions.

 All of our operations are conducted in the PRC,
while a portion of our products are sold to Europe, the US, India, Southeast Asian countries, and other regions. Accordingly, our financial
condition and results of operations are affected to a significant extent by the economic, political and legal developments in the PRC.
The PRC economy differs from the economies of most developed countries in many respects, including the extent of government involvement,
level of development, growth rate, and control of foreign exchange and allocation of resources. The PRC government has implemented various
measures to encourage economic growth and to guide the allocation of resources. Some of these measures may benefit the overall PRC economy
but may also have a negative effect on us. Our financial condition and results of operations could be materially and adversely affected
by government control over capital investments or changes in tax regulations that are applicable to us. However, the PRC government has
actively encouraged foreign capital to invest in China and has an open mindset welcoming a free-market economy in areas unrelated to
military and national security.

 The Chinese government in recent years has published
new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the
possibility that it will not in the future release regulations or policies regarding our industry that could require us or our PRC subsidiaries
to seek permission from Chinese authorities to continue to operate our business in China, which may adversely affect our business, financial
condition and results of operations. Furthermore, recent statements made by the Chinese government have indicated an intent to increase
the government's oversight and control over offerings of companies with significant operations in China that are to be conducted
in foreign markets, as well as foreign investment in China-based issuers like us. Any such action, once taken by the Chinese government,
could significantly limit or completely hinder our ability to offer our securities, and could cause the value of such securities to significantly
decline or become worthless.

 For example, in July 2021, the Chinese government
provided new guidance on China-based companies raising capital outside of China, including through arrangements via VIEs. In light of
such developments, the SEC has imposed enhanced disclosure requirements on China-based companies seeking to register securities with
the SEC. Although we have never adopted a VIE structure and our business in China does not involve any type of restricted industry under
Chinese regulations, any future Chinese, U.S. or other rules and regulations that place restrictions on capital raising or other activities
by companies with extensive operations in China could adversely affect our business. If the business environment in China deteriorates
from the perspective of domestic or international investment, or if relations between China and the United States or other governments
deteriorate, the Chinese government may intervene with our operations, and our business in China, as well as the value of our securities,
may also be adversely affected.

 The PRC government has increasingly strengthened
oversight in offerings conducted overseas or on foreign investment in China-based issuers, which could result in a material change in
our operations and our common stock could decline in value or become worthless.

 The PRC government has recently indicated an
intent to take actions to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based
issuers. For example, on July 6, 2021, the relevant PRC government authorities made public the Opinions on Strictly Scrutinizing Illegal
Securities Activities in Accordance with the Law, or the Opinions. These Opinions emphasized the need to strengthen the administration
over illegal securities activities and the supervision of overseas listings by China-based companies and proposed to take effective measures,
such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based over-seas-listed
companies.

 On December 24, 2021, the CSRC issued the Provisions
of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments) and
the Administrative Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), collectively
the Draft Overseas Listing Regulations, for public comment until January 23, 2022.

 Following issuance of the Draft Overseas Listing
Regulations, on February 17, 2023, the CSRC issued the Notice on Filing Arrangements for Overseas Securities Offering and Listing by
Domestic Companies (the "CSRC Filing Notice"), stating that the CSRC has published the Trial Administrative Measures of Overseas
Securities Offering and Listing by Domestic Companies (the "Trial Measures") and five supporting guidelines (the "Listing
Guidelines"), collectively the Trial Measures and Listing Guidelines. Among others, the Trial Measures and Listing Guidelines provide
that overseas offerings and listings by PRC domestic companies shall:

 (i)
 require submission of relevant materials
 that contain a filing report and a legal opinion, providing truthful, accurate and complete
 information on matters including but not limited to the shareholders of the issuer. Where
 the filing documents are complete and in compliance with stipulated requirements, the CSRC
 shall, within 20 working days after receipt of filing documents, conclude the filing procedure
 and publish filing results on the CSRC website. Where filing documents are incomplete or
 do not conform to stipulated requirements, the CSRC shall request supplementation and amendment
 thereto within five working days after receipt of the filing documents. The issuer should
 then complete supplementation and amendment within 30 working days;

 (ii)
 abide by laws, administrative regulations
 and relevant state rules concerning foreign investment in China, state-owned asset administration,
 industry regulation and outbound investment, and shall not disrupt the PRC domestic market
 order, harm state or public interests or undermine the lawful rights and interests of PRC
 domestic investors;

 (iii)
 abide by national secrecy laws and relevant provisions. Necessary
measures shall be taken to fulfill confidentiality obligations. Divulgence of state secrets or working secrets of government agencies
is strictly prohibited. Provision of personal information and important data, etc., to overseas parties in relation to overseas offering
and listing of PRC domestic companies shall be in compliance with applicable laws, administrative regulations and relevant state rules;
and

 (iv)
 be made in strict compliance with
 relevant laws, administrative regulations and rules concerning national security in the spheres
 of foreign investment, cybersecurity, data security, etc., and issuers shall duly fulfill
 their obligations to protect national security. If the intended overseas offering and listing
 necessitates a national security review, relevant security review procedures shall be completed
 according to the law before the application for such offering and listing is sub-mitted to
 any overseas parties such as securities regulatory agencies and trading venues;

 The Trial Measures came into effect on March
31, 2023. PRC domestic companies seeking to offer and list securities (which, for the purposes of the Trial Measures, are defined thereunder
as equity shares, depository receipts, corporate bonds convertible to equity shares, and other equity securities that are offered and
listed overseas, either directly or indirectly, by PRC domestic companies) in overseas markets, either via direct or indirect means,
must file with the CSRC with-in three working days after their application for an overseas listing is submitted.

 The Trial Measures provide that where a PRC domestic
company seeks to indirectly offer and list securities in overseas markets, the issuer shall designate a major domestic operating entity,
which shall, as the domestic entity responsible, file with the CSRC. The Trial Measures stipulate that an overseas listing will be determined
as "indirect" if the issuer meets both of the following conditions: (1) 50% or more of any of the issuer's operating
revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent
accounting year are accounted for by PRC domestic companies ("Condition I"), and (2) the main parts of the issuer's
business activities are conducted in the PRC, or its main places of business are located in the PRC, or the senior managers in charge
of its business operations and management are mostly Chinese citizens or domiciled in the PRC ("Condition II"); whether Chinese
citizens from Taiwan, Hong Kong, and Macau are included in the foregoing specification is not specified. The determination as to whether
or not an overseas offering and listing by PRC domestic companies is indirect shall be made on a 'substance over form' basis;
the Listing Guidelines further stipulate that if an issuer not satisfying Condition I submits an application for issuance and listing
in overseas markets in accordance with relevant non-PRC issuance regulations requiring such issuer to disclose risk factors mainly related
to the PRC, the securities firm(s) and the issuer's PRC counsel should follow the principle of 'sub-stance over form'
in order to identify and argue whether the issuer should complete a filing under the Trial Measures. Sub-sequent securities offerings
of an issuer in (i) the same overseas market where it has previously offered and listed securities, and (ii) an overseas market other
than one where the issuer has previously offered and listed securities shall be filed with the CSRC within three working days after offerings
are completed. Additionally, the Trial Measures stipulate that after an issuer has offered and listed securities in an overseas market,
the issuer shall submit a report to the CSRC within three working days after the occurrence and public disclosure of (i) a change of
control thereof, (ii) investigations of or sanctions imposed on the issuer by overseas securities regulators or relevant competent authorities,
(iii) changes of listing status or transfers of listing segment, and (iv) a voluntary or mandatory delisting.

 The CSRC Filing Notice states that, beginning
from March 31, 2023, PRC domestic enterprises which have already issued and listed securities overseas and fall within the scope of filing
under the Trial Measures shall be considered "existing enterprises" ("Existing Listed Enterprises"). Existing
Listed Enterprises are not required to complete filings immediately; rather, Existing Listed Enterprises should complete filings if they
are subsequently involved in matters require filings, such as follow-on financing activities, in accordance with the Trial Measures.

 There is a possibility that we may be deemed
as an Existing Listed Enterprise as defined under the CSRC Filing Notice, and that future offerings of listed securities or listings
outside China by us may be subject to CSRC filing requirements in accordance with the Trial Measures.

 On February 24, 2023, the CSRC, together with
the Ministry of Finance, National Administration of State Secrets Protection and National Archives Administration of China, revised the
Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing, which were issued
by the CSRC and National Administration of State Secrets Protection and National Archives Administration of China in 2009, or the "Provisions."
The revised Provisions were issued under the title the "Provisions on Strengthening Confidentiality and Archives Administration
of Overseas Securities Offering and Listing by Domestic Companies," and came into effect on March 31, 2023 together with the Trial
Measures. One of the major revisions to the revised Provisions is expanding their application to cover indirect overseas offering and
listing, as is consistent with the Trial Measures. The revised Provisions require that, among other things, (a) a domestic company that
plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities,
including securities companies, securities service providers, and overseas regulators, any documents and materials that contain state
secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file
with the secrecy administrative department at the same level; and (b) a domestic company that plans to, either directly or indirectly
through its overseas listed entity, publicly disclose or provide to relevant individuals and entities, including securities companies,
securities service providers, and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national
security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. Any failure or
perceived failure by our Company, or our PRC subsidiaries to comply with the above confidentiality and archives administration requirements
under the revised Provisions and other PRC laws and regulations may result in the relevant entities being held legally liable by competent
authorities, and referred to the judicial organ to be investigated for criminal liability if suspected of committing a crime.

 Given that the Trial Measures, Listing Guidelines
and Revised Provisions have been introduced recently, and that there remain substantial uncertainties surrounding the enforcement thereof,
we cannot assure you that, if required, we would be able to complete the filings and fully comply with the relevant new rules on a timely
basis, if at all. Further, as of the date of this report, the aforementioned Provisions of the State Council on the Administration of
Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments) issued on December 24, 2021, although effectively
replaced by the Trial Measures and its supporting guidelines, remain in draft form. The final and effective versions are yet to be published.

 Changes in U.S. and Chinese regulations
or in relations between the United States and China may adversely impact our business, our operating results, our ability to raise capital
and the value of our securities. Any such changes may take place quickly and with very little notice.

 The U.S. government, including the SEC, has made
statements and taken certain actions that led to changes to United States and international relations, and will impact companies with
connections to the United States or China. The SEC has issued statements primarily focused on companies with significant China-based
operations, such as us. For example, on July 30, 2021, Gary Gensler, Chairman of the SEC, issued a Statement on Investor Protection Related
to Recent Developments in China, pursuant to which Chairman Gensler stated that he has asked the SEC staff to engage in targeted additional
reviews of filings for companies with significant China-based operations. The statement also addressed risks inherent in companies with
VIE structures. We have never adopted a VIE structure and are not in any industry that is subject to foreign ownership limitations by
China. However, it is possible that the Company's filings with the SEC may be subject to enhanced review by the SEC.

 In response to the SEC's July 30, 2021
statement, the CSRC announced on August 1, 2021, that "it is our belief that Chinese and U.S. regulators shall continue to enhance
communication with the principle of mutual respect and cooperation, and properly address the issues related to the supervision of China-based
companies listed in the U.S. so as to form stable policy expectations and create benign rules framework for the market." The CSRC
pledged to continue to collaborate "closely with different stakeholders including investors, companies, and relevant authorities
to further promote transparency and certainty of policies and implementing measures," and emphasized that it "has always
been open to companies' choices to list their securities on international or domestic markets in compliance with relevant laws
and regulations." If any new legislation, executive orders, laws and/or regulations are implemented, if the U.S. or Chinese governments
take retaliatory actions due to the recent U.S.-China tension or if the Chinese government exerts more oversight and control over securities
offerings that are conducted in the United States, such changes could have an adverse effect on our business, financial condition and
results of operations, our ability to raise capital and the value of our securities.

 There are uncertainties regarding the interpretation and enforcement
of PRC laws, rules and regulations.

 Substantially all of our operations are conducted
in the PRC, and are governed by PRC laws, rules and regulations. Our PRC subsidiaries are subject to laws, rules and regulations applicable
to foreign investment in China. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior
court decisions may be cited for reference but have limited precedential value. In 1979, the PRC government began to promulgate a comprehensive
system of laws, rules and regulations governing economic matters in general. The overall effect of legislation over the past four decades
has significantly enhanced the protections afforded to various forms of foreign investment in China. However, China has not developed
a fully integrated legal system, and recently enacted laws, rules and regulations may not sufficiently cover all aspects of economic
activities in China or may be subject to significant degrees of interpretation by PRC regulatory agencies. In particular, because these
laws, rules and regulations are relatively new, and because of the limited number of published decisions and the nonbinding nature of
such decisions, and because the laws, rules and regulations often give the relevant regulator significant discretion in how to enforce
them, the interpretation and enforcement of these laws, rules and regulations involve uncertainties and can be inconsistent and unpredictable.
In addition, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely
basis or at all, and may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until
after the occurrence of the violation. Any administrative and court proceedings in China may be protracted, resulting in substantial
costs and diversion of resources and management attention.

 PRC laws and regulations establish complex
procedures in connection with certain acquisitions of China-based companies by foreign investors, which could make it more difficult
for us to pursue growth through acquisitions or mergers in China.

 On August 8, 2006, six PRC regulatory agencies,
including the Ministry of Commerce ("MOFCOM"), the State-Owned Assets Supervision and Administration Commission, the State
Administration of Taxation, the State Administration for Industry and Commerce, the CSRC, and the State Administration of Foreign Exchange,
jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which
came into effect on September 8, 2006 and were amended on June 22, 2009. The M&A Rules include, among other things, provisions that
purport to require that an offshore special purpose vehicle formed for the purpose of an overseas listing of securities of a PRC company
obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle's securities on an overseas stock
exchange. On September 21, 2006, the CSRC published on its official website procedures regarding its approval of overseas listings through
special purpose vehicles. However, substantial uncertainty remains regarding the scope and applicability of the M&A Rules to offshore
special purpose vehicles.

 The regulations also established additional procedures
and requirements that are expected to make merger and acquisition activities in China by foreign investors more time consuming and complex,
including requirements in some instances that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign
investor takes control of a PRC domestic enterprise, or that the approval from the MOFCOM be obtained in circumstances where overseas
companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies.

 Moreover, according to the Anti-Monopoly Law
of the People's Republic of China promulgated on August 30, 2007 and the Provisions on Thresholds for Reporting of Concentrations
of Undertakings (the "Prior Reporting Rules") issued by the State Council in August 2008 and amended in September 2018, the
concentration of business undertakings by way of mergers, acquisitions or contractual arrangements that allow one market player to take
control of or to exert decisive impact on another market player must also be notified in advance to the anti-monopoly enforcement agency
of the State Council when the applicable threshold is crossed and such concentration shall not be implemented without the clearance of
prior reporting. In addition, the Regulations on Implementation of Security Review System for the Merger and Acquisition of Domestic
Enterprise by Foreign Investors (the "Security Review Rules") issued by the MOFCOM that became effective in September 2011
specify that mergers and acquisitions by foreign investors that raise "national defense and security" concerns and mergers
and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise "national security"
concerns are subject to strict review by the MOFCOM, and the rules prohibit any activities attempting to bypass a security review by
structuring the transaction through, among other things, trusts, entrustment or contractual control arrangements.

 In the event that our acquisition of other companies
in China falls within the scope of these regulations, compliance with these regulations to complete such transactions could be time-consuming,
and any required approval processes, including approval from the MOFCOM, may delay or inhibit our ability to complete such transactions,
which could affect our ability to expand our business or maintain our market share.

 CBAK Energy Technology, Inc., as a holding
company incorporated in Nevada, the United States, without material operations of its own, relies on dividends and other distributions
on equity paid by its PRC operating subsidiaries for its cash needs.

 CBAK Energy Technology, Inc. is a holding company,
and we conduct all of our operations through our PRC subsidiaries. CBAK Energy Technology, Inc. relies on dividends and other distributions
on equity paid by its PRC subsidiaries for its cash needs, including the funds necessary to pay dividends and other cash distributions
to its stockholders, to service any debt it may incur and to pay its operating expenses. Current regulations in the PRC permit payment
of dividends only out of accumulated profits as determined in accordance with PRC accounting standards and regulations. According to
the articles of association of our PRC subsidiaries, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax
profit based on the PRC accounting standards and regulations each year to its statutory general reserve, until the balance in the reserve
reaches 50% of the registered capital of the company. Funds in the reserve are not distributable to CBAK Energy Technology, Inc. in forms
of cash dividends, loans or advances. In addition, if our PRC subsidiaries incur debt on their own behalf in the future, the instruments
governing the debt may restrict their ability to pay dividends or make other distributions to CBAK Energy Technology, Inc., which in
turn will adversely affect its available cash.

 In addition, our PRC subsidiaries' ability
to pay dividends and other cash distributions is subject to foreign exchange restrictions in China. For example, to address persistent
capital outflows and the RMB's depreciation against the U.S. dollar in the fourth quarter of 2016, the People's Bank of China
and the State Administration of Foreign Exchange, or SAFE, implemented a series of capital control measures in the subsequent months,
including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments
and shareholder loan repayments. The PRC government may continue to strengthen its capital controls and our PRC subsidiaries' dividends
and other distributions may be subject to tightened scrutiny in the future. The PRC government also imposes controls on the conversion
of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing
the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any.

 As a matter of fact, we have never declared or
paid any dividends to CBAK Energy Technology, Inc.'s stockholders, nor do we have any present plan to pay any cash dividends on
the common stock in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings
to operate and expand our business.

 Fluctuations in exchange rates could adversely affect our business
and the value of our securities.

 The value of our securities will be indirectly
affected by the foreign exchange rate between the U.S. dollar and RMB and between those currencies and other currencies in which our
sales may be denominated. Appreciation or depreciation in the value of the RMB relative to the U.S. dollar would affect our financial
results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations
in the exchange rate will also affect the relative value of any dividend we issue that will be exchanged into U.S. dollars, as well as
earnings from, and the value of, any U.S. dollar-denominated investments we make in the future.

 Very limited hedging transactions are available
in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions. While we may
enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not
be able to successfully hedge our exposure at all. In addition, our foreign currency exchange losses may be magnified by PRC exchange
control regulations that restrict our ability to convert RMB into foreign currencies. As a result, fluctuations in exchange rates may
have a material adverse effect on your investment.

 Investors may experience difficulties in
effecting service of legal process, enforcing foreign judgments or bringing original actions in China based upon U.S. laws, including
the federal securities laws or other foreign laws against us or our management.

 All of our current operations are conducted in
China. Moreover, most of our current directors and officers are nationals or residents of China. All or a substantial portion of the
assets of these persons are located outside the United States and in the PRC. As a result, it may not be possible to effect service of
process within the United States or elsewhere outside China upon these persons. In addition, uncertainty exists as to whether the courts
of China would recognize or enforce judgments of U.S. courts obtained against us or such officers and/or directors predicated upon the
civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions
brought in China against us or such persons predicated upon the securities laws of the United States or any state thereof.

 PRC regulation of loans to, and direct
investment in, PRC entities by offshore holding companies and governmental control of currency conversion may restrict or prevent CBAK
Energy Technology, Inc. from making additional capital contributions or loans to its PRC subsidiaries.

 CBAK Energy Technology, Inc., as an offshore
holding company, is permitted under PRC laws and regulations to provide funding to its PRC subsidiaries through loans or capital contributions.
However, loans by CBAK Energy Technology, Inc. to its PRC subsidiaries to finance their activities cannot exceed statutory limits and
must be registered with the local counterpart of the State Administration of Foreign Exchange and capital contributions to its PRC subsidiaries
are subject to the requirement of making necessary filings in the Foreign Investment Comprehensive Management Information System, and
registration with other governmental authorities in China.

 The State Administration of Foreign Exchange
promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement
of Capital of Foreign-invested Enterprises, or Circular 19, effective on June 1, 2015, in replacement of the Circular on the Relevant
Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested
Enterprises, the Notice from the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration
of Foreign Exchange Businesses, and the Circular on Further Clarification and Regulation of the Issues Concerning the Administration
of Certain Capital Account Foreign Exchange Businesses. According to Circular 19, the flow and use of the RMB capital converted from
foreign currency-denominated registered capital of a foreign-invested company is regulated such that RMB capital may not be used for
the issuance of RMB entrusted loans, the repayment of inter-enterprise loans or the repayment of bank loans that have been transferred
to a third party. Although Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested
enterprise to be used for equity investments within the PRC, it also reiterates the principle that RMB converted from the foreign currency-denominated
capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear
whether the State Administration of Foreign Exchange will permit such capital to be used for equity investments in the PRC in actual
practice. The State Administration of Foreign Exchange promulgated the Notice of the State Administration of Foreign Exchange on Reforming
and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective on June 9, 2016, which
reiterates some of the rules set forth in Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated
registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to grant loans
to non-associated enterprises. Violations of Circular 19 and Circular 16 could result in administrative penalties. Circular 19 and Circular
16 may significantly limit our ability to transfer any foreign currency CBAK Energy Technology, Inc. holds to its PRC subsidiaries, which
may adversely affect our liquidity and our ability to fund and expand our business in the PRC.

 In light of the various requirements imposed
by PRC regulations on loans to, and direct investment in, PRC entities by offshore holding companies, we cannot assure you that we will
be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all,
with respect to future loans or future capital contributions by us to our PRC subsidiaries. As a result, uncertainties exist as to our
ability to provide prompt financial support to our PRC subsidiaries when needed. If we fail to complete such registrations or obtain
such approvals, our ability to use foreign currency and to capitalize or otherwise fund our PRC operations may be negatively affected,
which could materially and adversely affect our liquidity and our ability to fund and expand our business.

 Failure to comply with PRC regulations
relating to the investment in offshore special purpose companies by PRC residents may subject our PRC resident stockholders to personal
liability, limit our ability to acquire PRC companies or to inject capital into our PRC subsidiaries, limit our PRC subsidiaries'
ability to distribute profits to us or otherwise materially adversely affect us.

 On July 14, 2014, SAFE issued the Circular on
Relevant Issues Relating to Domestic Residents' Investment and Financing and Roundtrip Investment through Special Purpose Vehicles
("Circular 37"), which replaced the Circular 75, promulgated by SAFE on October 21, 2005. Circular 37 requires PRC residents
to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for
the purpose of overseas investment and financing, with such PRC residents' legally owned assets or equity interests in domestic
enterprises or offshore assets or interests, referred to in Circular 37 as a "special purpose vehicle."

 We have notified substantial beneficial owners
of our company who we know are PRC residents to comply with the registration obligation. However, we may not be aware of the identities
of all our beneficial owners who are PRC residents. In addition, we do not have control over our beneficial owners and cannot assure
you that all of our PRC resident beneficial owners will comply with Circular 37. The failure of our beneficial owners who are PRC residents
to register or amend their SAFE registrations in a timely manner pursuant to Circular 37 or the failure of future beneficial owners of
our company who are PRC residents to comply with the registration procedures set forth in Circular 37 may subject such beneficial owners
or our PRC subsidiaries to fines and legal sanctions. Failure to register or amend the registration may also limit our ability to contribute
additional capital to our PRC subsidiaries or receive dividends or other distributions from our PRC subsidiaries or other proceeds from
disposal of our PRC subsidiaries, or we may be penalized by SAFE. These risks may have a material adverse effect on our business, financial
condition and results of operations.

 Under the Enterprise Income Tax Law, we
may be classified as a "resident enterprise" of China. Such classification will likely result in unfavorable tax consequences
to us and our non-PRC shareholders.

 On March 16, 2007, the National People's
Congress of China passed a new Enterprise Income Tax Law, or the EIT Law, and on November 28, 2007, the State Council of China passed
its implementing rules, which took effect on January 1, 2008. Under the EIT Law, an enterprise established outside of China with "de
facto management bodies" within China is considered a "resident enterprise," meaning that it can be treated in a manner
similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the EIT Law define de facto management
as "substantial and overall management and control over the production and operations, personnel, accounting, and properties"
of the enterprise.

 On April 22, 2009, the State Administration of
Taxation issued the Notice Concerning Relevant Issues Regarding Cognizance of Chinese Investment Controlled Enterprises Incorporated
Offshore as Resident Enterprises pursuant to Criteria of de facto Management Bodies, or the Notice, further interpreting the application
of the EIT Law and its implementation non-Chinese enterprise or group controlled offshore entities. Pursuant to the Notice, an enterprise
incorporated in an offshore jurisdiction and controlled by a Chinese enterprise or group will be classified as a "non-domestically
incorporated resident enterprise" if (i) its senior management in charge of daily operations reside or perform their duties mainly
in China; (ii) its financial or personnel decisions are made or approved by bodies or persons in China; (iii) its substantial assets
and properties, accounting books, corporate chops, board and shareholder minutes are kept in China; and (iv) at least half of its directors
with voting rights or senior management often resident in China. A resident enterprise would be subject to an enterprise income tax rate
of 25% on its worldwide income and must pay a withholding tax at a rate of 10% when paying dividends to its non-PRC shareholders. In
addition, the SAT issued the Announcement of the State Administration of Taxation on Issues concerning the Determination of Resident
Enterprises Based on the Standards of Actual Management Institutions in January 2014 to provide more guidance on the implementation of
Circular 82. This bulletin further provides that, among other things, an entity that is classified as a "resident enterprise"
in accordance with the circular shall file the application for classifying its status of residential enterprise with the local tax authorities
where its main domestic investors are registered. From the year in which the entity is determined to be a "resident enterprise,"
any dividend, profit and other equity investment gains from other resident enterprises within China in previous years (on or after January
1, 2008) shall be taxed in accordance with the enterprise income tax law and its implementing rules.

 We may be deemed to be a resident enterprise
by Chinese tax authorities. If the PRC tax authorities determine that we are a "resident enterprise" for PRC enterprise income
tax purposes, a number of unfavorable PRC tax consequences could follow. First, we may be subject to the enterprise income tax at a rate
of 25% on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. In our case, this would mean that
income such as interest on financing proceeds and non-China source income would be subject to PRC enterprise income tax at a rate of
25%. Second, although under the EIT Law and its implementing rules dividends paid to us from our PRC subsidiaries would qualify as "tax-exempt
income," we cannot guarantee that such dividends will not be subject to a 10% withholding tax, as the PRC foreign exchange control
authorities, which enforce the withholding tax, have not yet issued guidance with respect to the processing of outbound remittances to
entities that are treated as resident enterprises for PRC enterprise income tax purposes. Finally, it is possible that future guidance
issued with respect to the new "resident enterprise" classification could result in a situation in which a 10% withholding
tax is imposed on dividends we pay to our non-PRC shareholders and with respect to gains derived by our non-PRC stockholders from transferring
our shares. If we were treated as a "resident enterprise" by the PRC tax authorities, we would be subject to taxation in
both the U.S. and China, and our PRC tax may not be used as a credit to reduce our U.S. tax.

 We and our stockholders face uncertainties
with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed to a Chinese establishment
of a non-Chinese company, or immovable properties located in China owned by non-Chinese companies.

 In October 2017, the State Administration of
Taxation issued the Bulletin on Issues Concerning the Withholding of Non-PRC Resident Enterprise Income Tax at Source, or Bulletin 37,
which replaced the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises
issued by the State Administration of Taxation on December 10, 2009, and partially replaced and supplemented rules under the Bulletin
on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or Bulletin 7, issued by the State
Administration of Taxation on February 3, 2015. Pursuant to Bulletin 7, an "indirect transfer" of PRC assets, including a
transfer of equity interests in an unlisted non-PRC holding company of a PRC resident enterprise, by non-PRC resident enterprises may
be re-characterized and treated as a direct transfer of the underlying PRC assets, if such arrangement does not have a reasonable commercial
purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect
transfer may be subject to PRC enterprise income tax. According to Bulletin 7, "PRC taxable assets" include assets attributed
to an establishment in China, immoveable properties located in China, and equity investments in PRC resident enterprises and any gains
from the transfer of such asset by a direct holder, who is a non-PRC resident enterprise, would be subject to PRC enterprise income taxes.
When determining whether there is a "reasonable commercial purpose" of the transaction arrangement, features to be taken
into consideration include: whether the main value of the equity interest of the relevant offshore enterprise derives from PRC taxable
assets; whether the assets of the relevant offshore enterprise mainly consists of direct or indirect investment in China or if its income
mainly derives from China; whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have
real commercial nature which is evidenced by their actual function and risk exposure; the duration of existence of the business model
and organizational structure; the replicability of the transaction by direct transfer of PRC taxable assets; and the tax situation of
such indirect transfer and applicable tax treaties or similar arrangements. In the case of an indirect offshore transfer of assets of
a PRC establishment, the resulting gain is to be included with the enterprise income tax filing of the PRC establishment or place of
business being transferred, and may consequently be subject to PRC enterprise income tax at a rate of 25%. Where the underlying transfer
relates to immoveable properties located in China or to equity investments in a PRC resident enterprise, which is not related to a PRC
establishment or place of business of a non-resident enterprise, a PRC enterprise income tax of 10% would apply, subject to available
preferential tax treatment under applicable tax treaties or similar arrangements, and the party who is obligated to make the transfer
payments has the withholding obligation. Pursuant to Bulletin 37, the withholding agent shall declare and pay the withheld tax to the
competent tax authority in the place where such withholding agent is located within 7 days from the date of occurrence of the withholding
obligation, while the transferor is required to declare and pay such tax to the competent tax authority within the statutory time limit
according to Bulletin 7. Late payment of applicable tax will subject the transferor to default interest. Both Bulletin 37 and Bulletin
7 do not apply to transactions of sale of shares by investors through a public stock exchange where such shares were acquired from a
transaction through a public stock exchange.

 There is uncertainty as to the application of
Bulletin 37 or previous rules under Bulletin 7. We face uncertainties as to the reporting and other implications of certain past and
future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries
or investments. Our company may be subject to filing obligations or taxes if our company is transferor in such transactions, and may
be subject to withholding obligations if our company is transferee in such transactions, under Bulletin 37 and Bulletin 7. For transfer
of shares in our company by investors that are non-PRC resident enterprises, our PRC subsidiary may be requested to assist in the filing
under Bulletin 37 and Bulletin 7. As a result, we may be required to expend valuable resources to comply with Bulletin 37 and Bulletin
7 or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our
company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of
operations.

 We may be exposed to liabilities under
the Foreign Corrupt Practices Act and Chinese anti-corruption laws, and any determination that we violated these laws could have a material
adverse effect on our business.

 We are subject to the Foreign Corrupt Practice
Act ("FCPA"), and other laws that prohibit improper payments or offers of payments to foreign governments and their officials
and political parties by U.S. persons and issuers as defined by the statute, for the purpose of obtaining or retaining business. We have
operations, have agreements with third parties, and make most of our sales in China. The PRC also strictly prohibits bribery of government
officials. Our activities in China create the risk of unauthorized payments or offers of payments by the employees, consultants, sales
agents, or distributors of our subsidiaries, even though they may not always be subject to our control. It is our policy to implement
safeguards to discourage these practices by our employees. However, our existing safeguards and any future improvements may prove to
be less than effective, and the employees, consultants, sales agents, or distributors of our subsidiaries may engage in conduct for which
we might be held responsible. Violations of the FCPA or Chinese anti-corruption laws may result in severe criminal or civil sanctions,
and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In
addition, the U.S. government may seek to hold our subsidiaries liable for successor liability FCPA violations committed by companies
in which we invest or that we acquire.

 RISKS RELATED TO OUR BUSINESS

 Our independent auditors have expressed substantial doubt about
our ability to continue as a going concern.

 Our independent auditors have added an explanatory
paragraph to their audit opinion issued in connection with our financial statements included in this annual report which states that the
financial statements were prepared assuming that we would continue as a going concern. As discussed in Note 1 to the consolidated financial
statements included herein, we had a working capital deficiency, accumulated deficit from recurring net losses incurred for the prior
years and significant short-term debt obligations maturing in less than one year as of December 31, 2023. These conditions raise substantial
doubt about our ability to continue as a going concern. We plan to improve our profitability, renew our bank borrowings upon maturity
and raise additional funds through bank borrowings and equity financing to meet our daily cash demands. However, there can be no assurance
that we will be successful in executing such plans or obtaining additional equity or debt financing on acceptable terms. The audited consolidated
financial statements included in this report do not include any adjustments that might result from the outcome of this uncertainty.

 Our business has been and may continue to be adversely affected
by the ongoing global COVID-19 pandemic or other health epidemics and outbreaks.

 Since late 2019, the outbreak of a novel strain
of coronavirus named COVID-19 has materially and adversely affected the global economy. In response, China imposed widespread lockdowns,
closure of workplaces and restrictions on mobility and travel to contain the spread of the virus. After the initial outbreak in late
2019, from time to time, some instances of COVID-19 infections have emerged in various regions of China, including infections caused
by the Omicron variant. For example, a wave of infections caused by the Omicron variant emerged in Shanghai in early 2022, and a series
of restrictions and quarantines were implemented in Shanghai and other regions to contain the spread. Our manufacturing facilities were
not producing at full capacity when restrictive measures were in force for the areas where our manufacturing operations are located during
2022. China began to modify its zero-COVID policy at the end of 2022, and most of the travel restrictions and quarantine requirements
were lifted in December 2022. Although the COVID-19 pandemic has caused disruptions to our operations, it has had limited adverse impacts
on our operating results for the fiscal year ended December 31, 2023. We generated revenues of $204.44 million and $248.73 million for
the fiscal years ended December 31, 2023 and 2022, respectively.

 There may be surges of cases in certain regions
in the future, and there remains uncertainty as to the future impact of the virus, especially in light of this change in policy. We cannot
be assured that more lockdowns and other restrictive measures will not be implemented in the future. Some other countries, including
the U.S., also introduced various restrictions in response to the COVID-19 pandemic.

 The ongoing COVID-19 pandemic as well as other
possible health epidemics and outbreaks could have a material adverse impact on our or our customers' business operations including
reduction or suspension of operations in China, the U.S. or certain parts of the world. Our manufacturing operations, among others, cannot
all be conducted in a remote working structure and often require on-site access to materials and equipment. Our international customers
account for approximately 42% of our sales in 2023. Depending upon the duration of the ongoing COVID-19 pandemic and the associated business
interruptions, our customers, suppliers and partners may suspend or delay their engagement with us, which could result in a material
adverse effect on our financial condition. Our response to the ongoing COVID-19 pandemic may prove to be inadequate and we may be unable
to continue our operations in the manner we had prior to the outbreak, and may endure interruptions and delays in our product development
and shipments, all of which could have an adverse effect on our business, operating results, and financial condition.

 The acquisition of a controlling Interest
in Hitrans may fail to result in anticipated benefits but has involved significant investment of financial and other resources.

 We consummated
the acquisition of 81.56% of registered equity interests (representing 75.57% of paid-up capital) in Hitrans in November 2021 (such ownership
percentage reduced to 67.33% of registered equity interests (representing 72.99% of paid-up capital) as of December 31, 2023, as a result
of Hitrans's subsequent equity financings and our transfer of some of our equity interests in Hitrans). In addition, as of December
31, 2023, we had paid all registered capital of Hitrans that we had subscribed for. However,
acquisitions generally create risks such as (i) the need to integrate and manage the businesses and products acquired with our own business
and products; (ii) additional demands on our resources, systems, procedures and controls; (iii) disruption of our ongoing business; (iv)
potential unknown or unquantifiable liabilities associated with the target company; and (v) diversion of management's attention
from other business concerns. Moreover, this acquisition involved substantial investment of funds from our previous equity financings,
resulted in one-time charges and expenses. This acquisition may not be successful in generating revenue, income or other returns, and
any resources we committed will not be available to us for other purposes. Our inability to take advantage of growth opportunities or
address risks associated with this acquisition and investment may negatively affect our operating results.

 Additionally, we have recognized impairment losses
for long-lived assets of $7.1 million and $4.8 million for the years ended December 31, 2023 and 2022, respectively. Such impairment
charges represented the excess of carrying amounts of long-lived assets over the estimated fair value of the production facilities in
Hitrans for the production of materials used in manufacturing of lithium batteries. In addition, we recognized impairment losses for
goodwill of $1.6 million for the year ended December 31, 2022 due to the underperformance of the Hitrans segment. Any additional impairment
of goodwill or other intangible assets acquired in connection with Hitrans's acquisition or in another acquisition or charges to
earnings associated with any acquisition or investment activity, may materially reduce our earnings. This acquisition may not result
in its anticipated benefits, and we may not be able to properly integrate acquired products, technologies or businesses with our existing
products and operations or successfully combine personnel and cultures. Failure to do so could deprive us of the intended benefits of
this acquisition.

 We may face impairment charges if economic
environments in which our businesses operate and key economic and business assumptions substantially change.

 Assessment of the potential impairment of property,
plant and equipment and other identifiable intangible assets is an integral part of our normal ongoing review of operations. Testing
for potential impairment of long-lived assets is dependent on numerous assumptions and reflects our best estimates at a particular point
in time, which may vary from testing date to testing date. The economic environments in which our businesses operate and key economic
and business assumptions with respect to projected product selling prices and materials costs, market growth and inflation rates, can
significantly affect the outcome of impairment tests. Estimates based on these assumptions may differ significantly from actual results.
Changes in factors and assumptions used in assessing potential impairments can have a significant impact on both the existence and magnitude
of impairments, as well as the time at which such impairments are recognized. Future changes in the economic environment and the economic
outlook for the assets being evaluated could also result in impairment charges. Any significant asset impairments would adversely impact
our financial results.

 If we cannot continue to develop new products in a timely manner,
and at favorable margins, we may not be able to compete effectively.

 The battery industry has been notable for the
pace of innovations in product life, product design and applied technology. We have made, and will continue to make, investments in research
and development with the goal of further innovation. The successful development and introduction of new products and line extensions
face the uncertainty of customer acceptance and reaction from competitors, as well as the possibility of cannibalization of sales of
our existing products. In addition, our ability to create new products and line extensions and to sustain existing products is affected
by whether we can:

 develop and fund research and technological innovations;

 receive and maintain necessary intellectual property protections;

 obtain governmental approvals and registrations;

 comply with governmental regulations; and

 anticipate customer needs and preferences successfully.

 The failure to develop and launch successful
new products could hinder the growth of our business and any delay in the development or launch of a new product could also compromise
our competitive position. If competitors introduce new or enhanced products that significantly outperform ours, or if they develop or
apply manufacturing technology which permits them to manufacture at a significantly lower cost relative to ours, we may be unable to
compete successfully in the market segments affected by these changes.

 There are inherent risks associated with new product development
and our efforts to develop and market new products could fail.

 In June 2020, our wholly-owned subsidiary, BAK
Asia entered into a framework investment agreement with Gaochun EDZ. According to this agreement, we intended to develop certain lithium
battery projects which are expected to have a total production capacity of 20 GWh per year with support from Gaochun EDZ. See also "Item
1. Business—Expansion of Manufacturing Capabilities" for additional information on our cooperation with Gaochun EDZ. We have
put into operation two production lines of model 32140 large-sized cylindrical "tabless" batteries with a production capacity of 2
GWh per year. Model 32140 batteries can be used in light electric vehicles, electric vehicles, electric tools and energy storage. We also
announced in June 2023 that we had succeeded in mass-producing Model 32140 sodium-ion cylindrical batteries, making us one of only a few
companies in the world that have the capacity to mass produce sodium-ion batteries. We are also in the process of developing larger-sized
cylindrical batteries including Model 40140 and Model 46120.

 In addition, as
of December 31, 2023, we have been gradually phasing out our light electric vehicle business. In
2020, we ventured into developing light electric vehicle projects. On November 9, 2020, we established our new subsidiary, Nanjing BFD,
formally named Nanjing Daxin, to launch and develop our light electric vehicle business. However, the development of this new line of
business was not successful due to the competitive landscape and evolving market preferences. Consequently, Nanjing BFD has shifted away
from the development and manufacture of electric bicycles, motorcycles and automotive spare parts and pivoted towards the manufacture
of sodium-ion batteries since 2023. Jiangsu Daxin, a subsidiary wholly-owned by Nanjing BFD, incorporated on August 4, 2021 and focused
on the development and manufacture of electric bicycle, motorcycle and automotive spare parts, was dissolved on December 22, 2023.

 We cannot provide assurance that market acceptance
of our new products will occur due to the highly competitive nature of the business, or our future business ventures will not fail. The
Company has operated and competed in industries where there are frequent introductions of new products and line extensions and such product
introductions often require significant investment and support. The ability of the Company to understand end user needs and preferences
is key to maintaining and improving the competitiveness of its product offerings. The development and introduction of new products, as
well as the renovation of current products and product lines, require substantial and effective research, development and marketing expenditures,
which the Company may be unable to recoup if the new or renovated products do not gain widespread market acceptance. There are inherent
risks associated with new product development and marketing efforts, including product development or launch delays, product performance
issues during development, changing regulatory frameworks that affect the new products in development and the availability of key raw
materials included in such products. These inherent risks could result in the failure of new products and product line extensions to
achieve anticipated levels of market acceptance, additional costs resulting from failed product introductions and the Company not being
first to market. As the Company continues to focus on innovation and renovation of its products, the Company's business, financial
condition or results of operations could be adversely affected in the event that the Company is not able to effectively develop and introduce
new or renovated products and line or brand extensions.

 Our failure, if any, to keep up with rapid
technological changes and evolving industry standards may cause our products to become obsolete and less marketable, resulting in loss
of market share to our competitors.

 The lithium-based battery market, as well as
the battery materials industry, are characterized by changing technologies and evolving industry standards, which are difficult to predict.
This, coupled with frequent introduction of new products and models, has shortened product life cycles and may render our products obsolete
or unmarketable. Our ability to adapt to evolving industry standards and anticipate future standards will be a significant factor in
maintaining and improving our competitive position and our prospects for growth. To achieve this goal, we have invested and plan to continue
investing significant financial resources in our R&D infrastructure. Currently, we have facilities in Dalian, Nanjing and Shaoxing,
China, which have about 337 R&D staffers and over 8,254 square meters of space dedicated to R&D activities.

 R&D activities, however, are inherently uncertain,
and we might encounter practical difficulties in commercializing our research results. Accordingly, our significant investment in our
R&D infrastructure may not bear fruit. On the other hand, our competitors may improve their technologies or even achieve technological
breakthroughs that would render our products obsolete or less marketable. Therefore, our failure to effectively keep up with rapid technological
changes and evolving industry standards by introducing new and enhanced products may cause us to lose our market share and to suffer
a decrease in our revenue.

 Maintaining our R&D activities and
manufacturing operations require significant capital expenditures, and our inability or failure to maintain our operations could have
a material adverse impact on our market share and ability to generate revenue.

 We incurred capital expenditures of approximately
$12.4 million and $31.1 million for the years ended December 31, 2022 and 2023, respectively. We may incur significant additional capital
expenditures as a result of unanticipated expenses, regulatory changes and other events that impact our business. If we are unable or
fail to timely obtain capital on acceptable terms and adequately maintain our manufacturing capacity, we could lose customers and there
could be a material adverse impact on our market share and our ability to generate revenue.

 We face intense competition from other
battery manufacturers and cathode material and precursor producers, many of which have significantly greater resources.

 The market for batteries used in electric vehicles
and light electric vehicles is intensely competitive and is characterized by frequent technological changes and evolving industry standards.
We expect competition to become more intense. Increased competition may result in declines in average selling prices, causing a decrease
in gross profit margins. We have faced and will continue to face competition from manufacturers of traditional rechargeable batteries,
such as lead-acid batteries, other manufacturers of lithium-ion batteries and companies engaged in the development of batteries incorporating
new technologies. Other manufacturers of high-power lithium batteries currently include Gotion Hi-tech, EVE Battery, Shandong Goldencell,
EVPS and Power Long Battery.

 Many of these existing competitors have greater
financial, personnel, technical, manufacturing, marketing, sales and other resources than we do. As a result, these competitors may be
in a stronger position to respond quickly to market opportunities, new or emerging technologies and evolving industry standards. Many
of our competitors are developing a variety of battery technologies, such as lithium polymer, prismatic cells, cylindrical cells and
fuel cell batteries, which are expected to compete with our existing product lines. Other companies undertaking R&D activities of
solid-polymer lithium-ion batteries have developed prototypes and are constructing commercial scale production facilities. It is possible
that our competitors will be able to introduce new products with more desirable features than ours and their new products will gain market
acceptance. If our competitors successfully do so, we may not be able to maintain our competitive position and our future success would
be materially and adversely affected.

 The market for cathode materials and precursors
has been evolving rapidly. Rapid and ongoing changes in technology and product standards could render our cathode materials and precursor
products less competitive, or even obsolete, particularly if we fail to continue to improve the performance of our cathode materials
and precursor products. Competing technologies that outperform our cathode materials and precursor products in one or more performance
attributes could be developed and successfully introduced. We are aware of certain companies, including Sumitomo Metal Mining Co., Ltd.,
Umicore N.V., Beijing Easpring Material Technology Co., Ltd. and Ningbo Ronbay Lithium Battery Material Co., Ltd. using cell chemistry
technology similar to our technology and these or other companies have introduced or could introduce products that compete directly with
our products and could in the future outperform our products in one or more performance attributes, could be offered to our customers
as a cheaper alternative to our products or may result in increased pricing pressure on our products.

 We are dependent on a limited number of customers for a significant
portion of our revenues and this dependence is likely to continue.

 We have been dependent on a limited number of
customers for a significant portion of our revenue. Our top five customers accounted for approximately 59.2% and 69.5% of our revenues
for the years ended December 31, 2023 and 2022, respectively. Dependence on a few customers could make it difficult to negotiate attractive
prices for our products and could expose us to the risk of substantial losses if a single prominent customer stops purchasing our products.
We expect that a limited number of customers will continue to contribute a significant portion of our sales in the near future. Our ability
to maintain close relationships with these top customers is essential to the growth and profitability of our business. If we fail to
sell our products to one or more of these top customers in any particular period, or if a large customer purchases fewer of our products,
defers orders or fails to place additional orders with us, or if we fail to develop additional major customers, our revenue could decline,
and our results of operations could be adversely affected.

 In addition to our own production, we also
rely on a few battery suppliers to fulfill our customers' orders. If we fail to effectively manage our relationships with, or lose
the services of these suppliers and we cannot substitute suitable alternative suppliers, our operations would be materially adversely
affected.

 We generate part
of our revenues by outsourcing some of our customers' orders to other suppliers
for certain battery models that we do not produce. If our business relationship with these suppliers changes negatively or their financial
condition deteriorates, or their operating environment changes, our business may be harmed in many ways. Suppliers may also unilaterally
terminate battery supply to us or increase the prices. As a result, we are not assured of an uninterrupted supply of certain types of
high-power lithium batteries of acceptable quality or at acceptable prices from suppliers. On the other hand, we may not be able to substitute
them with suitable alternative contract manufacturers in a timely manner on commercially acceptable terms or at all. We may be forced
to default on the agreements with our customers. This may negatively impact our revenues and adversely affect our reputation and relationships
with our customers, causing a material adverse effect on our financial condition, results of operations and prospects.

 Failure by us to maintain and strengthen
relationships with certain contract battery material producer may materially adversely affect our ability to fulfill customer orders
and our results of operations.

 We outsource the production of a portion of our
battery material products to a third-party supplier in Xianyang city, Shaanxi province. Our ability to meet the demands of our customers
for battery material products would be affected, if our relationship with this supplier changes negatively, or operations at this supplier
are disrupted. In the event of a significant disruption to the battery material production line of this supplier, our proprietary manufacturing
facility in Shangyu, Zhejiang province, may not have sufficient production capacity to meet demand until the supplier's production
line returns to operation. On the other hand, we may not be able to replace this supplier with suitable alternative contract manufacturers
in a timely manner on commercially acceptable terms or at all. We may be forced to default on orders with our customers. This could negatively
impact our revenues and adversely affect our reputation and relationships with our customers, causing a material adverse effect on our
financial condition, results of operations and prospects.

 Our business depends on the growth in demand
for light electric vehicles, electric vehicles, electric tools, energy storage, such as residential energy supply and UPS application,
and other high-power electric devices.

 As the demand for our battery cell and battery
materials is directly related to the market demand for high-power electric devices, a fast-growing high-power electric devices market
will be critical to the success of our business. In anticipation of an expected increase in the demand for high-power electric devices
such as electric vehicles, light electric vehicles, electric tools, and energy storage including residential energy supply and UPS application
in the next few years, we are building new manufacturing facilities in Nanjing and have invested in the R&D capability of our newly
acquired battery materials business. However, the markets we have targeted, primarily those in the PRC, may not achieve the level of
growth we expect. If this market fails to achieve our expected level of growth, we may have excess production capacity and may not be
able to generate enough revenue to maintain our profitability.

 Our success, in part, depends on the success
of manufacturers of the end applications that use our products, and our failure to gain acceptance of our products from such manufacturers
could materially and adversely affect our results of operations and profitability.

 As we target the battery markets for light electric
vehicles, electric vehicles, electric tools, energy storage including but not limited to residential energy supply & UPS application,
and other high-power electric devices, our future success in part depends on whether end-application manufacturers are willing to use
batteries that incorporate our products. To secure acceptance of our products, we must constantly develop and introduce more reliable
and cost-effective battery cells and battery materials with enhanced functionality to meet evolving industry standards. Our failure to
gain acceptance of our products from these manufacturers could materially and adversely affect our future success. From 2017 to 2019,
our electric vehicle customers included Dongfeng Autos, Dayun Motor and Yema Auto. Our sales to electric vehicle customers decreased significantly
in 2020 and 2021. However, we have been looking for opportunities to re-enter the electric vehicle battery market by continuing to develop
batteries suitable for electric vehicles and actively cooperating with previous electric vehicle customers in battery pack after-sales
service and technical support. As a result of our efforts, we generated approximately $2.8 million revenues from electric vehicle customers
in 2023. In 2023, our sales of cathode materials and precursors reached $71.4 million. However, we cannot guarantee that the market demand
for the cathode materials and precursors will not decline.

 Even if a manufacturer decides to use batteries
that incorporate our products, the manufacturer may not be able to market and sell its products successfully. The manufacturer's
inability to market and sell its products successfully, whether from lack of market acceptance or otherwise, could materially and adversely
affect our business and prospects because this manufacturer may not order new products from us. If we cannot achieve the expected level
of sales, we will not be able to make sufficient profits to offset the expenditures we have incurred to expand our production capacity
or develop new technologies, nor will we be able to grow our business. Accordingly, our business, financial condition, results of operations
and future success would be materially and adversely affected.

 We may not be able to accurately plan our production based on
our sales contracts, which may result in excess product inventory or product shortages.

 Our sales contracts for battery cells typically
provide for a non-binding, three-month forecast on the quantity of products that our customers may purchase from us. Our sales contracts
for battery materials typically provide for a non-binding, two-month forecast on the quantity of products that our customers may purchase
from us. We typically have only a 15-day to 30-day lead time to manufacture battery cell products and 25-day lead time to produce battery
material products to meet our customers' requirements once our customers place orders with us. To meet the short delivery deadline,
we generally make significant decisions on our production level and timing, procurement, facility requirements, personnel needs and other
resources requirements based on our estimate in light of this forecast, our past dealings with such customers, market conditions and
other relevant factors. Our customers' final purchase orders may not be consistent with our estimates. If the final purchase orders
substantially differ from our estimates, we may have excess product inventory or product shortages. Excess product inventory could result
in unprofitable sales or write-offs as our products are susceptible to obsolescence and price declines. Producing additional products
to make up for any product shortages within a short time frame may be difficult, making us unable to fill out the purchase orders. In
either case, our results of operation would fluctuate from period to period.

 A change in our product mix may cause our results of operations
to differ substantially from the anticipated results in any particular period.

 Our overall profitability may not meet expectations
if our products, customers or geographic mix are substantially different than anticipated. Our profit margins vary among products, customers
and geographic markets. Consequently, if our mix of any of these is substantially different from what is anticipated in any particular
period, our profitability could be lower than anticipated.

 Manufacturing or use of our products may
cause accidents, which could result in significant production interruption, delay or claims for substantial damages.

 Due to the high energy density inherent in lithium-based
batteries, our batteries can pose certain safety risks, including the risk of fire. Although we incorporate safety procedures in the
research, development, manufacture and transportation of batteries that are designed to minimize safety risks, the manufacture or use
of our products may still cause accidents. Any accident, whether occurring at the manufacturing facilities or from the use of our products,
may result in significant production interruption, delays or claims for substantial damages caused by personal injuries or property damages.

 We may not be able to substantially increase our manufacturing
output in order to maintain our cost competitiveness.

 We believe that our ability to provide cost-effective
products is one of the most significant factors that contributed to our past success and will be essential for our future growth. We
believe this is one of our competitive advantages over our Japanese and Korean competitors. We need to increase our manufacturing output
to a level that will enable us to substantially reduce the cost of our products on a per unit basis through economies of scale. However,
our ability to substantially increase our manufacturing output is subject to significant constraints and uncertainties, including:

 the need to raise significant additional funds to purchase and
prepay raw materials or to build additional manufacturing facilities, which we may be unable to obtain on reasonable terms or at all;

 delays and cost overruns as a result of a number of factors,
many of which may be beyond our control, such as increases in raw material prices and problems with equipment vendors;

 delays or denial of required approvals by relevant government
authorities;

 diversion of significant management attention and other resources;
and

 failure to execute our expansion plan effectively.

 If we are unable to increase our manufacturing
output because of any of the risks described above, we may be unable to maintain our competitive position or achieve the growth we expect.
Moreover, even if we expand our manufacturing output, we may not be able to generate sufficient customer demand for our products to support
our increased production output.

 We may incur significant costs because of the warranties we
supply with our battery cell products.

 With respect to the sale of our battery products,
we typically offer warranties against any defects due to product malfunction or workmanship for a period of six months-to-eight years
from the date of purchase, including a period of six to twenty-four months for battery cells, and a period of twelve to twenty-seven
months for battery modules for electric bicycles, and a period of three years to eight years (or 120,000 or 200,000 km if reached sooner)
for battery modules for electric vehicles. We provide a reserve for these potential warranty expenses, which is based on an analysis
of historical warranty issues. There is no assurance that future warranty claims will be consistent with past history, and in the event
that we experience a significant increase in warranty claims, there is no assurance that our reserves will be sufficient. This could
have a material adverse effect on our business, financial condition and results of operations.

 We do not have product liability insurance
for claims against our product quality. Defects in our products could result in a loss of customers and decrease in revenue, unexpected
expenses and a loss of market share.

 We have not purchased product liability insurance
to provide against any claims against us based on our product quality. As a result, defects in our products could result in a loss of
customers and decrease in revenue, unexpected expenses and a loss of market share, and any of our products are found to have reliability,
quality or compatibility problems, we will be required to accept returns, provide replacements, provide refunds, or pay damages. We may
be required to incur substantial amounts to indemnify our customers in respect of their product quality claims against us, which would
materially and adversely affect the results of our operations and severely damage our reputation.

 We do not have insurance coverage against all the damages or
losses of our facilities.

 We currently have insurance coverage for certain
machinery and equipment and buildings located at our facilities in Dalian. We are discussing with multiple insurance service providers
aiming to secure comprehensive insurance coverage for the remaining properties. If we were to suffer any losses or damages to any of
the facilities before the purchase of insurance policies that provide adequate coverage, our business, financial condition and results
of operations may be materially and adversely affected. In addition, our subsidiary, Hitrans, maintains property insurance coverage against
certain property and inventory damages and losses.

 However, such insurance may not adequately compensate
us for any such losses and will not address a loss of customers as a result of property damages and consequent disruptions to operations
or may have large deductibles insufficient to support our continuing operations. If damages or losses exceed the insurance coverage,
we may not be able to return to operation for an extended period of time, potentially even threatening our viability. In addition, insurance
coverage is expensive, may be difficult to obtain and may not be available in the future on acceptable terms or at all. A significant
increase in the cost of insurance coverage could adversely affect our business, financial condition and results of operations.

 We depend on third parties to supply key
raw materials and components to us. Failure to obtain a sufficient supply of these raw materials and components in a timely fashion and
at reasonable costs could significantly delay our production and shipments, which would cause us to breach our sales contracts with our
customers.

 We purchase from Chinese domestic suppliers for
certain key raw materials and components such as electrolytes, electrode materials and separators for our battery cell products and purchase
from Chinese domestic suppliers for cobaltous sulfates, manganese sulfates, lithium hydroxides, lithium carbonates and liquid nickel
sulfates. We have purchased raw materials and components on the basis of purchase orders. In the absence of firm and long-term contracts,
we may not be able to obtain a sufficient supply of these raw materials and components from our existing suppliers or alternates in a
timely fashion or at a reasonable cost. If we fail to secure a sufficient supply of key raw materials and components in a timely fashion,
it would result in a significant delay in our production and shipments, which may cause us to breach our sales contracts with our customers.
Furthermore, failure to obtain sufficient supply of these raw materials and components at a reasonable cost could also harm our revenue
and gross profit margins.

 Fluctuations in prices and availability
of raw materials, particularly Ni, Co, Mn, Li2CO3, LiPF6 and LiFePO4, could increase our costs or cause delays in shipments, which would
adversely impact our business and results of operations.

 Our operating results could be adversely affected
by increases in the cost of raw materials, particularly Ni, Co, Mn, Li2CO3, LiPF6 and LiFePO4, the primary cost component of our battery
products, battery material products or other product parts or components. The price of Ni, Co, Mn, Li2CO3, LiPF6 and LiFePO4 is not stable.
For example, we experienced significant increases in the costs of nickel and cobalt in 2022, as a result of the Ukrainian-Russian conflict,
as well as in the cost of lithium carbonate due to large market demand and supply imbalance from 2021 to 2022. Although we are not dependent
on single suppliers for the supply of any raw materials, we mostly purchase raw materials through individual purchase orders or short-term
contracts and not pursuant to long-term contracts. As such, our third-party suppliers may not be able to satisfy our requirements during
a period of sustained or growing demand.

 In addition, our battery cell products historically
have not been able to fully offset the effects of higher costs of raw materials through price increases to customers or by way of productivity
improvements. As a result, a significant increase in the price of one or more raw materials, parts or components or the inability to
successfully implement price increases/surcharges to mitigate such cost increases could have a material adverse effect on our results
of operations.

 We do not have long-term purchase commitments
from our customers, which may result in significant uncertainties and volatility with respect to our revenue from period to period.

 We do not have long-term purchase commitments
from our customers and the term of our sales contracts with our customers is typically one year or less. Furthermore, these contracts
leave certain major terms such as price and quantity of products open to be determined in each purchase order. These contracts also allow
parties to re-adjust the contract price for substantial changes in market conditions. As a result, if our customers hold stronger bargaining
power than us or the market conditions are in their favor, we may not be able to enjoy the price downside protection or upside gain.
Furthermore, our customers may decide not to continue placing purchase orders with us in the future at the same level as in prior periods.
As a result, our results of operations may vary from period to period and may fluctuate significantly in the future.

 Compliance with environmental regulations
can be expensive, and our failure to comply with these regulations may result in adverse publicity and a material adverse effect on our
business.

 As a manufacturer, we are subject to various
PRC environmental laws and regulations on air emission, wastewater discharge, solid waste and noise. Although we believe that our operations
are in substantial compliance with current environmental laws and regulations, we may not be able to comply with these regulations at
all times as the PRC environmental legal regime is evolving and becoming more stringent. Therefore, if the PRC government imposes more
stringent regulations in the future, we will have to incur additional substantial costs and expenses in order to comply with new regulations,
which may negatively affect our results of operations. If we fail to comply with any of the present or future environmental regulations
in material aspects, we may suffer from negative publicity and may be required to pay substantial fines, suspend or even cease operations.
Failure to comply with PRC environmental laws and regulations may materially and adversely affect our business, financial condition and
results of operations.

 We rely significantly on technology and
systems to support our production, supply chain, payments, financial reporting and other key aspects of our business. Any failure, inadequacy,
interruption or security failure of those systems could have a material adverse effect on our business, reputation and brand, financial
condition, and results of operations.

 The satisfactory performance, reliability and
availability of our technology systems are critical to our business. A failure or malfunction of our information technology system can
result in substantial losses, damage and harm to our business, operations or brand. To manage our operations and personnel, we will need
to continue to improve and expand our operational and financial systems, transaction processing and internal controls and business processes;
in doing so, we could encounter transitional issues and incur substantial additional expenses. The failure of our information systems
to operate effectively, problems with transitioning to upgraded or replacement systems or expanding them, or a breach in security of
these systems, could materially adversely affect the promptness and accuracy of our manufacturing process, products delivery, transaction
processing, financial accounting and reporting, the efficiency of our operations and our ability to properly forecast earnings and cash
requirements. We could be required to make significant additional expenditures to remediate any such failure, problem or breach. Any
such events could have a material adverse effect on our business, financial condition, and results of operations.

 Further, we house
a portion of our systems offsite at third-party data centers. Our data centers may be
subject to cyber-attacks or other technology-related incidents, and also break-ins, sabotage and intentional acts of vandalism that could
cause disruptions in our ability to serve our customers and protect data. Some of our systems are not fully redundant, and our disaster
recovery planning cannot account for all eventualities. The occurrence of a natural disaster, intentional sabotage or other anticipated
problems could result in lengthy interruptions to our operations. Any errors or vulnerability in our systems or damage to or failure
of our systems, or a third-party data center hosting our data, could result in interruptions in our operations and could have a material
adverse effect on our business, financial condition, and results of operations.

 In addition, we may now and in the future implement
new systems to increase efficiency and profitability. We may encounter transitional issues and incur substantial additional expenses
in connection with any implementation or change to existing processes, any of which could have a material adverse effect on our business,
financial condition, and results of operations.

 System security risk issues, and disruption
of our internal operations or information technology systems, could have a material adverse effect on our business, financial condition,
and results of operations.

 External parties, such as experienced computer
programmers and hackers, or even internal users (including both employees and non-employees with authorized access), may be able to penetrate
or create systems disruptions or cause shutdowns of our networks, systems and applications or those of third-party vendors. We collect
and store identifiable information about our employees, customers and others, and sometimes rely upon third-party service providers to
maintain or process data on our behalf and to provide security for the information in their possession. Such compromise of such information
could subject us to governmental investigations and/or enforcement actions, fines and penalties, litigation, claims and other liabilities,
and harm our reputation, which could have a material adverse effect on our business, financial condition and results of operations. Moreover,
we could incur significant expenses or disruptions of our operations in connection with system failures, timeliness of applying updates
to vulnerable systems or other factors within or beyond our control. Such failures or breaches in our information systems could also
result in the disclosure, misappropriation or misuse of or unauthorized access to our confidential, proprietary, or personal information,
disruption of our operations or damage to our networks and systems. An increasing number of companies have recently disclosed breaches
of their security, some of which have involved increasingly sophisticated and highly targeted attacks on portions of their sites.

 Although we take steps to protect our networks,
systems, applications and data, we or our service providers may be unable to anticipate, defend against, or timely identify and respond
to such activity, including but not limited to hacking, malware, viruses, social engineering (such as phishing or other scams), extortion,
account takeover attacks, denial or degradation of service attacks, supply chain attacks, computer and network vulnerabilities or the
negligence and malfeasance of individuals with authorized access to our data. In addition, sophisticated hardware and operating system
software and applications that we buy or license from third parties may contain defects in design or manufacture, including "bugs"
and other problems that could unexpectedly interfere with the security and operation of the systems. The costs to us to eliminate or
alleviate security problems, viruses and bugs, or any problems associated with the outsourced services provided to us, could be significant,
and efforts to address these problems could result in interruptions, delays or cessation of service that may impede our production, supply
chain, sales, financial reporting or other critical functions and have a material adverse effect on our business, financial condition
and results of operations.

 In addition, the Chinese government and governments
in other jurisdictions have enacted laws or regulations that require companies to notify individuals about certain types of security
incidents or breaches, and any such disclosures may lead to negative publicity. It is also possible that security breaches affecting
our competitors or others in our industry could also result in negative publicity that indirectly harms our reputation. Increasing public,
industry, and governmental focus on privacy and data security may continue to lead to additional guidance or legislative and regulatory
action. As a result, we may have to modify our business systems and practices with the goal of further improving data security, which
could result in reduced net revenue, increased expenditures and operating complexity. Any compromise of our security or security breach
could result in a violation of applicable privacy and other laws, significant legal and financial exposure or damage to our reputation,
which could have a material adverse effect on our business, financial condition, and results of operations.

 We currently do not carry insurance to cover
any potential claims or expenses related to security breaches that affect us. In addition, we cannot assure investors that the limitations
on liability in our contracts would be enforceable or adequate or would otherwise protect us from any such liabilities with respect to
any particular claim. Any imposition of liability that is not covered by insurance would increase our operating expenses and reduce our
net income, if any, or increase our net loss.

 The use of technology based on artificial
intelligence presents risks relating to confidentiality, creation of inaccurate and flawed outputs and emerging regulatory risk, any
or all of which may adversely affect our business and results of operations.

 As with many technological innovations, artificial
intelligence ("AI") presents great promise but also risks and challenges that could adversely affect our business. Sensitive,
proprietary, or confidential information of the Company and employees, could be leaked, disclosed, or revealed as a result of or in connection
with the use of generative AI technologies by our employees or vendors. Any such information input into a third-party generative AI or
machine learning platform could be revealed to others, including if information is used to train the third party's generative AI
or machine learning models. Additionally, where a generative AI or machine learning model ingests personal information and makes connections
using such data, those technologies may reveal other sensitive, proprietary, or confidential information generated by the model. Moreover,
generative AI or machine learning models may create incomplete, inaccurate, or otherwise flawed outputs, some of which may appear correct.
Due to these issues, these models could lead us to make flawed decisions that could result in adverse consequences to us, including exposure
to reputational and competitive harm, customer loss, and legal liability. In addition, uncertainty in the legal regulatory regime relating
to AI may require significant resources to modify and maintain business practices to comply with applicable law, the nature of which
cannot be determined at this time. Several jurisdictions have already proposed or enacted laws governing AI. These obligations may prevent
or limit our ability to use AI in our business, lead to regulatory fines or penalties, or require us to change our business practices.
If we cannot use AI, or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage. Any of
these factors could adversely affect our business, financial condition, and results of operations.

 We face risks associated with the marketing,
distribution and sale of our products internationally, and if we are unable to effectively manage these risks, they could impair our
ability to expand our business abroad.

 For the years ended December 31, 2023 and 2022,
we derived 42% and 20%, respectively, of our sales from outside the PRC mainland. We deem overseas market as an important revenue source
for us, and have been actively pursuing opportunities to expand our customer base overseas. The marketing, international distribution
and sale of our products expose us to a number of risks, including:

 fluctuations in currency exchange rates;

 difficulty in engaging and retaining distributors that are
 knowledgeable about, and can function effectively in, overseas markets;

 increased costs associated with maintaining marketing efforts
 in various countries;

 difficulty and cost relating to compliance with the different
 commercial and legal requirements of the overseas markets in which we offer our products;

 inability to obtain, maintain or enforce intellectual property
 rights; and

 trade barriers such as export requirements, tariffs, taxes
 and other restrictions and expenses, which could increase the prices of our products and
 make us less competitive in some countries.

 Our business depends substantially on the continuing efforts
of our senior executives and other key personnel, and our business may be severely disrupted if we lose their services.

 Our future success heavily depends on the continued
service of our senior executives and other key employees. In particular, we rely on the expertise and experience of our Chairman, Chief
Executive Officer, President Mr. Yunfei Li and our Chief Financial Officer, Mr. Jiewei Li. If one or more of our other senior executives
are unable or unwilling to continue to work for us in their present positions, we may encounter similar problems, but on a compounded
basis. Moreover, if any of our current or former senior executives joins a competitor or forms a competing company, we may lose customers,
suppliers, know-how and key personnel. Each of our executive officers has entered into an employment agreement with us, which contains
non-competition and confidentiality clauses. However, if any dispute arises between our current or former executive officers and the
Company, it is hard to predict the extent to which any of these agreements could be enforced in China, where these executive officers
reside, in light of the uncertainties with China's legal system.

 The success of our business depends on our ability to attract,
train and retain highly skilled employees and key personnel.

 Because of the highly specialized, technical
nature of our business, we must attract, train and retain a sizable workforce comprising highly skilled employees and other key personnel.
Since our industry is characterized by high demand and intense competition for talent, we may have to pay higher salaries and wages and
provide greater benefits in order to attract and retain highly skilled employees or other key personnel that we will need to achieve
our strategic objectives. Our ability to train and integrate new employees into our operations may not meet the requirements of our growing
business. Our failure to attract, train or retain highly skilled employees and other key personnel in numbers that are sufficient to
satisfy our needs would materially and adversely affect our business.

 We have experienced significant management
changes which could increase our control risks and have a material adverse effect on our ability to do business and our results of operations.

 Since 2019, we have had a number of changes in
our senior management, including multiple changes in our Chief Financial Officer. The magnitude of these past and potential changes and
the short time interval in which they have occurred or may occur, particularly during a time of economic or financial crisis, add to
the risks of control failures, including a failure in the effective operation of our internal control over financial reporting or our
disclosure controls and procedures. Control failures could result in material adverse effects on our financial condition and results
of operations. It may take time for the new management team to become sufficiently familiar with our business and each other to effectively
develop and implement our business strategies. The turnover of key management positions could further harm our financial performance
and results of operations. Management attention may be diverted from regular business concerns by reorganizations.

 We and our independent public accounting
firm identified material weaknesses in our internal control over financial reporting as of December 31, 2023. If we
fail to remediate the material weaknesses, we may be unable to accurately report our financial results or prevent fraud, and investor
confidence and the market price of our shares may be adversely affected.

 To implement Section 404 of the Sarbanes-Oxley
Act of 2002, or SOX 404, the SEC adopted rules requiring public companies to include a report of management on the company's internal
control over financial reporting in their annual reports on Form 10-K. A report of our management is included under Item 9A of this annual
report. In addition, as we became an "accelerated filer" in 2023, our independent registered public accounting firm is required
to attest to and report on the effectiveness of our internal control over financial reporting. Our management has identified the following
material weaknesses in our internal control over financial reporting: (i) we did not have appropriate policies and procedures in place
to evaluate the proper accounting and disclosures of key documents and agreements, and (ii) we do not have sufficient and skilled accounting
personnel with an appropriate level of technical accounting knowledge and experience in the application of accounting principles generally
accepted in the United States commensurate with our financial reporting requirements. A "material weakness" is a deficiency,
or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. We have
taken measures and plan to continue to take measures to remedy the material weaknesses. We have regularly offered our financial personnel
trainings on internal control and risk management, and we have regularly provided trainings to our financial personnel on U.S. GAAP accounting
guidelines. However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial
reporting. Our failure to address any control deficiency could result in inaccuracies in our financial statements and could also impair
our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. Moreover, effective
internal control over financial reporting is important to prevent fraud. As a result, our business, financial condition, results of operations
and prospects, as well as the trading price of our shares, may be adversely affected.

 RISKS RELATED TO COMMON STOCK

 Numerous factors, many of which are beyond our control, may
cause the market price of common stock to fluctuate significantly.

 There are numerous factors, many of which are beyond our control,
may cause the market price of common stock of CBAK Energy Technology, Inc. to fluctuate significantly. These factors include:

 our earnings releases, actual or anticipated changes in our
 earnings, fluctuations in our operating results or our failure to meet the expectations of
 financial market analysts and investors;

 changes in financial estimates by us or by any securities
 analysts who might cover the common stock;

 speculation about our business in the press or the investment
 community;

 significant developments relating to our relationships with
 our customers or suppliers;

 stock market price and volume fluctuations of other publicly
 traded companies and, in particular, those that are in our industries;

 customer demand for our products;

 investor perceptions of our industry in general and our company
 in particular;

 the operating and stock performance of comparable companies;

 general economic conditions and trends;

 major catastrophic events;

 announcements by us or our competitors of new products, significant
 acquisitions, strategic partnerships or divestitures;

 changes in accounting standards, policies, guidance, interpretation
 or principles;

 loss of external funding sources;

 sales of our shares, including sales by our directors, officers
 or significant shareholders; and

 additions or departures of key personnel.

 In the past, shareholders of a public company
often brought securities class action suits against the company following periods of instability in the market price of that company's
securities. If we were involved in a class action suit, it could divert a significant amount of our management's attention and
other resources from our business and operations, which could harm our results of operations and require us to incur significant expenses
to defend the suit. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise
capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which
could have a material adverse effect on our financial condition and results of operations.

 Techniques employed by short sellers may drive down the market
price of the common stock of CBAK Energy Technology, Inc.

 Short selling is the practice of selling securities
that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later
date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the
borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received
in the sale. As it is in the short seller's interest for the price of the security to decline, many short sellers publish, or arrange
for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market
momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, led to selling of
shares in the market.

 Public companies that have substantially all
of their operations in China have been the subject of short selling. Much of the scrutiny and negative publicity has centered on allegations
of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities and mistakes, inadequate
corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result, a number of targets
of such efforts are now conducting internal and external investigations into the allegations and, in the interim, are subject to shareholder
lawsuits and/or SEC enforcement actions.

 We were the subject of certain unfavorable allegations.
Although we believe such allegations are untrue, inaccurate or inflated, we have expended resources to investigate such allegations and
defend ourselves and we may need to expend more resources in connection with these or other allegations in the future, which could be
costly and time-consuming and could distract our management from growing our business. The allegations against us may severely impact
our stock price and disrupt our business operations. Any investment in the common stock of CBAK Energy Technology, Inc. could be greatly
reduced or even rendered worthless due to such allegations.

 If we fail to comply with the continued
listing requirements of NASDAQ, we would face possible delisting, which would result in a limited public market for shares of CBAK Energy
Technology, Inc. and make obtaining future debt or equity financing more difficult for us.

 CBAK Energy Technology, Inc.'s common stock
is traded and listed on the NASDAQ Capital Market under the symbol "CBAT", which was changed from "CBAK" on November
30, 2018. The common stock may be delisted if we fail to maintain certain NASDAQ listing requirements.

 On September 27, 2023, we received notice from
the Listing Qualifications Department of The NASDAQ Stock Market ("Nasdaq") indicating that, for the last 30 consecutive
business days, the bid price for the common stock had closed below the minimum $1.00 per share and as a result, CBAK Energy Technology,
Inc. was no longer in compliance with the NASDAQ Listing Rule 5550(a)(2). We regained compliance with the minimum bid price rule on January
8, 2024.

 We cannot assure you that CBAK Energy Technology,
Inc. will continue to comply with the requirements for continued listing on the NASDAQ Capital Market in the future. If the common stock
loses its status on the NASDAQ Capital Market, the common stock would likely trade in the over-the-counter market. If our shares were
to trade on the over-the-counter market, selling the common stock could be more difficult because smaller quantities of shares would
likely be bought and sold, transactions could be delayed, and security analysts' coverage of us may be reduced. In addition, in
the event the common stock is delisted, broker-dealers have certain regulatory burdens imposed upon them, which may discourage broker-dealers
from effecting transactions in the common stock, further limiting the liquidity of the common stock. These factors could result in lower
prices and larger spreads in the bid and ask prices for the common stock. Such delisting from the NASDAQ Capital Market and continued
or further declines in our share price could also greatly impair our ability to raise additional necessary capital through equity or
debt financing and could significantly increase the ownership dilution to shareholders caused by our issuing equity in financing or other
transactions.

 If we become directly subject to the scrutiny,
criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate
and resolve the matter which could harm our business operations, stock price and reputation and could result in a loss of your investment
in our stock, especially if such matter cannot be addressed and resolved favorably.

 U.S. public companies that have substantially
all of their operations in China, particularly companies like us which have completed so-called reverse merger transactions, have been
the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such
as the SEC. Much of the scrutiny, criticism and negative publicity has centered around financial and accounting irregularities and mistakes,
a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto
and, in many cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of
many U.S. listed Chinese companies has sharply decreased in value and, in some cases, has become virtually worthless. Many of these companies
have also been subject to shareholder lawsuits and SEC enforcement actions, and have been conducting internal and external investigations
into the allegations. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue,
we will have to expend significant resources to investigate such allegations and/or defend our company. This situation will be costly
and time consuming and distract our management from growing our company. If such allegations are not proven to be groundless, our company
and business operations will be severely and your investment in our stock could be rendered worthless.

 The disclosures in our reports and other
filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC. Accordingly,
our public disclosure should be reviewed in light of the fact that no governmental agency that is located in China where substantially
all of our operations and business are located have conducted any due diligence on our operations or reviewed or cleared any of our disclosures.

 We are regulated by the SEC and our reports and
other filings with the SEC are subject to SEC review in accordance with the rules and regulations promulgated by the SEC under the Securities
Act and the Exchange Act. Unlike public reporting companies whose operations are located primarily in the United States, however, substantially
all of our operations are located in China. Since substantially all of our operations and business take place in China, it may be more
difficult for the Staff of the SEC to overcome the geographic and cultural obstacles that are present when reviewing our disclosures.
These same obstacles are not present for similar companies whose operations or business take place entirely or primarily in the United
States. Furthermore, our SEC reports and other disclosures and public pronouncements are not subject to the review or scrutiny of any
PRC regulatory authority. For example, the disclosure in our SEC reports and other filings are not subject to the review of China Securities
Regulatory Commission, a PRC regulator that is tasked with oversight of the capital markets in China. Accordingly, you should review
our SEC reports, filings and our other public pronouncements with the understanding that no local regulator has done any due diligence
on our company and with the understanding that none of our SEC reports, other filings or any of our other public pronouncements has been
reviewed or otherwise been scrutinized by any local regulator.

 You may experience dilution to the extent
that shares of the common stock are issued upon the exercise of outstanding warrants or other securities that CBAK Energy Technology,
Inc. may issue in the future.

 You may experience dilution to the extent that
shares of the common stock are issued upon the exercise of outstanding warrants of CBAK Energy Technology, Inc., and if CBAK Energy Technology,
Inc. issues additional equity securities, or there are any issuances and subsequent exercises of stock options issued in the future.

 On February 10, 2021, pursuant to that certain
Securities Purchase Agreement, dated February 8, 2021, CBAK Energy Technology, Inc. issued to certain investors (i) in a private placement,
Series A-1 warrants to purchase a total of 4,469,988 shares of common stock, at a per share exercise price of $7.67 and exercisable for
42 months from the date of issuance; (ii) in a registered direct offering, certain Series B warrants to purchase a total of 4,469,988
shares of common stock, at a per share exercise price of $7.83 and exercisable for 90 days from the date of issuance; and (iii) in the
registered direct offering, certain Series A-2 warrants to purchase up to 2,234,992 shares of common stock, at a per share exercise price
of $7.67 and exercisable for 45 months from the date of issuance. On May 10, 2021, we entered into that Amendment No. 1 to the Series
B Warrant with each of the holders of the Series B warrants, pursuant to which the expiration date of the Series B warrants was extended
from May 11, 2021 to August 31, 2021. On September 1, 2021, all of the Series B warrants and Series A-2 warrants had expired.

 Prior to that, in December 2020, CBAK Energy
Technology, Inc. issued to the same investors warrants to purchase an aggregate of 3,795,920 shares of common stock at an exercise price
of $6.46 per share. These warrants are exercisable until 36 months after the date of issuance. The exercise prices of all of the above
warrants are subject to full-ratchet anti-dilution adjustment in the case of future issuances or deemed issuances of shares of common
stock below the warrants' exercise price then in effect, as well as customary adjustment in case of stock splits, stock dividends,
stock combinations and similar recapitalization transactions. In addition, CBAK Energy Technology, Inc. issued to Mr. Jian Ke placement
agent warrants to purchase up to 379,592 shares of common stock at an exercise price of $6.475 per share in December 2020 and the placement
agent warrant to purchase up to 446,999 shares of common stock at an exercise price of $9.204 per share in February 2021. These warrants
also bear customary anti-dilution protections in the event of stock dividends or splits, business combination, sale of assets, similar
recapitalization transactions, or other similar transactions. As of December 31, 2023, the warrants to purchase 3,795,920 shares of common
stock at an exercise price of $6.46 per share, and the warrants to purchase 379,592 shares of common stock at an exercise price of $6.475
per share, all issued in December 2020, had expired.

 Our directors and executive officers, collectively,
own approximately 12.89% of outstanding common stock of CBAK Energy Technology, Inc. and may possess significant influence in or control
over our management and affairs.

 Mr. Yunfei Li,
our president and chief executive officer and chairman of our board, and our other executive officers and directors beneficially own
an aggregate of 12.89% of outstanding common stock of CBAK Energy Technology, Inc. as
of December 31, 2023. As a result, our directors and executive officers, acting together, may have significant influence in or control
over our management and affairs, including the election of directors and approval of significant corporate transactions, such as mergers,
consolidation, and sale of all or substantially all of our assets. Consequently, this concentration of ownership may have the effect
of delaying or preventing a change of control, including a merger, consolidation or other business combination involving us, even if
such a change of control would benefit our stockholders.

 GENERAL RISK FACTORS

 We may be exposed to infringement or misappropriation
claims by third parties, which, if determined adversely to us, could cause our loss of significant rights and inability to continue providing
our existing product offerings.

 Our success also depends largely on our ability
to use and develop our technology and know-how without infringing the intellectual property rights of third parties. The validity and
scope of claims relating to lithium-ion battery technology patents involve complex scientific, legal and factual questions and analysis
and, therefore, may be highly expensive and time-consuming. If there is a successful claim of infringement against us, we may be required
to pay substantial damages to the party claiming infringement, develop non-infringing technologies or enter into royalty or license agreements
that may not be available on acceptable terms, if at all. Our failure to develop non-infringing technologies or license the proprietary
rights on a timely basis would harm our business. Protracted litigation could result in our customers, or potential customers, deferring
or limiting their purchase or use of our products until resolution of such litigation. Parties making the infringement claim may also
obtain an injunction that can prevent us from selling our products or using technology that contains the allegedly infringing contents.
Any intellectual property litigation could have a material adverse effect on our business, results of operation and financial condition.

 Adverse developments affecting the financial
services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional
counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations.

 Actual events involving limited liquidity, defaults,
non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in
the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or
other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon
Valley Bank failed and was taken into receivership by the U.S. Federal Deposit Insurance Corporation; on March 12, 2023, Signature Bank
and Silvergate Capital Corp. were each swept into receivership; the following week, a syndicate of U.S. banks infused $30 billion in
First Republic Bank; and later that same week, the Swiss Central Bank provided $54 billion in covered loan and short-term liquidity facilities
to Credit Suisse Group AG, all in an attempt to reassure depositors and calm fears of a banking contagion. Our ability to effectively
run our business could be adversely affected by general conditions in the global economy and in the financial services industry. Various
macroeconomic factors could adversely affect our business, including fears concerning the banking sector, changes in inflation, interest
rates and overall economic conditions and uncertainties. A severe or prolonged economic downturn could result in a variety of risks,
including our ability to raise additional funding on a timely basis or on acceptable terms. A weak or declining economy could also impact
third parties upon whom we depend to run our business. Increasing concerns over bank failures and bailouts and their potential broader
effects and potential systemic risk on the global banking sector generally and its participants may adversely affect our access to capital
and our business and operations more generally.

 Currently, we do not have a business relationship
with any of the banking institutions mentioned above, and our cash, cash equivalents and short term investments that are mostly concentrated
in China have been unaffected by the turmoil in the financial industry in the US and Europe; however, we cannot guarantee that the banking
institution with which we do business will not face similar circumstances in the future, or that the third parties with whom we do business
will not be negatively affected by such circumstances.

 ITEM 1B. UNRESOLVED STAFF COMMENTS.

 Not applicable.

 ITEM 1C. CYBERSECURITY

 We have taken a multifaceted approach to addressing cybersecurity
risks, including leadership from our senior management and Board of Directors, direct supervision and operational execution from our
information technology ("IT") department and active involvement of employees. The Company's senior management devotes
significant resources to cybersecurity and risk management processes to adapt to the changing cybersecurity landscape and respond to
emerging threats. We periodically assess the threat landscape and take a holistic view of cybersecurity risks, with a layered cybersecurity
strategy based on prevention, detection and mitigation. Our IT team reviews cybersecurity risks, and we have a set of Company-wide policies
and procedures concerning cybersecurity matters, including policies related to encryption standards, remote access, multi factor authentication,
confidential information, the use of the internet, social media, email and wireless devices and incident response.

 The Company's Chief Executive Officer, an engineering expert
with over eight years of experience in leading our company, is responsible for developing and implementing our information security measures
and overseeing our IT department. The Company has established a physical firewall, with physical gateways that filter suspicious files
and data flows entering and exiting our Company's network. In addition, the computers in our R&D department are equipped with
behavior control software, which makes emails and files sent from the R&D computers in an encrypted state and inaccessible without
specific authorization from designated supervisors.

 The Company's IT department is directly responsible for cybersecurity
matters and routinely reports to the senior management. In the event of a cybersecurity incident, the IT department will initially report
to the Company's senior management, including our Chief Executive Officer. If the incident is assessed as a material threat or
incident to our information systems, our senior management will escalate the issue to the Board of Directors. Given that our core operations
are in manufacturing and involve limited network-related activities, we believe that our existing cybersecurity measures are adequate.
The Company's Board of Directors and senior management are committed to continuously evaluating and upgrading our cybersecurity
prevention, detection, and mitigation strategies in line with the evolution of our business needs and cybersecurity risks.

 In the fiscal year ended December 31, 2023, we did not identify any
cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations
or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances
that we have not experienced undetected cybersecurity incidents. For additional information about these risks, see "Risks Related
to Our Business—We rely significantly on technology and systems to support our production, supply chain, payments, financial reporting
and other key aspects of our business. Any failure, inadequacy, interruption or security failure of those systems could have a material
adverse effect on our business, reputation and brand, financial condition, and results of operations" and "Risks Related
to Our Business—System security risk issues, and disruption of our internal operations or information technology systems, could
have a material adverse effect on our business, financial condition, and results of operations" in Item 1A-Risk Factors.

 ITEM 2. PROPERTIES.

 We have completed the construction of the facilities
in our Dalian site with a total area of 72,809 square meters comprising manufacturing facilities, warehousing and packaging facilities
and administrative offices at the BAK Industrial Park in Dalian. Of that space, approximately 35,355 square meters are manufacturing
facilities. Our power battery manufacturing plant and packing plant in Dalian started commercial production in July 2015.

 We have completed the construction facilities for the Phase One of
our Nanjing site, which occupies an area of 27,141 square meters.

 In November 2021, the Company completed the acquisition
of Hitrans. Hitrans owns a manufacturing facility, warehousing, R&D and administrative offices in Zhejiang with a total area of 13,772
square meters. Of that space, approximately 10,660 square meters are manufacturing facilities.

 In July 2023, we
secured a rental agreement for a facility in Shangqiu, Henan, PRC, spanning an area of 22,000 square meters. This space includes 12,000
square meters allocated for production purposes, specifically aimed at expanding our capacity to manufacture model 26700 cells. This
strategic move is in response to the escalating demand for our battery products. Additionally, Nanjing BFD has leased a property covering
548 square meters.

 We believe that our facilities, including those
under construction, meet our current business needs and will meet the needs of our expanded operations in the future.

 The following tables sets forth the breakdown of our facilities as
of December 31, 2023 based on use.

 Facility

 Usage

 Area (m 2)

 Constructions completed – facilities owned

 Manufacturing

 46,016

 R&D and administrative

 9,745

 Warehousing

 29,018

 Other facilities

 1,803

 Total

 86,582

 Constructions–completed - facilities rented

 Manufacturing

 31,743

 Warehousing

 9,674

 Administrative

 8,272

 Total

 49,689

 The following table presents the total acreage of facilities controlled
by each of our major operating subsidiaries as of December 31, 2023:

 Area (m 2)

 Dalian CBAK Power facilities site area

 Total

 72,810

 Nanjing CBAK facility site area

 Total

 27,141

 Nanjing BFD facilities site area

 Total

 Hitrans facilities site area

 Total

 13,772

 See also " Item 1. Business—Overview
of Our Business—Expansion of Manufacturing Capabilities " for more information related to the construction of our Nanjing
facilities.

 We currently have insurance coverage for certain
machinery, equipment and buildings located at our owned facilities. We are discussing with multiple insurance service providers aiming
to secure comprehensive insurance coverage for the remaining properties. In addition, our subsidiary, Hitrans, maintains property insurance
coverage against certain property and inventory damages and losses. If we were to suffer any losses or damages to any of the facilities
before purchasing insurance policies that provide adequate coverage, our business, financial condition and results of operations may
be materially and adversely affected.

 ITEM 3. LEGAL PROCEEDINGS.

 See Note 28 (ii) to our audited consolidated financial statements
included in this report.

 ITEM 4. MINE SAFETY DISCLOSURES.

 Not applicable.

 ITEM 5. MARKET FOR REGISTRANT'S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 Market Information

 Effective June 21, 2019, the Company's Common Stock started
trading on the Nasdaq Capital Market under the symbol "CBAT."

 Approximate Number of Holders of Our Common Stock

 As of March 14, 2024, there were approximately
54 holders of record of our common stock, which do not include the number of stockholders holding shares of our common stock in "street
name."

 Dividend Policy

 We have never declared or paid any dividends,
nor do we have any present plan to pay any cash dividends on our common stock in the foreseeable future. We currently intend to retain
most, if not all, of our available funds and any future earnings to operate and expand our business.

 As we are a holding company, we rely on dividends
paid to us by our subsidiaries in the PRC through our Hong Kong subsidiaries, BAK Asia and BAK Investments. In accordance with its articles
of association, each of our subsidiaries in the PRC is required to allocate to its statutory general reserve at least 10% of its respective
after-tax profits determined in accordance with the PRC accounting standards and regulations. Each of our subsidiaries in the PRC may
stop allocations to its general reserve if such reserve has reached 50% of its registered capital. Allocations to the reserve can only
be used for making up losses and other specified purposes and may not be paid to us in the form of loans, advances, or cash dividends.
Dividends paid by our PRC subsidiaries to BAK Asia or BAK Investments, our Hong Kong subsidiaries, will not be subject to Hong Kong capital
gains or other income tax under current Hong Kong laws and regulations because they will not be deemed to be assessable income derived
from or arising in Hong Kong. Such dividends, however, may be subject to a 10% withholding tax in the PRC.

 Our board of directors has discretion on whether
to pay dividends unless the distribution would render us unable to repay our debts as they become due, as provided in Chapter 78.288
of the Nevada Revised Statutes. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon
our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other
factors that the board of directors may deem relevant.

 Recent Sales of Unregistered Securities

 There were no unregistered sales of equity securities during the 2023
fiscal year that were not previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K that was filed during
the 2023 fiscal year.

 Purchases of Equity Securities

 No repurchases of our common stock were made during the fiscal year
of 2023.

 ITEM 6. [RESERVED]

 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

 The following management's discussion
and analysis should be read in conjunction with our financial statements and the notes thereto and the other financial information appearing
elsewhere in this report. In addition to historical information, the following discussion contains certain forward-looking information.
See "Special Note Regarding Forward Looking Statements" above for certain information concerning those forward-looking statements.
Our financial statements are prepared in U.S. dollars and in accordance with U.S. GAAP.

 Overview

 We are engaged in the development, manufacture
and sale of new energy high power lithium and sodium batteries, as well as cathode materials and precursors for lithium batteries, which
are mainly used in the following applications:

 Electric vehicles ("EV"), such as electric cars,
 electric buses, hybrid electric cars and buses;

 Light electric vehicles ("LEV"), such as electric
 bicycles, electric motors, electric tricycles and smaller-sized electric cars; and

 Energy storage including but not limited to residential energy supply & uninterruptible power supply application, and other high-power applications.

 In 2023, we experienced
higher demand for our model 26650 lithium-ion batteries than our Dalian facilities could supply. To address this demand, we increased
our capacity at both our Dalian manufacturing center and the Phase I project in Nanjing by adding new production lines. Currently, we
have three production lines in our Dalian manufacturing center, with a total capacity of 2 GWh per year. In Nanjing, our Phase I project
has two production lines, capable of producing 2 GWh per year (or 1.7 GWh if one line is used exclusively for sodium battery manufacturing).
Additionally, we have two production lines in our Shangqiu manufacturing center, which we have rented to meet the high client demand,
with a total capacity of 0.5 GWh per year.

 We generated revenues from the manufacture and
sale of high-power lithium and sodium batteries as well as raw materials for lithium batteries in the aggregate amounts of $204.4 million
and $248.7 million for the fiscal years ended December 31, 2023 and 2022, respectively. We incurred a net loss of $8.5 million and $11.3
million during the fiscal years ended December 31, 2023 and 2022, respectively. New revenues derived from the sale of materials used in
manufacturing of lithium batteries, through the newly acquired subsidiary, Hitrans, as well as the continuous climb of sales in batteries
used in residential energy supply and UPS and light-electric-vehicle related products, contributed to the total increase in net revenues.
For more details, see " Item 1. Business—Overview of Our Business." Specifically, total net revenue from sales
of batteries for residential energy supply and uninterruptable supplies was $124.5 million for the fiscal year ended December 31, 2023,
as compared to $83.6 million for fiscal year ended December 31, 2022, an increase of $40.9 million, or 49%. Net revenue from sales of
cathode materials and precursors was $71.4 million for the fiscal year ended December 31, 2023, as compared to $154.0 million for fiscal
year ended December 31, 2022. In addition, net revenues from sales of batteries for light electric vehicles was $5.6 million for the fiscal
year ended December 31, 2023, as compared to $6.4 million for fiscal year ended December 31, 2022, a decrease of $0.1 million, or 13%.
We believe the government's new energy policies will, in the long run, encourage the production of new energy vehicles, optimize
the industry's structure, enhance technical standards and strengthen the industry's competitiveness, which ultimately will
foster strategic development of new energy vehicles. In addition, our latest development of 32140 battery and our planned investment in
the R&D of Series 46 batteries will help us regain competitiveness in both LEV and EV markets with the appropriate products. With
the demand for new energy growing, we are confident in our ability to secure additional orders from the expanding market.

 We completed the construction of a cylindrical
power battery manufacturing plant in Dalian, which began commercial production in July 2015. We have successfully integrated most of BAK
Tianjin's operating assets into our Dalian facilities. This includes machinery and equipment for battery and battery pack production,
customers, management team, technical staff, as well as patents and technologies. In 2020, we initiated the construction of our Nanjing
facilities, planned in two phases. The Phase I commenced operations in the second half of 2021, covering an area of approximately 27,173
square meters. Since then, we have been steadily increasing its production capacity to 2GWh. Construction of the Phase II began in 2022
and includes three major manufacturing plants. The construction of the ceiling stage for the first of these three plants in Phase II was
completed in 2023, and we anticipate it will commence operations in the last quarter of 2024. Once fully operational with these three
new plants, the Nanjing facilities are expected to provide a total capacity of 20 GWh, supporting the growing demand from our customers.
In 2023, our client demand for batteries soared, prompting us to rent additional manufacturing space in Shangqiu, Henan, PRC. Our Shangqiu
facility has a capacity of 0.5 GWh per year. We have two production lines at this leased facility, and the renovation costs were covered
by the owner. Additionally, subject to meeting certain criteria, the rental expenses can be offset by the taxes incurred. In addition
to our construction efforts, we have also invested in machinery and equipment to expand our production capacity. Thanks to the booming
demand from our clients, our battery segment has successfully returned to profitability in 2023. We are confident that our battery segment
will continue to improve its profitability as we move forward.

 In addition, we completed the acquisition of
81.56% of registered equity interests (representing 75.57% of paid-up capital) in Hitrans, a leading developer and manufacturer of NCM
precursor and cathode materials in China, in November 2021. As of December 31, 2023, our equity interests in Hitrans had reduced to 67.33%
(representing 72.99% of paid-up capital) after Hitrans accepted investments from several investors. See " Item 1. Business—Overview
of Our Business—Acquisition of A Raw Materials Manufacturer " for more information on the acquisition.

 The consolidated financial statements contained
in this annual report have been prepared assuming we will continue to operate as a going concern, which contemplates the realization
of assets and the settlement of liabilities in the normal course of business. The consolidated financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification
of liabilities that may result from the outcome of this uncertainty related to our ability to continue as a going concern.

 Financial Statement Presentation

 Net revenues. The Company recognizes
revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects
to receive in exchange for those goods. The Company recognizes revenues following the five-step model prescribed under ASU No. 2014-09:
(i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction
price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we
satisfy the performance obligation.

 Revenues from product sales are recognized when
the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental
costs of obtaining a contract as and when incurred it the expected amortization period of the asset that it would have recognized is
on year or less or the amount is immaterial.

 Revenue from product sales is recorded net of reserves established
for applicable discounts and allowances that are offered within contracts with our customers.

 Product revenue reserves, which are classified
as a reduction in product revenues, are generally characterized in the categories: discounts and returns. These reserves are based on
estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable as the
amount is payable to the Company's customer.

 Cost of revenues. Cost of revenues
consists primarily of material costs, employee remuneration for staff engaged in production activity, share-based compensation, depreciation
and related expenses that are directly attributable to the production of products. Cost of revenues also includes write-downs of inventory
to lower of cost and net realizable value.

 Research and development expenses. Research
and development expenses primarily consist of remuneration for R&D staff, share-based compensation, depreciation and maintenance
expenses relating to R&D equipment, and R&D material costs.

 Sales and marketing expenses. Sales
and marketing expenses consist primarily of remuneration for staff involved in selling and marketing efforts, including staff engaged
in the packaging of goods for shipment, warranty expenses, advertising cost, depreciation, share-based compensation and travel and entertainment
expenses. We do not pay slotting fees to retail companies for displaying our products, engage in cooperative advertising programs, participate
in buy-down programs or similar arrangements.

 General and administrative expenses. General
and administrative expenses consist primarily of employee remuneration, share-based compensation, professional fees, insurance, benefits,
general office expenses, depreciation, liquidated damage charges and bad debt expenses.

 Finance costs, net. Finance costs consist primarily
of interest income and interest on bank loans, net of capitalized interest.

 Income tax expenses. Our subsidiaries
in PRC are subject to an income tax rate of 25%, except for Hitrans and CBAK Power which each was recognized as a "High and New
Technology Enterprise" and enjoyed a preferential tax rate of 15% from 2021 to 2024. CBAK Nanjing obtained "High and New
Technology Enterprise" certificate in late 2023 can enjoy a preferential tax rate of 15% for three years starting from 2023. Our
Hong Kong subsidiaries, BAK Asia, BAK Investment and Nacell Holdings, are subject to profits tax at a rate of 16.5%. However, because
we did not have any assessable income derived from or arising in Hong Kong, BAK Asia, BAK Investment and Nacell Holdings had not paid
any such tax.

 Results of Operations

 Comparison of Years Ended December 31, 2022 and 2023

 The following table sets forth key components of our results of operations
for the years indicated, both in dollars and as a percentage of our revenue.

 (All amounts, other than percentages, in thousands
of U.S. dollars)

 Year Ended December 31,

 Change

 2022

 2023

 $

 %

 Net revenues

 $
 248,725

 $
 204,438

 (44,287
)

 -18
 %

 (230,630
)

 (172,714
)

 57,916

 -25
 %

 Gross profit

 18,095

 31,724

 13,629

 %

 Operating expenses:

 Research and development expenses

 (10,635
)

 (11,928
)

 (1,293
)

 %

 Sales and marketing expenses

 (2,008
)

 (4,904
)

 (2,896
)

 %

 General and administrative expenses

 (9,738
)

 (13,789
)

 (4,051
)

 %

 Impairment charge on property, plant and equipment

 (4,832
)

 (7,070
)

 (2,238
)

 %

 Impairment charge on goodwill

 (1,556
)

 -

 1,556

 -100
 %

 Provision of expected credit losses

 (831
)

 (1,285
)

 (454
)

 %

 (29,600
)

 (38,976
)

 (9,376
)

 %

 Operating loss

 (11,505
)

 (7,252
)

 4,253

 -37
 %

 Finance income, net

 (58
)

 -12
 %

 Impairment charges on equity investee

 -

 (2,366
)

 (2,366
)

 n/a

 Share of loss of equity investee

 -

 (27
)

 (27
)

 n/a

 Other expense, net

 (7,252
)

 3,023

 10,275

 -142
 %

 Change in fair value of warrants liability

 5,710

 (5,574
)

 -98
 %

 Loss before income tax

 (12,556
)

 (6,053
)

 6,503

 -52
 %

 Income tax credit (expense)

 1,228

 (2,486
)

 (3,714
)

 -302
 %

 (11,328
)

 (8,539
)

 2,789

 -25
 %

 Less: Net loss attributable to non-controlling interests

 1,879

 6,090

 4,211

 %

 Net loss attributable to shareholders of CBAK Energy Technology, Inc.

 $
 (9,449
)

 (2,449
)

 7,000

 -74
 %

 Net revenues. Net revenues were
$204.4 million for the fiscal year ended December 31, 2023, as compared to $248.7 million for the fiscal year ended December 31, 2022,
a decrease of $44.3 million, or 18%.

 The following table sets forth the breakdown of our net revenues by
end-product applications.

 (All amounts, other than percentage, in thousands
of U.S. dollars)

 Years Ended

 Change

 2022

 2023

 $

 %

 High-power lithium batteries used in:

 Electric vehicles

 $
 4,695

 $
 2,883

 (1,812
)

 -39
 %

 Light electric vehicles

 6,415

 5,607

 (808
)

 -13
 %

 Residential Energy Supply & Uninterruptable supplies

 83,603

 124,503

 40,900

 %

 Trading of Raw materials used in lithium batteries

 -

 (2
)

 -100
 %

 94,715

 132,993

 38,278

 %

 Materials used in manufacturing of lithium batteries

 Cathode

 75,331

 39,846

 (35,485
)

 -47
 %

 Precursor

 78,679

 31,599

 (47,080
)

 -60
 %

 154,010

 71,445

 (82,565
)

 -54
 %

 Total

 $
 248,725

 $
 204,438

 (44,287
)

 -18
 %

 Net revenues from
sales of batteries for electric vehicles were $2.9 million for the fiscal year ended December 31, 2023, as compared to $4.7 million for
2022, a decrease of 39%. The market for batteries used in electric vehicles has become highly competitive in 2023, with key players consistently
reducing sales prices. Consequently, we have scaled back our marketing efforts in this sector and plan to reassess our strategy once
the price level recovers.

 Net revenues from
sales of batteries for light electric vehicles was approximately $5.6 million for the fiscal year ended December 31, 2023, as compared
$6.4 million for 2022, representing a decrease of $0.8 million, or 13%. Similarly, the domestic market for batteries used in light electric
vehicles has become extremely competitive. We have reduced our marketing efforts in the Chinese market and instead begun seeking collaboration
with light electric vehicle manufacturers in international markets, including India. We believe
that our sales campaign in the international market will contribute to a rebound in our sales volume in this sector in the near future.

 Net revenues from sales of batteries for residential
energy supply & uninterruptable supplies was $124.5 million for the fiscal year ended December 31, 2023, as compared to $83.6 million
for fiscal year ended December 31, 2022, an increase of $40.9 million, or 49%. The increase in sales of batteries for residential energy
supply & uninterruptable supplies in 2023 can be attributed to a combination of factors including growing demand for renewable energy
sources, and our development of reliable and low-cost products. As more businesses and households switch to renewable energy, there has
been a growing demand for renewable energy sources and the need for energy storage solutions to support these sources. Additionally,
our focus on research and development has allowed us to develop innovative and reliable energy storage products at competitive pricing.
As we continue to invest in R&D and improve our product offerings, we expect to remain a leader in the energy storage industry and
see continued growth in sales.

 Net revenues from trading of raw materials used
in lithium batteries was nil for the fiscal year ended December 31, 2023, as compared with $2,172 in the same period in 2022.

 Net revenues from sales of materials for use
in manufacturing of lithium battery cells were $71.4 million for the fiscal year ended December 31, 2023, as compared to $154.0 million
for 2022. This primarily resulted from a rapid decrease in raw material prices during 2023, which led to significant downward pressure
on the pricing of our battery material products.

 Cost of revenues.
 Cost of revenues decreased to $172.7 million for the fiscal year ended December 31, 2023, as compared to $230.6 million for 2022,
a decrease of $57.9 million, or 25.1%. The decrease in cost of revenues was in line with the decrease of net revenues.

 Gross profit. Gross profit for
the year ended December 31, 2023 was $31.7 million, or 15.5% of net revenues as compared to gross profit of $18.1 million, or 7.3% of
net revenues, for the fiscal year ended December 31, 2022. Gross profit margin significantly increased largely due to our ability to
sell our battery products at a relatively higher price to certain customers.

 Research and development expenses. Research
and development expenses increased to $11.9 million for the year ended December 31, 2023, as compared to $10.6 million for 2022, an increase
of $1.3 million, or 12.2%. The increase primarily resulted from salaries and social insurance expenses due to a growing number of employees
at Nanjing CBAK and Hitrans and compensation expenses incurred for restricted share units and options granted to our employees on April
11, 2023 and August 22, 2023. We incurred $5.8 million in salaries and social insurance cost (including share-based compensation) for
the year ended December 31, 2023 compared to $4.7 million for the year ended December 31, 2022.

 Sales and marketing expenses. Sales and
marketing expenses increased to $4.9 million for the year ended December 31, 2023, as compared to $2.0 million for 2022, an increase
of $2.9 million, or 144.2%. As a percentage of revenues, sales and marketing expenses were 2.4% and 0.8% of revenues for the years ended
December 31, 2023 and 2022, respectively. We have expanded our marketing effort since the beginning of 2023 after the lift of travel
restrictions and quarantine requirements, including hosting the Company's inaugural corporate open day on June 28, 2023.

 General and administrative expenses. General
and administrative expenses increased to $13.8 million for the year ended December 31, 2023, as compared to $9.7 million for 2022, an
increase of $4.1 million, or 41.6%. The increase primarily resulted from salaries and social insurance expenses due to a growing number
of employees at Nanjing CBAK and Hitrans and compensation expenses incurred for restricted share units and options granted to our employees
on April 11, 2023 and August 22, 2023. We incurred $6.9 million in salaries and social insurance cost (including share-based compensation)
for the year ended December 31, 2023 compared to $4.9 million for the year ended December 31, 2022. With the expansion of Nanjing CBAK,
our operating expenses and consultancy expenses increased by $1.2 million to $4.3 million for the year ended December 31, 2023 compared
to $3.1 million for the year ended December 31, 2022.

 Long-lived assets impairment charge. During
the course of our strategic review of our operations, we assessed the recoverability of the carrying value of our long-lived assets which
resulted in impairment losses of $7.1 million and $4.8 million for the years ended December 31, 2023 and 2022, respectively. The impairment
charge represented the excess of carrying amounts of our long-lived assets over the estimated fair value of the Company's production
facilities in Hitrans for the production of materials used in manufacturing of lithium batteries, due to underperformance of Hitrans
reporting unit. No impairment charge on production facilities in Dalian and Nanjing.

 Goodwill impairment charge. Goodwill
impairment was $1.6 million for the year ended December 31, 2022. The impairment loss of goodwill was primarily attributable to the impairment
related to Hitrans reporting unit. Hitrans reporting unit carrying value exceeded the fair value as of December 31, 2022, due to underperformance
of Hitrans reporting unit.

 Provision for expected credit losses. Provision
for expected credit losses was $1.3 million for the year ended December 31, 2023, as compared to $0.8 million for 2022. We determine the
allowance based on historical write-off experience, customer specific facts and economic conditions.

 Operating loss. As a result of
the above, our operating loss totaled $7.3 million for the year ended December 31, 2023, as compared to $11.5 million for 2022, a decrease
of $4.3 million or 37.0%.

 Finance income, net. Finance income,
net was $0.5 million for both the years ended December 31, 2023 and 2022.

 Other income (expenses), net. Other
income was $3.0 million for the year ended December 31, 2023, as compared to other expenses of approximately $7.3 million for 2022. For
the year ended December 31, 2023, we have generated services income and materials sales compared to written off our long-lived assets
for $7.4 million for the year ended December 31, 2022.

 Changes in fair value of warrants liability.
 We issued warrants in the financings we consummated in December 2020 and February 2021, respectively. We determined that these
warrants should be accounted for as derivative liabilities, as the warrants are dominated in a currency (U.S. dollar) other than our
functional currency. The change in fair value of warrants liability is mainly due to our share price decline.

 Income tax credit. Income tax expenses
was $2.5 million for the year ended December 31, 2023, compared to an income tax credit of $1.2 million for the years ended December
31, 2022. The increase in the income tax expenses was primarily due to the "full valuation allowance" of the deferred tax
assets.

 Net loss.
 As a result of the foregoing, we had a net loss of $8.5 million and $11.3 million for the year ended December 31, 2023 and 2022,
respectively.

 Liquidity and Capital Resources

 We have financed our liquidity requirements from
a variety of sources, including bank loans, other short-term loans and bills payable under bank credit agreements, advance from our related
and unrelated parties, investors and issuance of capital stock.

 We recorded a net loss of $8.5 million in the
fiscal year ended December 31, 2023. As of December 31, 2023, we had cash and cash equivalents and restricted cash of $58.8 million.
Our total current assets were $128.4 million and our total current liabilities were $160.5 million, resulting in a net working capital
deficit of $32.1 million.

 Lending from Financial Institutions

 On November 16, 2021, we obtained banking facilities from Shaoxing
Branch of Bank of Communications Co., Ltd with a maximum amount of RMB120.1 million (approximately $16.6 million) with the term from
November 18, 2021 to November 18, 2026. The facility was secured by our land use rights and buildings. Under the facility, we have borrowed
RMB59.0 million (approximately $8.5 million) as of December 31, 2022.

 In January 2023, we renewed the banking facilities with Shaoxing Branch
of Bank of Communications Co., Ltd with a maximum amount of RMB160.0 million (approximately $22.1 million) with the term from January
2023 to December 2027. The facility was secured by our land use rights and buildings. Under the facility, we have borrowed RMB142.8 million
(approximately $20.1 million) as of December 31, 2023, bearing interest at 3.55% to 3.65% per annum expiring through February to May
2024.

 On April 19, 2021, we obtained five-year acceptance bills facilities
from Bank of Ningbo Co., Ltd with a maximum amount of RMB84.4 million (approximately $11.6 million). Any amount drawn under the facilities
requires security in the form of cash or bank acceptance bills receivable of at least the same amount. Under the facilities, as of December
31, 2021, we borrowed a total of RMB10 million (approximately $1.4 million) from Bank of Ningbo Co., Ltd in the form of bills payable
for a various term expiring from January to February 2022, which was secured by our cash totaling RMB10 million (approximately $1.4 million).
We repaid the bills in January to February 2022.

 On March 21, 2022, we renewed the above acceptance bills facilities
from Bank of Ningbo Co., Ltd with a maximum amount of RMB71.6 million ($9.9 million) with other terms remain the same. Under the facilities,
as of December 31, 2022 and 2023, we borrowed a total of RMB15.9 million (approximately $2.3 million) and RMB45.4 million (approximately
$6.4 million), respectively, in the form of bills payable for various terms expiring from January 2024 to May 2024, which was secured
by our cash totaling RMB15.9 million (approximately $2.3 million) and RMB45.4 million (approximately $6.4 million), respectively.

 On January 17, 2022, we obtained a one-year term facility from Agricultural
Bank of China with a maximum amount of RMB10 million (approximately $1.4 million) bearing interest at 105% of benchmark rate of the People's
Bank of China ("PBOC") for short-term loans, which is 3.85% per annum. The facility was guaranteed by our CEO, Mr. Yunfei
Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan and secured by an unrelated third party, Jiangsu Credits Financing Guarantee Co.,
Ltd. We borrowed RMB10 million (approximately $1.4 million) on January 20, 2022 for a term until January 16, 2023. We repaid RMB10 million
(approximately $1.4 million) early on January 5, 2023. On January 6, 2023, we borrowed a one-year term loan of RMB10 million (approximately
$1.4 million) for a period of one year to January 4, 2024, bearing interest at 120% of benchmark rate of the PBOC for short-term loans,
which is 3.85% per annum, while other terms and guarantee remain the same.

 On February 9, 2022, we obtained a one-year term facility from Jiangsu
Gaochun Rural Commercial Bank with a maximum amount of RMB10 million (approximately $1.4 million) bearing interest at 124% of benchmark
rate of the People's Bank of China ("PBOC") for short-term loans, which is 4.94% per annum. The facility was guaranteed
by our CEO, Mr. Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan. We borrowed RMB10 million (approximately $1.4 million) on
February 17, 2022 for a term until January 28, 2023. The Company repaid RMB10 million (approximately $1.4 million) on January 16, 2023.
On January 17, 2023, we borrowed a one-year loan of RMB10 million (approximately $1.4 million) bearing interest at 129% of benchmark
rate of PBOC for short-term loans, which is 4.70% per annum for a term until January 13, 2024.

 On March 8, 2022, we obtained a one-year term facility from China
Zheshang Bank Co., Ltd. Shangyu Branch with a maximum amount of RMB10 million (approximately $1.4 million) bearing interest at 5.5% per
annum. The facility was guaranteed by 100% equity in CBAK Power held by BAK Asia and our CEO, Mr. Yunfei Li. We borrowed RMB10 million
(approximately $1.4 million) on the same date. On May 17, 2022, we repaid the loan principal and related loan interests early.

 On April 28, 2022, we obtained a three-year term
facility from Industrial and Commercial Bank of China Nanjing Gaochun branch, with a maximum amount of RMB12 million (approximately $1.7
million) with the term from April 21, 2022 to April 21, 2025. The facility was guaranteed by the Company's CEO, Mr. Yunfei Li and
Mr. Yunfei Li's wife Ms. Qinghui Yuan. Under the facility, we borrowed RMB10 million (approximately $1.5 million) on April 29,
2022, bearing interest at 3.95% per annum for a term until April 29, 2023. We repaid RMB10 million (approximately $1.4 million) on April
19, 2023. On April 20, 2023, we borrowed another one-year loan of RMB10 million (approximately $1.4 million) bearing interest at 102.5%
of benchmark rate of PBOC for short-term loans, which is 3.90% per annum for a term until April 19, 2024.

 On June 22, 2022, we obtained another one-year
term facility from China Zheshang Bank Co., Ltd. Shangyu Branch with a maximum amount of RMB10 million (approximately $1.4 million) bearing
interest at 4.5% per annum. The facility was guaranteed by 100% equity in CBAK Power held by BAK Asia and our CEO, Mr. Yunfei Li. The
Company borrowed RMB10 million (approximately $1.4 million) on the same date for a term until June 21, 2023. On November 10, 2022, we
repaid the loan principal and the related loan interests early.

 On September 25, 2022, we entered into another
one-year term facility with Jiangsu Gaochun Rural Commercial Bank with a maximum amount of RMB9 million (approximately $1.3 million)
bearing interest rate at 4.81% per annum. The facility was guaranteed by 100% equity in CBAK Nanjing held by BAK Investment and our CEO,
Mr. Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan. We borrowed RMB9 million (approximately $1.3 million) on September 27,
2022 for a term until September 24, 2023. We repaid the loan on September 24, 2023.

 We entered into another one-year term facility
with Jiangsu Gaochun Rural Commercial Bank with a maximum amount of RMB9 million (approximately $1.2 million) bearing interest rate at
4.6% per annum for a period from September 27, 2023 to August 31, 2024. The facility was guaranteed by 100% equity in CBAK Nanjing held
by BAK Investment and the Company's CEO, Mr. Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan. We borrowed RMB9 million
(approximately $1.3 million) on September 27, 2023 for a term until September August 31, 2024.

 On November 8, 2022, we entered into a short-term
loan agreement with China CITIC Bank Shaoxing Branch to August 9, 2023 with a maximum amount of RMB10 million (approximately $1.4 million)
bearing interest rate at 4.35% per annum. We borrowed RMB10 million (approximately $1.4 million) on the same date. We has repaid RMB5
million (approximately $0.7 million), RMB0.2 million (approximately $0.1 million) and RMB4.8, million (approximately $0.7 million) on
November 16, 2022, December 27, 2022 and August 9, 2023, respectively. We entered into another short-term loan agreement with China CITIC
Bank Shaoxing Branch for a one-year short-term loan agreement with a maximum amount of RMB0.2 million (approximately $0.1 million) for
December 27, 2022 to December 27, 2023, bearing interest rate at 4.20% per annum. We entered into another loan agreement with China CITIC
Bank Shaoxing Branch for a short-term loan of RMB4.8 million (approximately $0.7 million) from August 10, 2023 to May 2, 2024, bearing
interest rate at 4.3% per annum.

 On December 9, 2022, we obtained a RMB5 million
(approximately $0.7 million) letter of credit from China CITIC Bank for a period to October 30, 2023 for settlement of Hitrans purchase.
We utilized RMB1.5 million (approximately $0.2 million) letter of credit at an interest rate of 2.7% for a period of one year to January
5, 2023.

 On January 7, 2023, we obtained a two-year term
facility from Postal Savings Bank of China, Nanjing Gaochun Branch with a maximum amount of RMB10 million (approximately $1.4 million)
for a period from January 7, 2023 to January 6, 2025. The facility was guaranteed by our CEO, Mr. Yunfei Li, Mr. Yunfei Li's wife
Ms. Qinghui Yuan and CBAK New Energy (Nanjing) Co., Ltd. We borrowed RMB5 million (approximately $0.7 million) on January 12, 2023 for
a term of one year until January 11, 2024, bearing interest at 3.65% per annum. We repaid the above early on June 15, 2023. On June 27,
2023, we entered into another loan agreement for one year from June 27, 2023 to June 26, 2024 under the two-year term facility for a
maximum loan amount of RMB10 million (approximately $1.4 million) bearing interest rate at 3.65 % pr annum. The Company borrowed
RMB10 million (approximately $1.4 million) on the same date. The loan was guaranteed by our CEO, Mr. Yunfei Li, Mr. Yunfei Li's
wife Ms. Qinghui Yuan and CBAK New Energy (Nanjing) Co., Ltd.

 On March 29, 2023, we and Bank of China Limited
entered into a short-term loan agreement for one year from March 29, 2023 to March 28, 2024 for a maximum loan amount to RMB5 million
(approximately $0.7 million) bearing interest rate at 3.65% per annum. Weborrowed RMB5 million (approximately $0.7 million) on the same
date. The loan was secured by our buildings in Dalian.

 On April 19, 2023, we and Bank of Nanjing Gaochun
Branch entered into a short-term loan agreement for one year from April 10, 2023 to April 9, 2024 for RMB10 million (approximately $1.4
million) bearing interest rate at 3.7% per annum. We borrowed RMB10 million (approximately $1.4 million) on April 23, 2023. The loan
was guaranteed by our CEO, Mr. Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan.

 On June 9, 2023, we and China Zheshang Bank Co.,
Ltd Shangyu Branch entered into a short-term loan agreement for one year from June 9, 2023 to June 7, 2024 for a maximum loan amount
to RMB4 million (approximately $0.6 million) bearing interest rate at 4.55% per annum. We borrowed RMB4 million (approximately $0.6 million)
on the same date. We early repaid the loan principal and related loan interests on December 22, 2023.

 On July 31, 2023, we obtained a three-year term
facility from Bank of China Gaochun Branch, with a maximum amount of RMB10 million (approximately $1.4 million) with the term from July
31, 2023 to July 30, 2026. The facility was guaranteed by our CEO, Mr, Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan. Under
the facility, we borrowed RMB10 million (approximately $1.4 million) on July 31, 2023, bearing interest rate at 3.15% per annum.

 On August 3, 2023, we and Bank of China entered
into a short term loan agreement for one year from August 3, 2023 to August 2, 2024 for a maximum amount of RMB10 million (approximately
$1.4 million) bearing interest rate at 3.55% per annum. We borrowed RMB10 million (approximately $1.4 million) on September 27,
2023. The loan was secured by our buildings in Dalian.

Agricultural Bank of China totaling RMB4.6 million (approximately $0.7 million) for various terms expiring in April 2024, which was secured
by our cash totaling RMB4.6 million (approximately $0.7 million).

China Zheshang Bank Co. Ltd Shenyang Branch totaling RMB174.0 million (approximately $24.5 million) for various terms expiring through
January to June 2024, which was secured by our cash totaling RMB174 million (approximately $24.5 million).

China Zheshang Bank Co. Ltd Shangyu Branch totaling RMB109.9 million (approximately $15.5 million) for various terms expiring through
January to June 2024, which was secured by our cash totaling RMB106.3 million (approximately $15.0 million) (Note 3) and the Company's
bills receivable totaling RMB2 million (approximately $0.3 million).

China Merchants Bank Dalian Branch totaling RMB9.3 million (approximately $1.3 million) for various terms through June 2024, which was
secured by our cash totaling RMB9.3 million (approximately $1.3 million).

Bank of China Limited totaling RMB4.9 million (approximately $0.7 million) for various terms through January 2024, which was secured
by our cash totaling RMB4.9 million (approximately $0.7 million).

Jiangsu Gaochun Rural Commercial Bank totaling RM30.6 million (approximately $4.3 million) for various terms expiring through March to
April 2024, which was secured by our cash totaling RMB30.6 million (approximately $4.3 million).

China CITIC Bank totaling RMB0.4 million (approximately $0.1 million) for various terms expiring through March 2024, which was secured
by our cash totaling RMB0.6 million (approximately $0.1 million).

Bank of Ningbo Shaoxing Shangyu Branch totaling RMB6.7 million (approximately $0.9 million) for various terms expiring through May 2024,
which was secured by our cash totaling RMB6.7 million (approximately $0.9 million).

 As of December 31, 2023, we had unutilized committed banking facilities
of $2.8 million. We plan to renew these loans upon maturity and intend to raise additional funds through bank borrowings in the future
to meet our daily cash demands, if required.

 Equity and Debt Financings from Investors

 In addition, we have obtained funds through private placements, registered
direct offerings and other equity and debt financings in the past:

 On July 28, 2016, the Company entered into securities
purchase agreements with Mr. Jiping Zhou and Mr. Dawei Li to issue and sell an aggregate of 2,206,640 shares of common stock of the Company,
at $2.5 per share, for an aggregate consideration of approximately $5.52 million. On August 17, 2016, the Company issued the foregoing
shares to the two investors.

 On February 17, 2017, we signed a letter of understanding
with each of eight individual investors, including our CEO, Mr. Yunfei Li, whereby these shareholders agreed in principle to subscribe
for new shares of our common stock totaling $10 million. The issue price was determined with reference to the market price prior to the
issuance of new shares. In January 2017, the shareholders paid us a total of $2.1 million as refundable earnest money, among which, Mr.
Yunfei Li agreed to subscribe new shares totaling $1.12 million and pay a refundable earnest money of $0.2 million. In April and May
2017, we received cash of $9.6 million from these shareholders. On May 31, 2017, we entered into a securities purchase agreement with
these investors, pursuant to which we agreed to issue an aggregate of 6,403,518 shares of common stock to these investors, at a purchase
price of $1.50 per share, for an aggregate price of $9.6 million, including 764,018 shares issued to Mr. Yunfei Li. On June 22, 2017,
we issued the shares to the investors. The issuance of the shares to the investors was made in reliance on the exemption provided by
Section 4(a)(2) of the Securities Act. In 2019, according to the securities purchase agreement and agreed by the investors, we returned
partial earnest money of $966,579 (approximately RMB6.7 million) to these investors.

 On January 7, 2019, each of Mr. Dawei Li and
Mr. Yunfei Li entered into an agreement with CBAK Power and Tianjin New Energy whereby Tianjin New Energy assigned its rights to loans
to CBAK Power of approximately $3.4 million (RMB23,980,950) and $1.7 million (RMB11,647,890) (totaled $5.1 million, the "First
Debt") to Mr. Dawei Li and Mr. Yunfei Li, respectively. On the same date, the Company entered into a cancellation agreement with
Mr. Dawei Li and Mr. Yunfei Li. Pursuant to the terms of the cancellation agreement, Mr. Dawei Li and Mr. Yunfei Li agreed to cancel
the First Debt in exchange for 3,431,373 and 1,666,667 shares of common stock of the Company, respectively, at an exchange price of $1.02
per share. Upon receipt of the shares, the creditors released the Company from any claims, demands and other obligations relating to
the First Debt.

 On April 26, 2019, each of Mr. Jun Lang, Ms.
Jing Shi and Asia EVK Energy Auto Limited ("Asia EVK") entered into an agreement with CBAK Power and Tianjin New Energy whereby
Tianjin New Energy assigned its rights to loans to CBAK Power of approximately $0.3 million (RMB2,225,082), $0.1 million (RMB 912,204)
and $5.2 million (RMB35,406,036) (collectively $5.7 million, the "Second Debt") to Mr. Jun Lang, Ms. Jing Shi and Asia EVK,
respectively. On the same date, the Company entered into a cancellation agreement with Mr. Jun Lang, Ms. Jing Shi and Asia EVK (the creditors).
Pursuant to the terms of the Cancellation Agreement, the creditors agreed to cancel the Second Debt in exchange for 300,534, 123,208
and 4,782,163 shares of common stock of the Company, respectively, at an exchange price of $1.1 per share. Upon receipt of the shares,
the creditors released the Company from any claims, demands and other obligations relating to the Second Debt.

 On June 28, 2019, each of Mr. Dawei Li and Mr. Yunfei
Li entered into an agreement with CBAK Power to loan approximately $1.4 million (RMB10,000,000) and $2.5 million (RMB18,000,000), respectively,
to CBAK Power for a terms of six months (collectively $3.9 million, the "Third Debt"). The loan was unsecured, non-interest
bearing and repayable on demand. On July 16, 2019, each of Asia EVK and Mr. Yunfei Li entered into an agreement with CBAK Power and Dalian
Zhenghong Architectural Decoration and Installation Engineering Co. Ltd. (the Company's construction contractor) whereby Dalian
Zhenghong Architectural Decoration and Installation Engineering Co. Ltd. assigned its rights to the unpaid construction fees owed by
CBAK Power of approximately $2.8 million (RMB20,000,000) and $0.4 million (RMB2,813,810) (collectively $3.2 million, the "Fourth
Debt") to Asia EVK and Mr. Yunfei Li, respectively. On July 26, 2019, we entered into a cancellation agreement with Mr. Dawei Li,
Mr. Yunfei Li and Asia EVK (the creditors). Pursuant to the terms of the cancellation agreement, Mr. Dawei Li, Mr. Yunfei Li and Asia
EVK agreed to cancel the Third Debt and Fourth Debt in exchange for 1,384,717, 2,938,067 and 2,769,435 shares of common stock of the
Company, respectively, at an exchange price of $1.05 per share. Upon receipt of the shares, the creditors released the Company from any
claims, demands and other obligations relating to the Third Debt and Fourth Debt.

 On October 10, 2019, each of Mr. Shibin Mao,
Ms. Lijuan Wang and Mr. Ping Shen entered into an agreement with CBAK Power and Zhengzhou BAK New Energy Vehicle Co., Ltd. (the Company's
supplier) whereby Zhengzhou BAK New Energy Vehicle Co., Ltd. assigned its rights to the unpaid inventories cost owed by CBAK Power of
approximately $2.1 million (RMB15,000,000), $1.0 million (RMB7,380,000) and $1.0 million (RMB7,380,000) (collectively $4.2 million, the
"Fifth Debt") to Mr. Shibin Mao, Ms. Lijuan Wang and Mr. Ping Shen, respectively.

 On October 14, 2019, we entered into a cancellation
agreement with Mr. Shangdong Liu, Mr. Shibin Mao, Ms. Lijuan Wang and Mr. Ping Shen (the creditors). Pursuant to the terms of the cancellation
agreement, Mr. Shangdong Liu, Mr. Shibin Mao, Ms. Lijuan Wang and Mr. Ping Shen agreed to cancel and convert the Fifth Debt and the unpaid
earnest money in exchange for 528,053, 3,536,068, 2,267,798 and 2,267,798 shares of common stock of the Company, respectively, at an
exchange price of $0.6 per share. Upon receipt of the shares, the creditors released the Company from any claims, demands and other obligations
relating to the Fifth Debt and the unpaid earnest money.

 On April 27, 2020, we entered into a cancellation
agreement with Mr. Yunfei Li, Asia EVK and Mr. Ping Shen, who loaned an aggregate of approximately $4.3 million to CBAK Power (the "Sixth
Debt"). Pursuant to the terms of the cancellation agreement, the creditors agreed to cancel the Sixth Debt in exchange for an aggregate
of 8,928,193 shares of common stock of the Company at an exchange price of $0.48 per share. According to the amount of loan, 2,062,619,
2,151,017 and 4,714,557 shares were issued to Mr. Yunfei Li, Asia EVK and Mr. Pin Shen, respectively. Upon receipt of the shares, the
creditors released the Company from any claims, demands and other obligations relating to the Sixth Debt.

 On July 24, 2019, we entered into a securities
purchase agreement with Atlas Sciences, LLC (the "Lender"), pursuant to which we issued a promissory note (the "Note
I") to the Lender. The Note I has an original principal amount of $1,395,000, bears interest at a rate of 10% per annum and will
mature 12 months after the issuance, unless earlier paid or redeemed in accordance with its terms. The Company received proceeds of $1,250,000
after an original issue discount of $125,000 and payment of Lender's expenses of $20,000.

 On December 30, 2019, we entered into a second
securities purchase agreement with Atlas Sciences, LLC, pursuant to which the Company issued a promissory note (the "Note II")
to the Lender. The Note II has an original principal amount of $1,670,000, bears interest at a rate of 10% per annum and will mature
12 months after the issuance, unless earlier paid or redeemed in accordance with its terms. We received proceeds of $1,500,000 after
an original issue discount of $150,000 and payment of Lender's expenses of $20,000.

 On January 27, 2020, we entered into an exchange
agreement (the "First Exchange Agreement") with the Lender, pursuant to which we and the Lender agreed to (i) partition a
new promissory note in the original principal amount equal to $100,000 (the "Partitioned Promissory Note) from the outstanding
balance of certain promissory note that the Company issued to the Lender on July 24, 2019, which has an original principal amount of
$1,395,000, and (ii) exchange the Partitioned Promissory Note for the issuance of 160,256 shares of the Company's common stock,
par value $0.001 per share, to the Lender.

 On February 20, 2020, we entered into another
exchange agreement (the "Second Exchange Agreement") with the Lender, pursuant to which the Company and the Lender agreed
to (i) partition a new promissory note in the original principal amount equal to $100,000 (the "Partitioned Promissory Note")
from the outstanding balance of certain promissory note that the Company issued to the Lender on July 24, 2019, which has an original
principal amount of $1,395,000, and (ii) exchange the Partitioned Promissory Note for the issuance of 207,641 shares of the Company's
common stock, par value $0.001 per share, to the Lender.

 On April 28, 2020, we entered into a third exchange
agreement (the "Third Exchange Agreement") with the Lender, pursuant to which the Company and the Lender agreed to (i) partition
a new promissory note in the original principal amount equal to $100,000 (the "Partitioned Promissory Note") from the outstanding
balance of certain promissory note that the Company issued to the Lender on July 24, 2019, which has an original principal amount of
$1,395,000, and (ii) exchange the Partitioned Promissory Note for the issuance of 312,500 shares of the Company's common stock,
par value $0.001 per share, to the Lender.

 On June 8, 2020, we entered into a fourth exchange
agreement (the "Fourth Exchange Agreement") with the Lender, pursuant to which the Company and the Lender agreed to (i) partition
a new promissory note in the original principal amount equal to $100,000 from the outstanding balance of certain promissory note that
the Company issued to the Lender on July 24, 2019, which has an original principal amount of $1,395,000, and (ii) exchange the partitioned
promissory note for the issuance of 271,739 shares of the Company's common stock, par value $0.001 per share to the Lender.

 On June 10, 2020, we entered into a fifth exchange
agreement (the "Fifth Exchange Agreement") with the Lender, pursuant to which the Company and the Lender agreed to (i) partition
a new promissory note in the original principal amount equal to $150,000 from the outstanding balance of certain promissory note that
the Company issued to the Lender on July 24, 2019, which has an original principal amount of $1,395,000, and (ii) exchange the partitioned
promissory note for the issuance of 407,609 shares of the Company's common stock, par value $0.001 per share to the Lender.

 On July 6, 2020, we entered into a sixth exchange
agreement (the "Sixth Exchange Agreement") with the Lender, pursuant to which the Company and the Lender agreed to (i) partition
a new promissory note in the original principal amount equal to $250,000 from the outstanding balance of certain promissory note that
the Company issued to the Lender on July 24, 2019, which has an original principal amount of $1,395,000, and (ii) exchange the partitioned
promissory note for the issuance of 461,595 shares of the Company's common stock, par value $0.001 per share to the Lender.

 On July 8, 2020, we entered into certain exchange
agreement with the Lender, pursuant to which the Company and the Lender agreed to (i) partition a new promissory note in the original
principal amount equal to $250,000 from the outstanding balance of certain promissory note that the Company issued to the Lender on December
30, 2019, which has an original principal amount of $1,670,000, and (ii) exchange the partitioned promissory note for the issuance of
453,161 shares of the Company's common stock, par value $0.001 per share to the Lender.

 On July 29, 2020, we entered into a seventh exchange
agreement (the "Seventh Exchange Agreement") with the Lender, pursuant to which the Company and the Lender agreed to (i)
partition a new promissory note in the original principal amount equal to $365,000 from the outstanding balance of certain promissory
note that the Company issued to the Lender on July 24, 2019, which has an original principal amount of $1,395,000, and (ii) exchange
the partitioned promissory note for the issuance of 576,802 shares of the Company's common stock, par value $0.001 per share to
the Lender.

 On October 12, 2020, we entered into an amendment
to promissory notes (the "Amendment") with the Lender, pursuant to which the Lender has the right at any time until the outstanding
balance of the notes has been paid in full, at its election, to convert all or any portion of the outstanding balance of the notes into
shares of common stock of the Company. The conversion price for each conversion will be calculated pursuant to the following formula:
80% multiplied by the lowest closing price of the Company common stock during the ten (10) trading days immediately preceding the applicable
conversion. Notwithstanding the foregoing, in no event will the conversion price be less than $1.00.

 According to the Amendment, on October 13, 2020,
we exchanged part of the outstanding balances of the notes for the issuance of 709,329 shares of the Company's common stock, par
value $0.001 per share to the Lender.

 On October 20, 2020, the Company exchanged the
remaining balance of $778,252 under the notes for the issuance of 329,768 shares of common stock, par value $0.001 per share to the Lender.

 On November 5, 2020, Tillicum Investment Company
Limited entered into an agreement with CBAK Nanjing and Shenzhen ESTAR Industrial Company Limited (the Company's equipment supplier)
whereby Shenzhen ESTAR Industrial Company Limited assigned its rights to the unpaid equipment cost owed by CBAK Power of approximately
$$11.17 million (RMB75,000,000) (the "Seventh Debt") to Tillicum Investment Company Limited.

 On November 11, 2020, we entered into a cancellation
agreement with Tillicum Investment Company Limited. Pursuant to the terms of the cancellation agreement, Tillicum Investment Company
Limited agreed to cancel the Seventh Debt in exchange for 3,192,291 shares of common stock of the Company, at an exchange price of $3.5
per share. Upon receipt of the shares, the creditor released the Company from any claims, demands and other obligations relating to the
Seventh Debt.

 On December 8, 2020, we entered into a securities
purchase agreement with certain institutional investors, pursuant to which we issued in a registered direct offering, an aggregate of
9,489,800 shares of common stock of the Company at a per share purchase price of $5.18, and warrants to purchase an aggregate of 3,795,920
shares of common stock of the Company at an exercise price of $6.46 per share exercisable for 36 months from the date of issuance (collectively,
the "2020 Warrants"), for gross proceeds of approximately $49.16 million, before deducting fees to the placement agent and
other offering expenses payable by the Company.

 On February 8, 2021, we entered into another
securities purchase agreement with the same investors, pursuant to which we issued in a registered direct offering, an aggregate of 8,939,976
shares of common stock of the Company at a per share purchase price of $7.83. In addition, we issued to the investors (i) in a concurrent
private placement, the Series A-1 warrants to purchase a total of 4,469,988 shares of common stock, at a per share exercise price of
$7.67 and exercisable for 42 months from the date of issuance; (ii) in the registered direct offering, the Series B warrants to purchase
a total of 4,469,988 shares of common stock, at a per share exercise price of $7.83 and exercisable for 90 days from the date of issuance;
and (iii) in the registered direct offering, the Series A-2 warrants to purchase up to 2,234,992 shares of common stock, at a per share
exercise price of $7.67 and exercisable for 45 months from the date of issuance. We received gross proceeds of approximately $70 million
from the registered direct offering and the concurrent private placement, before deducting fees to the placement agent and other offering
expenses payable by the Company.

 On May 10, 2021, we entered into that Amendment
No. 1 to the Series B Warrant (the "Series B Warrant Amendment") with each of the holders of the Company's outstanding
Series B warrants. Pursuant to the Series B Warrant Amendment, the term of the Series B warrants was extended from May 11, 2021 to August
31, 2021.

 As of August 31, 2021, we had not received any
notices from investors to exercise the Series B warrants, which, along with the Series A-2 warrants, had expired. As of December 31,
2023, we had not received any notices from investors to exercise the 2020 Warrants, which had also expired.

 We currently are expanding our product lines
and manufacturing capacity in our Dalian and Nanjing facilities, which require more funding to finance the expansion. We may also require
additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide
to pursue. We plan to renew our bank loans upon maturity, if required, and plan to raise additional funds through bank borrowings and
equity financing in the future to meet our daily cash demands, if required. However, there can be no assurance that we will be successful
in obtaining such financing. If our existing cash and bank borrowing are insufficient to meet our requirements, we may seek to sell equity
securities, debt securities or borrow from lending institutions. We can make no assurance that financing will be available in the amounts
we need or on terms acceptable to us, if at all. The sale of equity securities, including convertible debt securities, would dilute the
interests of our current shareholders. The incurrence of debt would divert cash for working capital and capital expenditures to service
debt obligations and could result in operating and financial covenants that restrict our operations and our ability to pay dividends
to our shareholders. If we are unable to obtain additional equity or debt financing as required, our business operations and prospects
may suffer.

 The following table sets forth a summary of our cash flows for the
periods indicated:

 (All amounts in thousands of U.S. dollars)

 Year
 Ended

 2022

 2023

 Net cash provided by operating activities

 $
 15,115

 $
 46,507

 Net cash used in investing activities

 (7,928
)

 (42,310
)

 Net cash provided by financing activities

 5,611

 18,615

 Effect of exchange rate changes on cash and cash equivalents and restricted cash

 (1,797
)

 (1,345
)

 Net increase in cash and cash equivalents and restricted cash

 11,001

 21,467

 Cash and cash equivalents and restricted cash at the beginning of the year

 26,355

 37,356

 Cash and cash equivalents and restricted cash at the end of the year

 $
 37,356

 $
 58,823

 Operating Activities

 Net cash provided by operating activities was
$46.5 million in the year ended December 31, 2023. The net cash provided by operating activities in 2023 was mainly attributable to our
net income of $17.1 million (before loss on disposal of property, plant and equipment, impairment charge of long-lived assets, impairment
loss of equity investee and excluding non-cash depreciation and amortization, write-down of inventories, share-based compensation and
changes in fair value of warrants liability), increase of trade and bills payable by $16.8 million, a decrease of inventories of $11.2
million, a decrease of trade receivable from Shenzhen BAK Battery Co., Ltd. ("Shenzhen BAK") of $5.4 million, offset by an
increase of trade and bills receivable of $3.0 million.

 Net cash provided by operating activities was
$15.1 million in the year ended December 31, 2022. The net cash provided by operating activities in 2022 was mainly attributable to our
net income of $6.9 million (before loss on disposal of property, plant and equipment, impairment charge of long-lived assets, impairment
charge of goodwill and excluding non-cash depreciation and amortization, write-down of inventories, share-based compensation and changes
in fair value of warrants liability), a decrease of trade and bills receivable of $21.0 million, decrease of prepayments and other receivables
of $7.1 million, increase of trade and bills payable by $7.6 million offset by increase of inventories of $24.0 million and increase
of trade receivable from Shenzhen BAK of $3.5 million.

 Investing Activities

 Net cash used in investing activities was $42.3
million in the fiscal year ended December 31, 2023. The net cash used in investing activities comprised the purchases of property, plant
and equipment and construction in progress $31.1 million, $4.0 million on investment in equity method investment and $7.1 million on deposit
paid for acquisition of long-term investments.

 Net cash used in investing activities was $7.9
million in the fiscal year ended December 31, 2022. In 2022, the primary uses of net cash for investing activities were purchases of
property, plant and equipment, and construction in progress, totaling $12.4 million offset by $4.5 million cash receipt from disposal
of equity interest of Hitrans.

 Financing Activities

 Net cash provided by financing activities was
$18.6 million in the fiscal year ended December 31, 2023. The net cash provided by financing activities for the year ended December 31,
2023 mainly comprised $36.1 million bank borrowings, and $1.7 million from finance leases, partially offset by repayment of bank borrowings
of $18.0 million and $0.9 million repayment on finance lease.

 Net cash provided by financing activities was
$5.6 million in the fiscal year ended December 31, 2022. The net cash provided by financing activities for the year ended December 31,
2022 mainly comprised $21.6 million bank borrowings, $1.5 million from non-controlling interests injections, and $1.5 million from finance
leases, partially offset by repayment of bank borrowings of $14.6 million and $3.7 million in repayment of loans to Mr. Ye Junnan.

 As of December 31, 2023, the principal amounts outstanding under our
credit facilities and lines of credit were as follows:

 (All amounts in thousands of U.S. dollars)

 Maximum

 amount

 available

 borrowed

 Long-term credit facilities:

 Shaoxing Branch of Bank of Communications Co., Ltd

 $
 22,547

 $
 20,076

 Industrial and Commercial Bank of China Limited

 1,691

 1,409

 Postal Savings Bank of China Nanjing Gaochun Branch

 1,409

 1,409

 25,647

 22,894

 Short-term credit facilities:

 China CITIC Bank

 Jiangsu Gaochun Rural Commercial Bank

 2,677

 2,677

 Agricultural Bank of China

 1,409

 1,409

 Bank of Nanjing Gaochun Branch

 1,409

 1,409

 Bank of China Gaochun Branch

 1,409

 1,409

 Bank of China Dalian Jinpu New Area Branch

 2,114

 2,114

 9,723

 9,694

 Other lines of credit:

 Agricultural Bank of China

 Jiangsu Gaochun Rural Commercial Bank

 4,311

 4,311

 Bank of Ningbo Nanjing Gaochun Branch

 6,404

 6,404

 Bank of Ningbo Shaoxing Shangyu Branch

 China Zheshang Bank Co., Ltd

 15,490

 15,490

 China Merchants Bank Co., Ltd, Dalian Development Zone Branch

 1,315

 1,315

 Bank of China, Dalian Jinzhou Branch

 Bank of Jilin Co., Ltd

 China Citibank Shaoxing Shangyu Branch

 Zhejiang Commercial Bank Shenyang Branch

 24,517

 24,517

 55,242

 55,242

 Total

 $
 90,612

 $
 87,830

 Capital Expenditures

 We incurred capital expenditures of $30.7 million
and $12.4 million in the fiscal years ended December 31, 2023 and 2022, respectively. Our capital expenditures in 2023 were primarily
allocated to the construction of our Dalian, Nanjing and Zhejiang facilities. The table below sets forth the breakdown of our capital
expenditures by use for the periods indicated.

 (All amounts in thousands of U.S. dollars)

 Year Ended

 2022

 2023

 Purchase of property, plant and equipment and construction in progress

 $
 12,373

 $
 31,141

 We estimate that our total capital expenditures in fiscal year 2024
will reach approximately $30.0 million. Such funds will be used to construct new plants with new production lines and battery module packing
lines.

 Critical Accounting Policies and Estimates

 Our consolidated financial information has
been prepared in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect (1) the
reported amounts of our assets and liabilities, (2) the disclosure of our contingent assets and liabilities at the end of each
fiscal period and (3) the reported amounts of revenues and expenses during each fiscal
period. We continually evaluate these estimates based on our own historical experience, knowledge and assessment of current business
and other conditions, our expectations regarding the future based on available information and reasonable assumptions, which
together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of
estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of
our accounting policies require a higher degree of judgment than others in their application.

 When reviewing our financial statements, the
following should also be considered: (1) our selection of critical accounting policies, (2) the judgment and other uncertainties affecting
the application of those policies, and (3) the sensitivity of reported results to changes in conditions and assumptions. We believe the
following accounting policies involve the most significant judgment and estimates used in the preparation of our financial statements.

 We consider the following to be the most critical accounting policies:

 Revenue Recognition

 We recognize revenues when our customer obtains
control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those
goods. We recognize revenues following the five step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer;
(ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price
to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

 Revenues from product sales are recognized when
the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental
costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is
one year or less or the amount is immaterial.

 Revenues from product sales are recorded net
of reserves established for applicable discounts and allowances that are offered within contracts with our customers.

 Product revenue reserves, which are classified
as a reduction in product revenues, are generally characterized in the categories: discounts and returns. These reserves are based on
estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable as the
amount is payable to our customer.

 Impairment of Long-lived Assets

 Long-lived assets, which include property, plant and equipment, prepaid
land use rights, leased assets and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.

 Recoverability of long-lived assets to be held
and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be
generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge
is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

 Trade and Bills Receivable and current expected credit
losses

 Trade and bills receivable are recorded at the
invoiced amount, net of allowances for doubtful accounts and sales returns. The allowance for doubtful accounts is the Company's
best estimate of the amount of probable credit losses in the Company's existing trade accounts receivable.

 In June 2016, the FASB issued ASU No. 2016-13,
Financial Instruments-Credit Losses, which introduces an approach based on expected losses to estimate credit losses on certain types
of financial instruments, including, but not limited to, trade and other receivables and net investments in leases. The Company assessed
that trade receivable and other current assets are within the scope of ASC 326. The Company has identified the relevant risk characteristics
of trade receivables and other current assets which include size, type of the services or the products the Company provides, or a combination
of these characteristics, the historical credit loss experience, current economic conditions, supportable forecasts of future economic
conditions, and any recoveries in assessing the lifetime expected credit losses, etc. Other key factors that influence the expected credit
loss analysis include industry-specific factors that could impact the credit quality of the Company's receivables. This is assessed
at each quarter based on the Company's specific facts and circumstances. All forward looking statements are, by their nature, subject
to risks and uncertainties, many of which are beyond the Company's control. Additionally, external data and macroeconomic factors
are also considered.

 The Company adopted this ASC 326 and several
associated ASUs on January 1, 2023 using a modified retrospective approach. As of January 1, 2023, upon the adoption, the expected credit
loss provision for the current assets was $2.3 million. For the year ended December 31, 2023, the Company recorded $1.0 million in expected
credit losses. As of December 31, 2023, the expected credit loss provision recorded in current assets was $3.2 million.

 The Company provides an allowance against trade
receivable based on the expected credit loss approach and writes off trade receivables when they are deemed uncollectible. The Company
considers the historical write-off experience, customer specific facts and economic conditions in assessing the expected credit losses.
Other key factors that influence the expected credit loss analysis include customer demographics, payment terms offered in the normal
course of business to customers, and industry-specific factors that could impact the Company's receivables. This is assessed at
each quarter based on the Company's specific facts and circumstances.

 Outstanding accounts receivable balances are
reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been
exhausted and the potential for recovery is considered remote.

 Inventories are stated at the lower of cost or
net realizable value. The cost of inventories is determined using the weighted average cost method, and includes expenditure incurred
in acquiring the inventories and bringing them to their existing location and condition. In case of finished goods and work in progress,
cost includes an appropriate share of production overhead based on normal operating capacity. Net realizable value is the estimated selling
prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

 We record adjustments to its inventory for estimated
obsolescence or diminution in net realizable value equal to the difference between the cost of the inventory and the estimated net realizable
value. At the point of loss recognition, a new cost basis for that inventory is established, and subsequent changes in facts and circumstances
do not result in the restoration or increase in that newly established cost basis.

 Warranties

 We provide a manufacturer's warranty on
all our products. We accrue a warranty reserve for the products sold, which includes our best estimate of the projected costs to repair
or replace items under warranty. These estimates are based on actual claims incurred to date and an estimate of the nature, frequency
and costs of future claims. These estimates are inherently uncertain given our relatively short history of sales of our current products,
and changes to our historical or projected warranty experience may cause material changes to the warranty reserve in the future. The
portion of the warranty reserve expected to be incurred within the next 12 months is included within accrued liabilities and other while
the remaining balance is included within other long-term liabilities on the consolidated balance sheets.

 Government Grants

 Our subsidiaries in China receive government
subsidies from local Chinese government agencies in accordance with relevant Chinese government policies. In general, we present the
government subsidies received as part of income unless the subsidies received are earmarked to compensate a specific expense, which have
been accounted for by offsetting the specific expense, such as research and development expense, interest expenses and removal costs.
Unearned government subsidies received are deferred for recognition until the criteria for such recognition could be met.

 Grants applicable to land are amortized over
the life of the depreciable facilities constructed on it. For research and development expenses, we match and offset the government grants
with the expenses of the research and development activities as specified in the grant approval document in the corresponding period
when such expenses are incurred.

 Share-based Compensation

 We adopted the provisions of ASC Topic 718 which
requires us to measure and recognize compensation expenses for an award of an equity instrument based on the grant-date fair value. The
cost is recognized over the vesting period (or the requisite service period). ASC Topic 718 also requires us to measure the cost of a
liability classified award based on its current fair value. The fair value of the award will be remeasured subsequently at each reporting
date through the settlement date. Changes in fair value during the requisite service period are recognized as compensation cost over
that period. Further, ASC Topic 718 requires us to estimate forfeitures in calculating the expense related to stock-based compensation.

 The fair value of each option award is estimated
on the date of grant using the Black-Scholes Option Valuation Model. The expected volatility was based on the historical volatilities
of our listed common stocks in the United States and other relevant market information. We use historical data to estimate share option
exercises and employee departure behavior used in the valuation model. The expected terms of share options granted is derived from the
output of the option pricing model and represents the period of time that share options granted are expected to be outstanding. Since
the share options once exercised will primarily trade in the U.S. capital market, the risk-free rate for periods within the contractual
term of the share option is based on the U.S. Treasury yield curve in effect at the time of grant.

 Warrant Liability

 For warrants that are not indexed to the Company's
stock, the Company records the fair value of the issued warrants as a liability at each balance sheet date and records changes in the
estimated fair value as a non-cash gain or loss in the consolidated statement of operations and comprehensive income. The warrant liability
is recognized in the balance sheet at the fair value (level 3). The fair value of these warrants has been determined using the Binomial
model.

 Changes in Accounting Standards

 Please refer to note 2 to our consolidated financial statements, "Summary
of Significant Accounting Policies and Practices–Recently Adopted Accounting Standards," for a discussion of relevant pronouncements.

 Exchange Rates

 The financial records of our PRC subsidiaries
are maintained in RMB. In order to prepare our financial statements, we have translated RMB amounts into U.S. dollars. The amounts of
our assets and liabilities on our balance sheets are translated using the closing exchange rate as of the date of the balance sheet.
Revenues, expenses, gains and losses are translated using the average exchange rate prevailing during the period covered by such financial
statements. Adjustments resulting from the translation, if any, are included in our cumulative other comprehensive income in our stockholders'
equity section of our balance sheet. All other amounts that were originally booked in RMB and translated into U.S. dollars were translated
using the closing exchange rate on the date of recognition. Consequently, the exchange rates at which the amounts in those comparisons
were computed varied from year to year.

 The exchange rates used to translate amounts in RMB into U.S. dollars
in connection with the preparation of our financial statements were as follows:

 RMB per U.S. Dollar

 Fiscal Year Ended

 2022

 2023

 Balance sheet items, except for equity accounts

 6.9091

 7.0971

 Amounts included in the statement of income and comprehensive loss and statement of cash flows

 6.7264

 7.0719

 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.

 Not applicable.

 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 FINANCIAL STATEMENTS

 CBAK ENERGY TECHNOLOGY, INC. AND SUBSIDIARIES

 CONSOLIDATED FINANCIAL STATEMENTS

 FOR THE YEARS ENDED

 DECEMBER 31, 2022 AND 2023

 AND SUBSIDIARIES

 Contents

 Page(s)

 Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 3299)

 Report of Independent Registered Public Accounting Firm (PCAOB ID No. 2769)

 Consolidated Balance Sheets as of December 31, 2022 and 2023

 Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2022 and 2023

 Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2022 and 2023

 Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2023

 Notes to the Consolidated Financial Statements

 F-13 - F-67

 F- 1

 Report of Independent Registered Public Accounting
Firm

 To the Shareholders and the Board of Directors
of CBAK Energy Technology, Inc.

 Opinion on the Financial Statements

 We have audited the accompanying consolidated
balance sheet of CBAK Energy Technology, Inc. and subsidiaries (the "Company") as of December 31, 2023 and the related consolidated
statements of operations and comprehensive loss, changes in shareholders' equity and cash flows for the year ended December 31,
2023, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated
financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023,
and the consolidated results of its operations and its cash flows for the year ended December 31, 2023, in conformity with U.S. generally
accepted accounting principles.

 We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31,
2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission and our report dated March 15, 2024, expressed an adverse opinion on the Company's internal control over financial
reporting because of material weaknesses.

 Going Concern

have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements,
the Company has a working capital deficiency, accumulated deficit from recurring net losses and significant short-term debt obligations
maturing in less than one year as of December 31, 2023. All these factors raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also discussed in Note 1 to the consolidated financial statements. These
consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis for Opinion

 These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial
statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect
to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.

 We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 Critical Audit Matters

 The critical audit matters communicated below
are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated
to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and
(2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 F- 2

 Going concern

have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements,
the Company has a working capital deficiency, accumulated deficit from recurring net losses and significant short-term debt obligations
maturing in less than one year as of December 31, 2023. The Company has contractual obligations such as commitments for purchases of equipment,
building constructions cost, payable, capital injection to subsidiaries and short-term loan (collectively "obligations").
Currently management's forecasts and related assumptions illustrate their ability to meet the obligations through management of
expenditures and, if necessary, obtaining additional debt financing, loans from existing directors and shareholders and private placements
of capital stock for additional funding to meet its operating needs. Should there be constraints on the ability to access such financing,
the Company can manage cash outflows to meet the obligations through reductions in capital expenditures and other operating expenditures.

 We identified management's assessment of
the Company's ability to continue as a going concern as a critical audit matter. Management made judgments to conclude that it is
probable that the Company's plans will be effectively implemented and will provide the necessary cash flows to fund the Company's
obligations as they become due. Specifically, the judgments with the highest degree of impact and subjectivity in determining it is probable
that the Company's plans will be effectively implemented included the revenue growth and gross margin assumptions underlying its
forecast operating cash flows, its ability to reduce capital expenditures and other operating expenditures, its ability to access funding
from the capital market and its ability to obtaining loans from existing directors and shareholders. Auditing the judgments made by management
required a high degree of auditor judgment and an increased extent of audit effort.

and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures
included the following, among others: (i) testing the effectiveness of controls relating to management's assessment of the Company's
ability to continue as a going concern, including controls relating to evaluate the appropriateness of management's process for developing
the estimates of forecast operating cash flows; (ii) testing key assumptions underlying management's forecast operating cash flows,
including revenue growth, gross margin and operating expenses assumptions; (iii) evaluating the probability that the Company will be able
to access funding from the capital market; (iv) evaluating the probability that the Company will be able to reduce capital expenditures
and other operating expenditures if required; and (v) evaluating the probability that the Company will be able to obtain the loan from
existing directors and shareholders.

 Inventory write-down

 As described in Note 5 of the consolidated financial
statements, inventories are stated at the lower of cost or net realizable value, with cost determined on a weighted average cost method.
Write-down of potential obsolete or slow moving inventories is recorded based on management's assumptions about future demands and
market conditions. For the year ended December 31, 2023, the Company recorded inventory write-downs of $3.6 million. Inventories include
items that have been written down to the Company's best estimate of their realizable value, which includes consideration of various
factors.

 We identified the inventory write-down as a critical
audit matter. The Company's determination of future markdowns is subjective. Specifically, there was a high degree of subjective
auditor judgment in evaluating how the Company's merchandising strategy and related inventory markdown assumptions affected the
realizable value of inventory.

and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures
included the following, among others: (i) testing the effectiveness of controls relating to management's assessment on inventory
write-down process, including controls relating to evaluate the appropriateness of management's process for developing the estimates of
net realizable value; (ii) observing the physical condition of inventories during inventory counts; (iii) testing the reasonableness of
the assumptions about quality, damages, future demand, selling prices and market conditions by considering with historical trends and
consistency with evidence obtained in other areas of the audit; and corroborating the assumptions with individuals within the product
team; and (iv) assessing the Company's adjustments of inventory costs to net realizable value for slow-moving and obsolete inventories
by (1) comparing the historical estimate for net realizable value adjustments to actual adjustments of inventory costs, and (2) analyzing
sales subsequent to the measurement date.

 Assessment of impairment of long-lived assets

 As discussed in Note 2 (f) and Note 7 to the consolidated
financial statements, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying
value of these assets may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the
carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount
of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying
amount of the asset exceeds the fair value of the asset. Fair value is generally measured based on either quoted market prices, if available,
or discounted cash flow analyses. Based upon the analysis performed, the Company recognized impairment losses for long-lived assets of
$7.1 million for the year ended December 31, 2023.

 We identified the assessment of impairment of
long-lived assets as a critical audit matter because of the significant estimates and assumptions management used in the projections of
future cash flows, including the expected production and sales volumes, production costs, operating expenses and discount rates applied
to these forecasted future cash flows. Performing audit procedures to evaluate the reasonableness of these estimates and assumptions required
a high degree of auditor judgment and an increased extent of effort.

 F- 3

and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures
included the following, among others: (i) testing the effectiveness of controls relating to management's impairment assessment on
of long-lived assets, including controls relating to fair value determination of the long-lived assets; (ii) evaluating the appropriateness
of the valuation model, by reviewing the valuation report and the calculation schedules prepared by the management and third party valuation
specialists engaged by the Company (iii) comparing the methodology used by the Company, that is, recoverable amount calculations based
on future discounted cash flows, to industry practice and testing the completeness and accuracy of the underlying data used in the projections;
(iv) assessing the reasonableness of the significant assumptions used in the calculations, which comprised of, amongst others, expected
production and sales volumes, production costs, operating expenses and discount rates, by comparing them to external industry outlook
reports from a number of sources and by analyzing the historical accuracy of management's estimates; (v) evaluating the competence,
capabilities and objectivity of the professionals engaged by the Company; and (vi) involving our valuation specialists to assist us with
assessing the appropriateness of the valuation methodologies and the reasonableness of assumptions used, including the discount rates.

 Assessment of allowance for current expected
credit losses ("CECL")

 As discussed in Note 2 (d) to the consolidated
financial statements, the Company adopted ASU No. 2016-13, Financial Instruments-Credit Losses (codified as Accounting Standard Codification
Topic 326) and several associated ASUs on January 1, 2023 using a modified retrospective approach. The Company assessed that trade receivable
and other current assets are within the scope of ASC 326. The Company has identified the relevant risk characteristics of trade receivables
and other current assets which include size, type of the services or the products the Company provides, or a combination of these characteristics,
the historical credit loss experience, current economic conditions, supportable forecasts of future economic conditions, and any recoveries
in assessing the lifetime expected credit losses, etc. Other key factors that influence the expected credit loss analysis include industry-specific
factors that could impact the credit quality of the Company's receivables. This is assessed at each quarter based on the Company's
specific facts and circumstances. All forward looking statements are, by their nature, subject to risks and uncertainties, many of which
are beyond the Company's control. Additionally, external data and macroeconomic factors are also considered. As of January 1, 2023,
upon the adoption, the expected credit loss provision for the current assets was $2.3 million. For the year ended December 31, 2023, the
Company recorded $1.3 million in expected credit losses. As of December 31, 2023, the expected credit loss provision recorded in current
assets was $3.5 million.

 We identified the assessment of allowances for
CECL as a critical audit matter due to the involvement of subjective judgment and management estimates in evaluating the CECL of the current
asset items, and the significance to the Company's consolidated financial position.

and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures
included the following, among others: (i) testing the effectiveness of controls relating to the assessment of allowances for CECL and
assessing management's method for developing the allowance for doubtful accounts (credit losses); (ii) evaluating the appropriateness
of the valuation model, by reviewing the valuation report and the calculation schedules prepared by the management and third party valuation
specialists engaged by the Company; (iii) testing the accuracy of management's basic input in calculating CECL including aging report,
historical write-offs and recoveries, on a sample basis; (iv) engaging independent valuation specialist with specialized skills and knowledge,
to evaluate the reasonableness of significant assumptions and judgments made by management to estimate the allowance for credit loss,
including the Company's assessment on significant factors, and the basis of estimated loss rates applied with reference to historical
default rates and forward-looking information; (v) sending confirmations to debtors to confirm the accuracy of the basic information and
terms of the loan receivables and other receivable accounts; (vi) evaluating subsequent collections occurring after the balance sheet
date; and (vii) evaluating the competence, capabilities and objectivity of the professionals engaged by the Company.

 /s/ ARK Pro CPA & Co

 ARK Pro CPA & Co

 We have served as the Company's auditor since
2023.

 Hong Kong, China

 PCAOB ID: 3299

 F- 4

 Report of Independent Registered Public Accounting
Firm

 To the Shareholders and the Board of Directors
of CBAK Energy Technology, Inc.

 Opinion on Internal Control over Financial
Reporting

 We have audited CBAK Energy Technology, Inc. and
subsidiaries' internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our
opinion, because of the effect of the material weaknesses described below on the achievement of the objectives of the control criteria,
CBAK Energy Technology, Inc. and subsidiaries (the "Company") has not maintained effective internal control over financial reporting as
of December 31, 2023, based on the COSO criteria.

 A material weakness is a deficiency, or combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of the company's annual or interim financial statements will not be prevented or detected on a timely basis. The following material
weaknesses have been identified and included in management's assessment:

 The Company did not have appropriate policies
and procedures in place to evaluate the proper accounting and disclosures of key documents and agreements, and there was insufficient
accounting personnel with an appropriate level of technical accounting knowledge and experience in the application of accounting principles
generally accepted in the United States of America, or U.S. GAAP, commensurate with the financial reporting requirements.

 We also have audited, in accordance with the standards
of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December
31, 2023, the related consolidated statements of operations and comprehensive loss, changes in shareholders' equity and cash flows
for the year ended December 31, 2023, and the related notes. These material weaknesses were considered in determining the nature, timing
and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our report
dated March 15, 2024, which expressed an unqualified opinion thereon.

 Basis for Opinion

 The Company's management is responsible
for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over
financial reporting, included in the Management's Annual Report on Internal Control over Financial Reporting. Our responsibility
is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material respects.

 Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,
and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis
for our opinion.

 Definition and Limitations of Internal Control
over Financial Reporting

 A company's internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control
over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition
of the company's assets that could have a material effect on the financial statements.

 Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

 /s/ ARK Pro CPA & Co

 ARK Pro CPA & Co

 We have served as the Company's auditor since
2023.

 Hong Kong, China

 PCAOB ID: 3299

 F- 5

 Report of Independent Registered Public Accounting
Firm

 To the Shareholders and the Board of Directors
of CBAK Energy Technology, Inc.

 Opinion on the Financial Statements

 We have audited the accompanying consolidated
balance sheet of CBAK Energy Technology, Inc. and subsidiaries (the "Company") as of December 31, 2022, and the related consolidated
statements of operations and comprehensive loss, changes in shareholders' equity and cash flows for the year then ended, and the
related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31, 2022, and the results of its
operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

 Going Concern

have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements,
the Company has accumulated deficit from recurring net losses and significant short-term debt obligations maturing in less than one year
as of December 31, 2022. All these factors raise substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also discussed in Note 1 to the consolidated financial statements. These consolidated financial statements
do not include any adjustments that might result from the outcome of this uncertainty.

 Basis for Opinion

 These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide
a reasonable basis for our opinion.

 Critical Audit Matters

 The critical audit matters communicated below
are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated
to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and
(2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 Going concern

have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements,
the Company has accumulated deficit from recurring net losses and significant short-term debt obligations maturing in less than one year
as of December 31, 2022. The Company has contractual obligations such as commitments for purchases of equipment, building constructions
cost, payable, capital injection to subsidiaries and short-term loan (collectively "obligations"). Currently management's
forecasts and related assumptions illustrate their ability to meet the obligations through management of expenditures and, if necessary,
obtaining additional debt financing, loans from existing directors and shareholders and private placements of capital stock for additional
funding to meet its operating needs. Should there be constraints on the ability to access such financing, the Company can manage cash
outflows to meet the obligations through reductions in capital expenditures and other operating expenditures.

 F- 6

 We identified management's assessment of
the Company's ability to continue as a going concern as a critical audit matter. Management made judgments to conclude that it is
probable that the Company's plans will be effectively implemented and will provide the necessary cash flows to fund the Company's
obligations as they become due. Specifically, the judgments with the highest degree of impact and subjectivity in determining it is probable
that the Company's plans will be effectively implemented included the revenue growth and gross margin assumptions underlying its
forecast operating cash flows, its ability to reduce capital expenditures and other operating expenditures, its ability to access funding
from the capital market and its ability to obtaining loans from existing directors and shareholders. Auditing the judgments made by management
required a high degree of auditor judgment and an increased extent of audit effort.

and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures
included the following, among others: (i) testing key assumptions underlying management's forecast operating cash flows, including
revenue growth and gross margin assumptions; (ii) evaluating the probability that the Company will be able to access funding from the
capital market; (iii) evaluating the probability that the Company will be able to reduce capital expenditures and other operating expenditures
if required and (iv) evaluating the probability that the Company will be able to obtain the loan from existing directors and shareholders.

 Inventory write-down

 As described in Note 5 of the consolidated financial
statements, inventories are stated at the lower of cost or net realizable value, with cost determined on a weighted average cost method.
Write-down of potential obsolete or slow moving inventories is recorded based on management's assumptions about future demands and
market conditions. For the year ended December 31, 2022, the Company recorded inventory write-down of $1.7 million. Inventories include
items that have been written down to the Company's best estimate of their realizable value, which includes consideration of various
factors.

 We identified the inventory write-down as a critical
audit matter. The Company's determination of future markdowns is subjective. Specifically, there was a high degree of subjective
auditor judgment in evaluating how the Company's merchandising strategy and related inventory markdown assumptions affected the
realizable value of inventory.

and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures
included the following, among others: (i) observing the physical condition of inventories during inventory counts; (ii) evaluating the
appropriateness of management's process for developing the estimates of net realizable value; (iii) testing the reasonableness of the
assumptions about quality, damages, future demand, selling prices and market conditions by considering with historical trends and consistency
with evidence obtained in other areas of the audit; and corroborating the assumptions with individuals within the product team; and (iv)
assessing the Company's adjustments of inventory costs to net realizable value for slow-moving and obsolete inventories by (1) comparing
the historical estimate for net realizable value adjustments to actual adjustments of inventory costs, and (2) analyzing sales subsequent
to the measurement date.

 Assessment of impairment of long-lived assets

 As discussed in Note 2 (l) and Note 7 to the consolidated
financial statements, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying
value of these assets may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the
carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount
of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying
amount of the asset exceeds the fair value of the asset. Fair value is generally measured based on either quoted market prices, if available,
or discounted cash flow analyses. Based upon the analysis performed, the Company recognized impairment losses for long-lived assets of
$4.8 million for the year ended December 31, 2022.

 We identified the assessment of impairment of
long-lived assets as a critical audit matter because of the significant estimates and assumptions management used in the projections of
future cash flows, including the expected production and sales volumes, production costs, operating expenses and discount rates applied
to these forecasted future cash flows. Performing audit procedures to evaluate the reasonableness of these estimates and assumptions required
a high degree of auditor judgment and an increased extent of effort.

and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures
included the following, among others: (i) comparing the methodology used by the Company, that is, recoverable amount calculations based
on future discounted cash flows, to industry practice and testing the completeness and accuracy of the underlying data used in the projections;
(ii) assessing the reasonableness of the significant assumptions used in the calculations, which comprised of, amongst others, expected
production and sales volumes, production costs, operating expenses and discount rates, by comparing them to external industry outlook
reports from a number of sources and by analyzing the historical accuracy of management's estimates; and (iii) involving our valuation
specialists to assist us with assessing the appropriateness of the valuation methodologies and the reasonableness of assumptions used,
including the discount rates.

 F- 7

 Assessment of impairment of goodwill

 As described in Note 13 to the consolidated financial
statements, the Company's consolidated goodwill balance was nil as of December 31, 2022. The Company performs an assessment of the
carrying value of the reporting units at least on an annual basis or when events occur or circumstances change that would more likely
than not reduce the estimated fair value of the reporting units below its carrying value. The Company performed a goodwill impairment
analysis as of December 31, 2022. For purposes of impairment testing, management allocates its goodwill to the relevant reporting unit,
and compares the recoverable amounts of these reporting unit to their respective carrying amounts. Management determined the recoverable
amounts of these reporting unit based on the value in use ("VIU") which is calculated based on discounted cash flows expected
to be derived from the respective reporting unit. Management's cash flows projections included significant judgments and assumptions
relating to the expected production and sales volumes, production costs, operating expenses and discount rates. Based upon the analysis
performed, the Company recognized impairment losses for goodwill of $1.6 million for the year ended December 31, 2022.

 We identified the assessment of impairment of
goodwill as a critical audit matter because of the significant estimates and assumptions management used in the projections of future
cash flows, including the expected production and sales volumes, production costs, operating expenses and discount rates applied to these
forecasted future cash flows. Performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a
high degree of auditor judgment and an increased extent of effort.

and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures
included the following, among others: (i) comparing the methodology used by the Company, that is, recoverable amount calculations based
on future discounted cash flows, to industry practice and testing the completeness and accuracy of the underlying data used in the projections;
(ii) assessing the reasonableness of the significant assumptions used in the calculations, which comprised of, amongst others, expected
production and sales volumes, production costs, operating expenses and discount rates, by comparing them to external industry outlook
reports from a number of sources and by analyzing the historical accuracy of management's estimates; and (iii) involving our valuation
specialists to assist us with assessing the appropriateness of the valuation methodologies and the reasonableness of assumptions used,
including the discount rates.

 Assessment of allowances for doubtful accounts

 As discussed in Note 2 to the consolidated financial
statements, the allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in the Company's
existing trade accounts receivable. The Company determines the allowance based on historical write-off experience, customer specific facts
and economic conditions. Outstanding accounts receivable balances are reviewed individually for collectability. Account balances are charged
off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Based
upon the analysis performed, the Company maintained an allowance for doubtful account of $2.3 million as of December 31, 2022.

 We identified the assessment of allowances for
doubtful accounts as a critical audit matter. Specifically, the specific allowance is an estimate that involved assessing the likelihood
of collection of a customer's accounts receivable by considering various factors such as the nature of any dispute, communications
from the customer, historical collections, and number of days accounts receivables have been outstanding. Subjective auditor judgment
was involved in evaluating the relevance and reliability of the evidence obtained in evaluating these factors.

and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures
included the following, among others: (i) investigating significant fluctuations in the specific allowance as compared to net accounts
receivable and the prior year specific allowance; (ii) inquiring of Company personnel to evaluate the rationale for establishing a specific
allowance for certain customers; (iii) assessing the Company's estimate of the specific customer allowance by evaluating the underlying
contractual documents, historical collection trends, communications with customers and other additional factors; and (iv) evaluating subsequent
collections occurring after the balance sheet date and considered the impact of potential subsequent events on the estimate of the specific
allowance.

 /s/ Centurion ZD CPA & Co.

 Centurion ZD CPA & Co.

 We served as the Company's auditor from 2016 to
2023.

 Hong Kong, China

 April 14, 2023

 PCAOB ID: 2769

 F- 8

 CBAK Energy Technology,
Inc. and Subsidiaries

 Consolidated Balance Sheets

 As of December 31, 2022 and 2023

 (In US$ except for number of shares)

 Note

 2022

 2023

 Assets

 Current assets

 Cash and cash equivalents

 $
 6,519,212

 $
 4,643,267

 Pledged deposits

 30,836,864

 54,179,549

 Trade and bills receivable, net

 27,413,575

 28,653,047

 49,446,291

 33,413,422

 Prepayments and other receivables

 5,915,080

 7,459,254

 Receivables from former subsidiary

 5,518,052

 74,946

 Income tax recoverable

 57,934

 -

 Total current assets

 125,707,008

 128,423,485

 Property, plant and equipment, net

 90,004,527

 91,628,832

 Construction in progress

 9,954,202

 37,797,862

 Long-term investments, net

 945,237

 2,565,005

 Prepaid land use rights

 12,361,163

 11,712,704

 Intangible assets, net

 1,309,058

 841,360

 Deposit paid for acquisition of long-term investments

 -

 7,101,492

 Operating lease right-of-use assets, net

 1,264,560

 1,084,520

 Deferred tax assets, net

 2,486,979

 -

 Total assets

 $
 244,032,734

 $
 281,155,260

 Liabilities

 Current liabilities

 Trade and bills payable

 $
 67,491,435

 82,429,575

 Short-term bank borrowings

 14,907,875

 32,587,676

 Other short-term loans

 689,096

 339,552

 Accrued expenses and other payables

 25,605,661

 41,992,540

 Payable to a former subsidiary, net

 358,067

 411,111

 Deferred government grants, current

 1,299,715

 375,375

 Product warranty provisions

 26,215

 23,870

 Warrants liability

 -

 Operating lease liability, current

 575,496

 691,992

 Finance lease liability, current

 844,297

 1,643,864

 Total current liabilities

 111,933,857

 160,495,555

 Deferred government grants, non-current

 5,577,020

 6,203,488

 Product warranty provisions

 450,613

 522,574

 Operating lease liability, non-current

 607,222

 475,302

 Accrued expenses and other payables, non-current

 1,085,525

 -

 Total liabilities

 119,654,237

 167,696,919

 Commitments and contingencies

 Shareholders' equity

 Common stock $ 0.001 par value; 500,000,000 authorized; 89,135,064 issued and 88,990,858 outstanding as of December 31, 2022; and 90,063,396 issued and 89,919,190 outstanding as of December 31, 2023

 89,135

 90,063

 Donated shares

 Additional paid-in capital

 246,240,998

 247,465,817

 Statutory reserves

 Accumulated deficit

 ( 131,946,705
)

 ( 134,395,762
)

 Accumulated other comprehensive loss

 ( 8,153,644
)

 ( 11,601,403
)

 121,561,984

 116,890,915

 Less: Treasury shares

)

)

 Total shareholders' equity

 117,495,374

 112,824,305

 Non-controlling interests

 6,883,123

 634,036

 Total equity

 124,378,497

 113,458,341

 Total liabilities and shareholder's equity

 $
 244,032,734

 $
 281,155,260

 See accompanying notes to the consolidated financial
statements.

 F- 9

 CBAK Energy Technology, Inc. and Subsidiaries

 Consolidated Statements of Operations and Comprehensive
Income (Loss)

 (In US$ except for number of shares)

 Note

 2022

 2023

 Net revenues

 $

 $

 ( 230,630,161
)

 ( 172,714,042
)

 Gross profit

 18,095,324

 31,724,323

 Operating expenses:

 Research and development expenses

 ( 10,635,486
)

 ( 11,928,070
)

 Sales and marketing expenses

 ( 2,007,812
)

 ( 4,903,926
)

 General and administrative expenses

 ( 9,737,711
)

 ( 13,789,108
)

 Impairment charge on long-lived assets

 ( 4,831,708
)

 ( 7,070,236
)

 Impairment charge on goodwill

 ( 1,556,078
)

 -

 Provision for expected credit losses and bad debts written off

 ( 831,132
)

 ( 1,284,795
)

 ( 29,599,927
)

 ( 38,976,135
)

 Operating loss

 ( 11,504,603
)

 ( 7,251,812
)

 Finance income, net

 491,060

 432,900

 Other (expenses) income, net

 ( 7,252,475
)

 3,023,238

 Impairment charges on equity investee

 -

 ( 2,366,080
)

 Share of loss of equity investee

 -

 ( 27,428
)

 Changes in fair value of warrants liability

 5,710,000

 Loss before income tax

 ( 12,556,018
)

 ( 6,053,182
)

 Income tax credit (expenses), net

)

)

)

 Less: Net loss attributable to non-controlling interests

 1,879,365

 6,090,270

 Net loss attributable to shareholders of CBAK Energy Technology, Inc.

 $
)

 $
 ( 2,449,057
)

)

)

 Other comprehensive loss

 – Foreign currency translation adjustment

 ( 11,189,175
)

 ( 3,606,576
)

 Comprehensive loss

 ( 22,516,986
)

 ( 12,145,903
)

 Less: Comprehensive loss attributable to non-controlling interests

 2,425,879

 6,249,087

 Comprehensive loss attributable to CBAK Energy Technology, Inc.

 $
 ( 20,091,107
)

 $
 ( 5,896,816
)

 Loss per share

 – Basic

 $
 ( 0.11
)

 $
 ( 0.03
)

 – Diluted

 $
 ( 0.11
)

 $
 ( 0.03
)

 Weighted average number of shares of common stock:

 – Basic

 88,927,671

 89,252,085

 – Diluted

 88,927,671

 89,252,085

 See accompanying notes to the consolidated financial
statements.

 F- 10

 CBAK Energy Technology, Inc. and Subsidiaries

 Consolidated Statements of Changes in Shareholders'
Equity

 For the years ended 2022 and 2023

 (In US$ except for number of shares)

 Common
 stock issued

 Additional

 Statutory

 Accumulated
 other

 Non-

 Treasury
 shares

 Total

 Number

 Donated

 paid-in

 reserves

 Accumulated

 comprehensive

 controlling

 Number

 shareholders'

 of shares

 shares

 capital

 (Note 21)

 deficit

 Income
 (loss)

 interests

 of shares

 equity

 as of January 1, 2022

 88,849,222

 $

 88,849

 $

 $

 241,946,362

 $

 $

 ( 122,498,259

)

 $

 2,489,017

 $

 7,593,014

 ( 144,206

)

 $

)

 $

 140,884,573

 Net
 loss

 -

 -

 -

 -

 -

)

 -

 ( 1,879,365

)

 -

 -

)

 Share-based
 compensation for employee and director stock awards

 -

 -

 -

 64,193

 -

 -

 -

 -

 -

 -

 64,193

 Common
 stock issued to employees and directors for stock award

 285,842

 -

 ( 286

)

 -

 -

 -

 -

 -

 -

 -

 Capital
 injection

 -

 -

 -

 1,148,447

 -

 -

 -

 338,232

 -

 -

 1,486,679

 Disposal
 of partial interest in a subsidiary without losing control

 -

 -

 -

 3,082,282

 -

 -

 -

 1,377,756

 -

 -

 4,460,038

 Foreign
 currency translation adjustment

 -

 -

 -

 -

 -

 -

 ( 10,642,661

)

 ( 546,514

)

 -

 -

 ( 11,189,175

)

 as of December 31, 2022

 89,135,064

 $

 89,135

 $

 $

 246,240,998

 $

 $

 ( 131,946,705

)

 $

 ( 8,153,644

)

 $

 6,883,123

 ( 144,206

)

 $

)

 $

 124,378,497

 Net
 loss

 -

 -

 -

 -

 -

 ( 2,449,057

)

 -

 ( 6,090,270

)

 -

 -

)

 Share-based
 compensation for employee and director stock awards

 -

 -

 -

 1,225,747

 -

 -

 -

 -

 -

 -

 1,225,747

 Common
 stock issued to employees and directors for stock award

 928,332

 -

 ( 928

)

 -

 -

 -

 -

 -

 -

 -

 Foreign
 currency translation adjustment

 -

 -

 -

 -

 -

 -

 ( 3,447,759

)

 ( 158,817

)

 ( 3,606,576

)

 as of December 31, 2023

 90,063,396

 $

 90,063

 $

 $

 247,465,817

 $

 $

 ( 134,395,762

)

 $

 ( 11,601,403

)

 $

 634,036

 ( 144,206

)

 $

)

 $

 113,458,341

 See accompanying notes to the consolidated financial
statements.

 F- 11

 CBAK Energy Technology, Inc. and subsidiaries

 Consolidated statements of cash flows

 (In US$)

 Year Ended

 Year Ended

 2022

 2023

 Cash flows from operating activities

 $
)

)

 Adjustments to reconcile net loss to net cash provided by operating activities:

 Depreciation and amortization

 8,062,303

 9,695,472

 (Reversal) provision for credit losses

 ( 2,428,449
)

 1,271,730

 Write-down of inventories

 1,658,432

 3,554,962

 Share-based compensation

 64,193

 1,225,747

 Changes in fair value of warrants liability

 ( 5,710,000
)

 ( 136,000
)

 Loss on disposal of property, plant and equipment

 7,722,451

 544,481

 Impairment charge on long-lived assets

 4,831,708

 7,070,236

 Impairment charge on goodwill

 1,556,078

 -

 Impairment loss of equity investee

 -

 2,366,080

 Share of loss of equity investees

 -

 27,428

 Amortization of operating lease right-of-use assets

 496,720

 640,375

 Changes in operating assets and liabilities:

 Trade and bills receivable

 21,021,110

 ( 2,960,147
)

 ( 23,977,795
)

 11,207,281

 Prepayments and other receivables

 7,146,992

 ( 2,050,039
)

 Investment in sales-type lease

 1,539,120

 -

 Trade and bills payable

 7,557,193

 16,785,569

 Accrued expenses and other payables and product warranty provisions

 581,074

 ( 2,490,859
)

 Lease liabilities

 1,188,476

 347,511

 Trade receivable from and payables to a former subsidiary

 ( 3,529,467
)

 5,359,249

 Income tax payables

 ( 109,307
)

 157,434

 Deferred tax assets

 ( 1,228,207
)

 2,429,726

 Net cash provided by operating activities

 15,114,814

 46,506,909

 Cash flows from investing activities

 Deposit paid for acquisition of long-term investment

 -

 ( 7,126,798
)

 Purchases of property, plant and equipment and construction in progress

 ( 12,373,112
)

 ( 31,140,550
)

 Proceeds on disposal of property, plant and equipment

 282,164

 1,139

 Investment in equity method investment

 ( 297,336
)

 ( 4,044,175
)

 Cash receipt from disposal of equity interest of a subsidiary without losing control

 4,460,038

 -

 Net cash used in investing activities

 ( 7,928,246
)

 ( 42,310,384
)

 Cash flows from financing activities

 Proceeds from bank borrowings

 21,594,593

 36,125,794

 Repayment of bank borrowings

 ( 14,607,200
)

 ( 17,986,680
)

 Repayment of borrowings from unrelated parties

 -

 ( 277,466
)

 Borrowings from related parties

 1,486,679

 -

 Repayment of borrowings from related parties

 ( 1,486,679
)

 -

 Borrowings from a shareholder

 -

 199,942

 Repayment of borrowings from shareholders

 ( 4,559
)

 ( 258,316
)

 Repayment of borrowings from Mr. Ye Junnan

 ( 3,716,698
)

 -

 Capital injection from non-controlling interests

 1,486,679

 -

 Proceeds from finance leases

 1,486,679

 1,696,857

 Principal payments on finance leases

 ( 628,122
)

 ( 884,911
)

 Net cash provided by financing activities

 5,611,372

 18,615,220

 Effect of exchange rate changes on cash and cash equivalents and restricted cash

 ( 1,796,488
)

 ( 1,345,005
)

 Net increase in cash and cash equivalents and restricted cash

 11,001,452

 21,466,740

 Cash and cash equivalents and restricted cash at the beginning of year

 26,354,624

 37,356,076

 Cash and cash equivalents and restricted cash at the end of year

 $
 37,356,076

 $
 58,822,816

 Supplemental non-cash investing and financing activities:

 Transfer of construction in progress to property, plant and equipment

 $
 22,667,373

 $
 19,538,431

 Lease liabilities arising from obtaining right-of-use assets

 $
 1,012,740

 $
 476,995

 Cash paid during the year for:

 Income taxes

 $
 59,508

 $
 -

 Interest, net of amounts capitalized

 $
 571,118

 $
 181,611

 See accompanying notes to the consolidated financial
statements.

 F- 12

 CBAK Energy Technology, Inc. and subsidiaries

 Notes to the consolidated financial statements

 (In US$ except for number of shares)

 1. Principal Activities, Basis of Presentation and Organization

 Principal Activities

 CBAK Energy Technology, Inc. (formerly known as
China BAK Battery, Inc.) ("CBAK" or the "Company") is a corporation formed in the State of Nevada on October 4,
1999 as Medina Copy, Inc. The Company changed its name to Medina Coffee, Inc. on October 6, 1999 and subsequently changed its name to
China BAK Battery, Inc. on February 14, 2005. CBAK and its subsidiaries (hereinafter, collectively referred to as the "Company")
are principally engaged in the manufacture, commercialization and distribution of a wide variety of standard and customized lithium ion
(known as "Li-ion" or "Li-ion cell") high power rechargeable batteries. Prior to the disposal of BAK International
Limited ("BAK International") and its subsidiaries (see below), the batteries produced by the Company were for use in cellular
telephones, as well as various other portable electronic applications, including high-power handset telephones, laptop computers, power
tools, digital cameras, video camcorders, MP3 players, electric bicycles, hybrid/electric vehicles, and general industrial applications.
After the disposal of BAK International and its subsidiaries on June 30, 2014, the Company will focus on the manufacture, commercialization
and distribution of high power lithium ion rechargeable batteries for use in cordless power tools, light electric vehicles, hybrid electric
vehicles, electric cars, electric busses, uninterruptable power supplies and other high power applications.

 The shares of the Company traded in the over-the-counter
market through the Over-the-Counter Bulletin Board from 2005 until May 31, 2006, when the Company obtained approval to list its common
stock on The NASDAQ Global Market, and trading commenced that same date under the symbol "CBAK".

 On January 10, 2017, the Company filed Articles
of Merger with the Secretary of State of Nevada to effectuate a merger between the Company and the Company's newly formed, wholly
owned subsidiary, CBAK Merger Sub, Inc. (the "Merger Sub"). According to the Articles of Merger, effective January 16, 2017,
the Merger Sub merged with and into the Company with the Company being the surviving entity (the "Merger"). As permitted by
Chapter 92A.180 of Nevada Revised Statutes, the sole purpose of the Merger was to effect a change of the Company's name.

 Effective November 30, 2018, the trading symbol
for common stock of the Company was changed from CBAK to CBAT. Effective at the opening of business on June 21, 2019, the Company's
common stock started trading on the Nasdaq Capital Market.

 Basis of Presentation and Organization

 On November 6, 2004, BAK International, a non-operating
holding company that had substantially the same shareholders as Shenzhen BAK Battery Co., Ltd ("Shenzhen BAK"), entered into
a share swap transaction with the shareholders of Shenzhen BAK for the purpose of the subsequent reverse acquisition of the Company. The
share swap transaction between BAK International and the shareholders of Shenzhen BAK was accounted for as a reverse acquisition of Shenzhen
BAK with no adjustment to the historical basis of the assets and liabilities of Shenzhen BAK.

 On January 20, 2005, the Company completed a share
swap transaction with the shareholders of BAK International. The share swap transaction, also referred to as the "reverse acquisition"
of the Company, was consummated under Nevada law pursuant to the terms of a Securities Exchange Agreement entered by and among CBAK, BAK
International and the shareholders of BAK International on January 20, 2005. The share swap transaction has been accounted for as a capital-raising
transaction of the Company whereby the historical financial statements and operations of Shenzhen BAK are consolidated using historical
carrying amounts.

 F- 13

 Also on January 20, 2005, immediately prior to
consummating the share swap transaction, BAK International executed a private placement of its common stock with unrelated investors whereby
it issued an aggregate of 1,720,087 shares of common stock for gross proceeds of $ 17,000,000. In conjunction with this financing, Mr.
Xiangqian Li, the Chairman and Chief Executive Officer of the Company ("Mr. Li") until March 1, 2016, agreed to place 435,910
shares of the Company's common stock owned by him into an escrow account pursuant to an Escrow Agreement dated January 20, 2005
(the "Escrow Agreement"). Pursuant to the Escrow Agreement, 50 % of the escrowed shares were to be released to the investors
in the private placement if audited net income of the Company for the fiscal year ended September 30, 2005 was not at least $ 12,000,000,
and the remaining 50 % was to be released to investors in the private placement if audited net income of the Company for the fiscal year
ended September 30, 2006 was not at least $ 27,000,000. If the audited net income of the Company for the fiscal years ended September 30,
2005 and 2006 reached the above-mentioned targets, the 435,910 shares would be released to Mr. Li in the amount of 50% upon reaching the
2005 target and the remaining 50% upon reaching the 2006 target.

 Under accounting principles generally accepted
in the United States of America ("US GAAP"), escrow agreements such as the one established by Mr. Li generally constitute
compensation if, following attainment of a performance threshold, shares are returned to a company officer. The Company determined that
without consideration of the compensation charge, the performance thresholds for the year ended September 30, 2005 would be achieved.
However, after consideration of a related compensation charge, the Company determined that such thresholds would not have been achieved.
The Company also determined that, even without consideration of a compensation charge, the performance thresholds for the year ended September
30, 2006 would not be achieved.

 While the 217,955 escrow shares relating to the
2005 performance threshold were previously released to Mr. Li, Mr. Li executed a further undertaking on August 21, 2006 to return those
shares to the escrow agent for the distribution to the relevant investors. However, such shares were not returned to the escrow agent,
but, pursuant to a Delivery of Make Good Shares, Settlement and Release Agreement between the Company, BAK International and Mr. Li entered
into on October 22, 2007 (the "Li Settlement Agreement"), such shares were ultimately delivered to the Company as described
below. Because the Company failed to satisfy the performance threshold for the fiscal year ended September 30, 2006, the remaining 217,955
escrow shares relating to the fiscal year 2006 performance threshold were released to the relevant investors. As Mr. Li has not retained
any of the shares placed into escrow, and as the investors party to the Escrow Agreement are only shareholders of the Company and do not
have and are not expected to have any other relationship to the Company, the Company has not recorded a compensation charge for the years
ended September 30, 2005 and 2006.

 At the time the escrow shares relating to the
2006 performance threshold were transferred to the investors in fiscal year 2007, the Company should have recognized a credit to donated
shares and a debit to additional paid-in capital, both of which are elements of shareholders' equity. This entry is not material
because total ordinary shares issued and outstanding, total shareholders' equity and total assets do not change; nor is there any
impact on income or earnings per share. Therefore, previously filed consolidated financial statements for the fiscal year ended September
30, 2007 will not be restated. This share transfer has been reflected in these financial statements by reclassifying the balances of certain
items as of October 1, 2007. The balances of donated shares and additional paid-in capital as of October 1, 2007 were credited and debited
by $ 7,955,358 respectively, as set out in the consolidated statements of changes in shareholders' equity.

 In November 2007, Mr. Li delivered the 217,955
shares related to the 2005 performance threshold to BAK International pursuant to the Li Settlement Agreement; BAK International in turn
delivered the shares to the Company. Such shares (other than those issued to investors pursuant to the 2008 Settlement Agreements, as
described below) are now held by the Company. Upon receipt of these shares, the Company and BAK International released all claims and
causes of action against Mr. Li regarding the shares, and Mr. Li released all claims and causes of action against the Company and BAK
International regarding the shares. Under the terms of the Li Settlement Agreement, the Company commenced negotiations with the investors
who participated in the Company's January 2005 private placement in order to achieve a complete settlement of BAK International's
obligations (and the Company's obligations to the extent it has any) under the applicable agreements with such investors.

 F- 14

 Beginning on March 13, 2008, the Company entered
into settlement agreements (the "2008 Settlement Agreements") with certain investors in the January 2005 private placement.
Since the other investors have never submitted any claims regarding this matter, the Company did not reach any settlement with them.

 Pursuant to the 2008 Settlement Agreements, the
Company and the settling investors have agreed, without any admission of liability, to a settlement and mutual release from all claims
relating to the January 2005 private placement, including all claims relating to the escrow shares related to the 2005 performance threshold
that had been placed into escrow by Mr. Li, as well as all claims, including claims for liquidated damages relating to registration rights
granted in connection with the January 2005 private placement. Under the 2008 Settlement Agreement, the Company has made settlement payments
to each of the settling investors of the number of shares of the Company's common stock equivalent to 50 % of the number of the escrow
shares related to the 2005 performance threshold these investors had claimed; aggregate settlement payments as of June 30, 2015amounted
to 73,749 shares. Share payments to date have been made in reliance upon the exemptions from registration provided by Section 4(2) and/or
other applicable provisions of the Securities Act of 1933, as amended. In accordance with the 2008 Settlement Agreements, the Company
filed a registration statement covering the resale of such shares which was declared effective by the SEC on June 26, 2008.

 Pursuant to the Li Settlement Agreement, the 2008
Settlement Agreements and upon the release of the 217,955 escrow shares relating to the fiscal year 2006 performance threshold to the
relevant investors, neither Mr. Li or the Company have any obligations to the investors who participated in the Company's January
2005 private placement relating to the escrow shares.

 As of December 31, 2023, the Company had not received
any claim from the other investors who have not been covered by the "2008 Settlement Agreements" in the January 2005 private
placement.

 As the Company has transferred the 217,955 shares
related to the 2006 performance threshold to the relevant investors in fiscal year 2007 and the Company also have transferred 73,749 shares
relating to the 2005 performance threshold to the investors who had entered the "2008 Settlement Agreements" with us in fiscal
year 2008, pursuant to "Li Settlement Agreement" and "2008 Settlement Agreements", neither Mr. Li nor the Company
had any remaining obligations to those related investors who participated in the Company's January 2005 private placement relating
to the escrow shares.

 On August 14, 2013, Dalian BAK Trading Co., Ltd
was established as a wholly owned subsidiary of China BAK Asia Holding Limited ("BAK Asia") with a registered capital of $ 500,000.
Pursuant to CBAK Trading's articles of association and relevant PRC regulations, BAK Asia was required to contribute the capital
to CBAK Trading on or before August 14, 2015. On March 7, 2017, the name of Dalian BAK Trading Co., Ltd was changed to Dalian CBAK Trading
Co., Ltd ("CBAK Trading"). On August 5, 2019, CBAK Trading's registered capital was increased to $ 5,000,000. Pursuant
to CBAK Trading's amendment articles of association and relevant PRC regulations, BAK Asia was required to contribute the capital
to CBAK Trading on or before August 1, 2033. On December 12, 2023, CBAK Trading changed its name to Dalian CBAK New Energy Co., Ltd ("CBAK
New Energy"). Up to the date of this report, the Company has contributed $ 2,435,000 to CBAK Trading in cash. CBAK Trading is dormant
as of the date of the report.

 On December 27, 2013, Dalian BAK Power Battery
Co., Ltd was established as a wholly owned subsidiary of BAK Asia with a registered capital of $ 30,000,000. Pursuant to CBAK Power's
articles of association and relevant PRC regulations, BAK Asia was required to contribute the capital to CBAK Power on or before December
27, 2015. On March 7, 2017, the name of Dalian BAK Power Battery Co., Ltd was changed to Dalian CBAK Power Battery Co., Ltd ("CBAK
Power"). On July 10, 2018, CBAK Power's registered capital was increased to $ 50,000,000. On October 29, 2019, CBAK Power's
registered capital was further increased to $ 60,000,000. Pursuant to CBAK Power's amendment articles of association and relevant
PRC regulations, BAK Asia was required to contribute the capital to CBAK Power on or before December 31, 2021. Up to the date of this
report, the Company has contributed $ 60,000,000 to CBAK Power through injection of a series of patents and cash. CBAK Power principal
engaged in development and manufacture of high-power lithium batteries.

 F- 15

 On May 4, 2018, CBAK New Energy (Suzhou) Co.,
Ltd ("CBAK Suzhou") was established as a 90 % owned subsidiary of CBAK Power with a registered capital of RMB 10,000,000 (approximately
$ 1.5 million). The remaining 10 % equity interest was held by certain employees of CBAK Suzhou. Pursuant to CBAK Suzhou's articles
of association, each shareholder is entitled to the right of the profit distribution or responsible for the loss according to its proportion
to the capital contribution. Pursuant to CBAK Suzhou's articles of association and relevant PRC regulations, CBAK Power was required
to contribute the capital to CBAK Suzhou on or before December 31, 2019. Up to the date of this report, the Company has contributed RMB 9.0
million (approximately $ 1.3 million), and the other shareholders have contributed RMB 1.0 million (approximately $ 0.1 million) to CBAK
Suzhou through injection of a series of cash. In April 14, 2023, CBAK Power and Nanjing BFD Energy Technology Co., Ltd entered into shares
transfer agreement to transfer the 90 % shares of CBAK Suzhou owned by CBAK Power to Nanjing BFD, no gain or loss was incurred for the
transfer. CBAK Suzhou is dormant as of the date of the report.

 On November 21, 2019, Dalian CBAK Energy Technology
Co., Ltd ("CBAK Energy") was established as a wholly owned subsidiary of BAK Asia with a registered capital of $ 50,000,000.
Pursuant to CBAK Energy's articles of association and relevant PRC regulations, BAK Asia was required to contribute the capital
to CBAK Energy on or before November 20, 2022, the Company has extended the paid up time to January 31, 2054. Up to the date of this report,
the Company has contributed $ 23,519,880 to CBAK Energy. CBAK Energy is dormant as of the date of the report.

 On July 14, 2020, the Company acquired BAK Asia
Investments Limited ("BAK Investments"), a company incorporated under Hong Kong laws, from Mr. Xiangqian Li, the Company's
former CEO, for a cash consideration of HK$ 1.00. BAK Asia Investments Limited is a holding company without any other business operations.
BAK Investments principally engaged in investment holding.

 On July 31, 2020, BAK Investments formed a wholly
owned subsidiary CBAK New Energy (Nanjing) Co., Ltd. ("CBAK Nanjing") in China with a registered capital of $ 100,000,000.
Pursuant to CBAK Nanjing's articles of association and relevant PRC regulations, BAK Investments was required to contribute the
capital to CBAK Nanjing on or before July 29, 2040. Up to the date of this report, the Company has contributed $ 55,289,915 to CBAK Nanjing.
CBAK Nanjing principally engaged in investment holding.

 On August 6, 2020, Nanjing CBAK New Energy Technology
Co., Ltd. ("Nanjing CBAK") was established as a wholly owned subsidiary of CBAK Nanjing with a registered capital of RMB 700,000,000
(approximately $ 101.3 million). Pursuant to Nanjing CBAK's articles of association and relevant PRC regulations, CBAK Nanjing was
required to contribute the capital to Nanjing CBAK on or before August 5, 2040. Up to the date of this report, the Company has contributed
RMB 352.5 (approximately $ 51.0 million) to Nanjing CBAK. Nanjing CBAK principally engaged in development and manufacture of larger-sized
cylindrical lithium batteries.

 On November 9, 2020, Nanjing Daxin New Energy
Automobile Industry Co., Ltd ("Nanjing Daxin") was established as a wholly owned subsidiary of CBAK Nanjing with a register
capital of RMB 50,000,000 (approximately $ 7.2 million). Up to the date of this report, the Company has contributed RMB 37 (approximately
$ 5.4 million) to Nanjing Daxin. On March 6, 2023, Nanjing Daxin changed its name to Nanjing BFD Energy Technology Co., Ltd ("Nanjing
BFD"). The Company has paid in full to Nanjing BFD through injection of a series of cash. Nanjing BFD principally engaged in development
and manufacture of sodium-ion batteries.

 On April 21, 2021, CBAK Power, along with Shenzhen
BAK Power Battery Co., Ltd ("BAK SZ"), Shenzhen Asian Plastics Technology Co., Ltd ("SZ Asian Plastics") and Xiaoxia
Liu, entered into an investment agreement with Junxiu Li, Hunan Xintao New Energy Technology Partnership, Xingyu Zhu, and Jiangsu Saideli
Pharmaceutical Machinery Manufacturing Co., Ltd for an investment in Hunan DJY Technology Co., Ltd ("DJY"). CBAK Power has
paid approximately $ 1.3 million (RMB 9,000,000) to acquire 9.74 % of the equity interests of DJY. CBAK Power has appointed one director
to the Board of Directors of DJY. DJY is an unrelated third party of the Company engaging in researching and manufacturing of raw materials
and equipment.

 On August 4, 2021, Daxin New Energy Automobile
Technology (Jiangsu) Co., Ltd ("Jiangsu Daxin") was established as a wholly owned subsidiary of Nanjing CBAK with a register
capital of RMB 30,000,000 (approximately $ 4.3 million). Pursuant to Jiangsu Daxin's articles of association and relevant PRC regulations,
Nanjing Daxin was required to contribute the capital to Jiangsu Daxin on or before July 30, 2061. Jiangsu Daxin was dissolved on December
22, 2023, no gain or loss resulted from the dissolution.

 On July 20, 2021, CBAK Power entered into a framework
agreement relating to CBAK Power's investment in Zhejiang Hitrans Lithium Battery Technology Co., Ltd ("Hitrans", formerly
known as Zhejinag Meidu Hitrans Lithium Battery Technology Co., Ltd), pursuant to which CBAK Power agreed to acquire 81.56 % of registered
equity interests (representing 75.57 % of paid-up capital) of Hitrans (the "Acquisition"). The Acquisition was completed on
November 26, 2021 (Note 12). After the completion of the Acquisition, Hitrans became a 81.56 % registered equity interests (representing
 75.57 % of paid up capital) owned subsidiary of the Company.

 F- 16

 On July 8, 2022, Hitrans held its second shareholder meeting ("the
shareholder meeting") in 2022 to pass a resolution to increase the registered capital of Hitrans from RMB 40 million to RMB 44 million
(approximately $ 6.4 million) and to accept an investment of RMB 22 million (approximately $ 3.2 million) from Shaoxing Haiji Enterprise
Management & Consulting Partnership ("Shaoxing Haiji") and an investment of RMB 18 million (approximately $ 2.6 million)
from Mr. Haijun Wu (collectively "management shareholder"). Under the resolution, 10 % of the investment injection (RMB 4 million
or $ 0.6 million) will be contributed towards Hitrans's registered capital and the remaining 90 % (RMB 36 million or $ 5.2 million)
will be treated as additional paid-in capital contribution of Hitrans. 25 % of the investments from the management shareholder were required
to be in place before August 15, 2022, 25 % of the investments were required to be in place before December 31, 2022 and the 50 % balance
(RMB 20 million) were required to be received June 30, 2024. As of December 31, 2023, RMB 10 million (approximately $ 1.4 million), representing
the 25 % of the investments were received. Shaoxing Haiji and Mr. Haijun Wu are currently in negotiations with other shareholders
of Hitrans to extend the payment due date for the remaining unpaid 25 % and 50 % of the Management Shareholder Investments to May 31, 2029.
Hitrans principally engaged in research and development, production and sales of cathode materials and precursors for NCM lithium batteries.

 On December 8, 2022, CBAK Power entered into equity
interest transfer agreements with five individuals to disposal in aggregate 6.82 % of Hitrans equity interests for a total consideration
of RMB 30,000,000 (approximately $ 4.3 million). The transaction was completed on December 30, 2022. As of December 31, 2023, CBAK Power's
equity interests in Hitrans was 67.33 % and representing 72.99 % of paid up capital.

 On July 6, 2018, Guangdong Meidu Hitrans Resources
Recycling Technology Co., Ltd. ("Guangdong Hitrans") was established as a 80 % owned subsidiary of Hitrans with a registered
capital of RMB 10 million (approximately $ 1.6 million). The remaining 20 % registered equity interest was held by Shenzhen Baijun Technology
Co., Ltd. Pursuant to Guangdong Hitrans's articles of association, each shareholder is entitled to the right of the profit distribution
or responsible for the loss according to its proportion to the capital contribution. Pursuant to Guangdong Hitrans's articles of
association and relevant PRC regulations, Hitrans was required to contribute the capital to Guangdong Hitrans on or before December 30,
2038. Up to the date of this report, Hitrans has contributed RMB 1.72 million (approximately $ 0.3 million), and the other shareholder has
contributed RMB 0.25 million (approximately $ 0.04 million) to Guangdong Hitrans through injection of a series of cash. Guangdong Hitrans
was established under the laws of the People's Republic of China as a limited liability company on July 6, 2018 with a registered
capital RMB 10 million (approximately $ 1.5 million). Guangdong Hitrans is based in Dongguan, Guangdong Province, and is principally engaged
in the business of resource recycling, waste processing, and R&D, manufacturing and sales of battery materials. Guangdong Hitrans
was dissolved on January 30, 2024.

 On July 28, 2021, Hitrans Holdings, was established
as a wholly owned subsidiary of CBAK, under the laws of the Cayman Islands, formerly named as "CBAK Energy Technology, Inc.,"
was renamed as "Hitrans Holdings Co., Ltd." on February 29, 2024. Hitrans Holdings owns 100 % equity interests of Nacell Holdings.

 On October 9, 2021, Shaoxing Haisheng International
Trading Co., Ltd. ("Haisheng") was established as a wholly owned subsidiary of Hitrans with a registered capital of RMB 5 million
(approximately $ 0.8 million). Pursuant to Haisheng's articles of association and relevant PRC regulations, Hitrans was required
to contribute the capital to Haisheng on or before May 31, 2025. Up to the date of this report, Hitrans has contributed RMB 3.5 million
(approximately $ 0.5 million) to Haisheng. Haisheng principally engaged in the business of cathode materials trading.

 On July 7, 2023, Hong Kong Nacell Holdings Company
Limited ("Nacell Holdings") was established as a wholly owned subsidiary of Hitrans Holdings, incorporated under the laws
of Hong Kong. Nacell Holdings had no significant operations as of the date of this report.

 On July 12, 2023, CBAK Energy Lithium Holdings
was established as a wholly owned subsidiary of CBAK, incorporated under the laws of the Cayman Islands in the name of "Hitrans
Holdings," was renamed as "CBAK Energy Lithium Holdings" on February 29, 2024.

 On February 26, 2024, CBAK Energy Investments
Holdings was established as a wholly wned subsidiary of CBAK, under the laws of the Cayman Islands. CBAK Energy Investments does not have
any significant operations as of the date of this report.

 On July 25, 2023, CBAK New Energy (Shangqiu) Co.,
Ltd ("CBAK Shangqiu") was established as a wholly owned subsidiary of CBAK Power with a registered capital of RMB 50 million
(approximately $ 6.9 million). Pursuant to CBAK Shangqiu's articles of association and relevant PRC regulations, CBAK Power was required
to contribute the capital to Shangqiu on or before July 24, 2043. Up to the date of this report, CBAK Power has contributed RMB 1.2 million
($ 0.2 million) to Shangqiu. CBAK Shsngqiu principally engaged in manufacture and sales of lithium-ion batteries.

 The Company's consolidated financial statements
have been prepared under US GAAP.

 The preparation of financial statements in conformity
with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates. This basis of accounting differs in certain material respects
from that used for the preparation of the books of account of the Company and its subsidiaries, which are prepared in accordance with
the accounting principles and the relevant financial regulations applicable to enterprises with limited liability established in the PRC
or Hong Kong. The accompanying consolidated financial statements reflect necessary adjustments not recorded in the books of account of
the Company's subsidiaries to present them in conformity with US GAAP.

 F- 17

 On December 8, 2020, the Company entered into
a securities purchase agreement with certain institutional investors, pursuant to which the Company issued in a registered direct offering,
an aggregate of 9,489,800 shares of common stock of the Company at a per share purchase price of $ 5.18, and warrants to purchase an aggregate
of 3,795,920 shares of common stock of the Company at an exercise price of $ 6.46 per share exercisable for 36 months from the date of
issuance, for gross proceeds of approximately $ 49.16 million, before deducting fees to the placement agent and other estimated offering
expenses of $ 3.81 million payable by the Company. In addition, the placement agent for this transaction also received warrants ("Placement
Agent Warrants") for the purchase of up to 379,592 shares of the Company's common stock at an exercise price of $ 6.475 per
share exercisable for 36 months after 6 months from the issuance.

 On February 8, 2021, the Company entered into
another securities purchase agreement with the same investors, pursuant to which the Company issued in a registered direct offering, an
aggregate of 8,939,976 shares of common stock of the Company at a per share purchase price of $7.83. In addition, the Company issued to
the investors (i) in a concurrent private placement, the Series A-1 warrants to purchase a total of 4,469,988 shares of common stock,
at a per share exercise price of $7.67 and exercisable for 42 months from the date of issuance; (ii) in the registered direct offering,
the Series B warrants to purchase a total of 4,469,988 shares of common stock, at a per share exercise price of $7.83 and exercisable
for 90 days from the date of issuance; and (iii) in the registered direct offering, the Series A-2 warrants to purchase up to 2,234,992
shares of common stock, at a per share exercise price of $7.67 and exercisable for 45 months from the date of issuance. The Company received
gross proceeds of approximately $ 70 million from the registered direct offering and the concurrent private placement, before deducting
fees to the placement agent and other estimated offering expenses of $ 5.0 million payable by the Company. In addition, the placement agent
for this transaction also received warrants ("Placement Agent Warrants") for the purchase of up to 446,999 shares of the Company's
common stock at an exercise price of $ 9.204 per share exercisable for 36 months after 6 months from the issuance.

 On May 10, 2021, the Company entered into that
Amendment No. 1 to the Series B Warrant (the "Series B Warrant Amendment") with each of the holders of the Company's
outstanding Series B warrants. Pursuant to the Series B Warrant Amendment, the term of the Series B warrants was extended from May 11,
2021 to August 31, 2021.

 As of August 31, 2021, the Company had not received
any notices from the investors to exercise Series B warrants. As of the date of this report, Series B warrants, along with Series A-2
warrants, had both expired.

 As of December 31, 2023, the Company had $ 32.6
million bank loans and approximately $ 127.9 million of other current liabilities.

 The Company is currently expanding its product
lines and manufacturing capacity in its Dalian, Nanjing and Zhejiang plant which requires more funding to finance the expansion. The Company
plans to raise additional funds through banks borrowings and equity financing in the future to meet its daily cash demands, if required.

 COVID-19

 The Company business has been and may continue
to be adversely affected by the COVID-19 pandemic or other health epidemics and outbreaks. A wave of infections caused by the Omicron
variant emerged in Shanghai in early 2022, and a series of restrictions and quarantines were implemented to contain the spread in Shanghai
and other regions. The Company's manufacturing facilities in Dalian, Nanjing and Shaoxing were not producing at full capacity when
restrictive measures were in force during 2022, which negatively affected our operational and financial results. China began to modify
its zero-COVID policy at the end of 2022, and most of the travel restrictions and quarantine requirements were lifted in December 2022.

 The extent of the impact of the COVID-19 pandemic
that will continue to have on the Company's business is highly uncertain and difficult to predict and quantify, as the actions that
the Company, other businesses and governments may take to contain the spread of COVID-19 continue to evolve. Because of the significant
uncertainties surrounding the COVID-19 pandemic, the extent of the future business interruption and the related financial impact cannot
be reasonably estimated at this time.

 F- 18

 The severity of the impact of the COVID-19 pandemic
on the Company's business will continue to depend on a number of factors, including, but not limited to, the duration and severity
of the pandemic, the new variants of COVID-19, the efficacy and distribution of COVID-19 vaccines and the extent and severity of the impact
on the global supply chain and the Company's customers, service providers and suppliers, all of which are uncertain and cannot be
reasonably predicted at this time. As of the date of issuance of the Company's financial statements, the extent to which the COVID-19
pandemic may in the future materially impact the Company's financial condition, liquidity or results of operations is uncertain.
The Company is monitoring and assessing the evolving situation closely and evaluating its potential exposure.

 Going Concern

have been prepared assuming the Company will continue as a going concern. The Company has a working capital deficiency, accumulated deficit
from recurring net losses incurred and significant short-term debt obligations maturing in less than one year as of December 31, 2023.
These conditions raise substantial doubt about the Company ability to continue as a going concern. The Company's plan for continuing
as a going concern included improving its profitability, and obtaining additional debt financing, loans from existing directors and shareholders
for additional funding to meet its operating needs. There can be no assurance that the Company will be successful in the plans described
above or in attracting equity or alternative financing on acceptable terms, or if at all. These consolidated financial statements do not
include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might
be necessary should the Company be unable to continue as a going concern.

 2. Summary of Significant Accounting Policies and Practices

 (a)
 Principles of Consolidation

 The consolidated financial statements include
the financial statements of the Company and its subsidiaries up to the date of disposal. All significant intercompany balances and transactions
have been eliminated prior to consolidation.

 (b)
 Cash and Cash Equivalents

 Cash and cash equivalents consist of cash on hand
and demand deposits placed with banks which are unrestricted as to withdrawal or use, and have original maturities less than three months.
The Company considers all highly liquid debt instruments, with initial terms of less than three months to be cash equivalents.

 As of December 31, 2022 and 2023, cash held in
accounts managed by online payment platforms such as Alipay amounted to $ 14,625 and $ 10,519 respectively, which have been classified as
cash and cash equivalents in the consolidated balance sheets.

 (c)
 Pledged deposit

 Pledged deposit primarily represents bank deposits
for bank notes amounted to $ 30.8 million and $ 54.2 million as of December 31, 2022 and 2023, respectively.

 (d)
 Trade and Bills Receivable and current expected credit losses

 Trade and bills receivable are recorded at the
invoiced amount, net of allowances for doubtful accounts and sales returns. The allowance for doubtful accounts is the Company's
best estimate of the amount of probable credit losses in the Company's existing trade accounts receivable.

 F- 19

 In June 2016, the FASB issued ASU No. 2016-13,
Financial Instruments-Credit Losses, which introduces an approach based on expected losses to estimate credit losses on certain types
of financial instruments, including, but not limited to, trade and other receivables and net investments in leases. The Company assessed
that trade receivable and other current assets are within the scope of ASC 326. The Company has identified the relevant risk characteristics
of trade receivables and other current assets which include size, type of the services or the products the Company provides, or a combination
of these characteristics, the historical credit loss experience, current economic conditions, supportable forecasts of future economic
conditions, and any recoveries in assessing the lifetime expected credit losses, etc. Other key factors that influence the expected credit
loss analysis include industry-specific factors that could impact the credit quality of the Company's receivables. This is assessed
at each quarter based on the Company's specific facts and circumstances. All forward looking statements are, by their nature, subject
to risks and uncertainties, many of which are beyond the Company's control. Additionally, external data and macroeconomic factors
are also considered.

 The Company adopted this ASC 326 and several associated ASUs on January
1, 2023 using a modified retrospective approach. As of January 1, 2023, upon the adoption, the expected credit loss provision for the
current assets was $ 2.3 million. For the year ended December 31, 2023, the Company recorded $1.3 million in expected credit losses. As
of December 31, 2023, the expected credit loss provision recorded in current assets was $ 3.5 million.

 The
Company provides an allowance against trade receivable based on the expected credit loss approach and writes off trade receivables when
they are deemed uncollectible. The Company considers the historical write-off experience, customer specific facts and economic conditions
in assessing the expected credit losses. Other
key factors that influence the expected credit loss analysis include customer demographics, payment terms offered in the normal course
of business to customers, and industry-specific factors that could impact the Company's receivables. This is assessed at each quarter
based on the Company's specific facts and circumstances.

 Outstanding accounts receivable balances are reviewed
individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted
and the potential for recovery is considered remote.

 (e)

 Inventories are stated at the lower of cost or
net realizable value. The cost of inventories is determined using the weighted average cost method, and includes expenditures incurred
in acquiring the inventories and bringing them to their existing location and condition. In case of finished goods and work in progress,
the cost includes an appropriate share of production overhead based on normal operating capacity. Net realizable value is the estimated
selling prices

 The Company records adjustments to its inventory
for estimated obsolescence or diminution in net realizable value equal to the difference between the cost of the inventory and the estimated
net realizable value. At the point of loss recognition, a new cost basis for that inventory is established, and subsequent changes in
facts and circumstances do not result in the restoration or increase in that newly established cost basis.

 (f)
 Property, Plant and Equipment

 Property, plant and equipment (except construction
in progress) are stated at cost less accumulated depreciation and impairment charges. Depreciation is calculated based on the straight-line
method (after taking into account their respective estimated residual values) over the estimated useful lives of the assets as follows:

 Buildings

 5 – 38 years

 Machinery and equipment

 1 – 15 years

 Leasehold improvement

 Over the shorter of lease term of the estimated useful lives of the assets

 Office equipment

 1 – 5 years

 Motor vehicles

 5 – 12 years

 The cost and accumulated depreciation of property,
plant and equipment sold are removed from the consolidated balance sheets and resulting gains or losses are recognized in the consolidated
statements of operations and comprehensive income (loss).

 Construction in progress mainly represents expenditures
in respect of the Company's corporate campus, including offices, factories and staff dormitories, under construction. All direct
costs relating to the acquisition or construction of the Company's corporate campus and equipment, including interest charges on
borrowings, are capitalized as construction in progress. No depreciation is provided in respect of construction in progress.

 F- 20

 A long-lived asset to be disposed of by abandonment
continues to be classified as held and used until it is disposed of.

 (g)
 Lease

 The Company accounts for leases in accordance
with ASC 842, Leases ("ASC 842"), which requires lessees to recognize leases on the balance sheet and disclose key
information about leasing arrangements. The Company elected not to apply the recognition requirements of ASC 842 to short-term leases.
The Company also elected not to separate non-lease components from lease components, therefore, it will account for lease component and
the non-lease components as a single lease component when there is only one vendor in the lease contract.

 The Company determines if a contract contains
a lease based on whether it has the right to obtain substantially all of the economic benefits from the use of an identified asset which
the Company does not own and whether it has the right to direct the use of an identified asset in exchange for consideration. Right of
use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities
represent the Company's obligation to make lease payments arising from the lease. ROU assets are recognized as the amount of the
lease liability, adjusted for lease incentives received. Lease liabilities are recognized at the present value of the future lease payments
at the lease commencement date. The interest rate used to determine the present value of the future lease payments is the Company's
incremental borrowing rate ("IBR"), because the interest rate implicit in most of the Company's leases is not readily
determinable. The IBR is a hypothetical rate based on the Company's understanding of what its credit rating would be to borrow and
resulting interest the Company would pay to borrow an amount equal to the lease payments in a similar economic environment over the lease
term on a collateralized basis. Lease payments may be fixed or variable, however, only fixed payments or in-substance fixed payments are
included in the Company's lease liability calculation. Variable lease payments are recognized in operating expenses in the period
in which the obligation for those payments are incurred.

 (i)

 Prepaid land use rights

 The land use rights are operating leases with
lease terms vary from 36 to 50 years. Land use rights acquired are assessed in accordance with ASC 842 if they meet the definition of
lease.

 (ii)

 Operating lease

 The lease terms of operating leases vary from
more than a year to five years. Operating leases are included in operating lease right of use assets, and the corresponding operating
lease liabilities are included within current and non-current operating lease liabilities on the Company's consolidated balance
sheets. As of December 31, 2022 and 2023, all of the Company's ROU assets were generated from leased assets in the PRC.

 (iii)

 Finance lease

 Finance leases are included in property, plant
and equipment, net, current and non-current finance lease liabilities on the Company's consolidated balance sheets. As of December
31, 2022 and 2023, all of the Company's finance lease assets were generated from leased assets in the PRC.

 (h)
 Foreign Currency Transactions and Translation

 The reporting currency of the Company is the United
States dollar ("US dollar"). The financial records of the Company's PRC operating subsidiaries are maintained in their
local currency, the Renminbi ("RMB"), which is the functional currency. The financial records of the Company's subsidiaries
established in other countries are maintained in their local currencies. Assets and liabilities of the subsidiaries are translated into
the reporting currency at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates, and
income and expense items are translated using the average rate for the period. The translation adjustments are recorded in accumulated
other comprehensive loss under shareholders' equity.

 F- 21

 Monetary assets and liabilities denominated in
currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of exchange
at the balance sheet date. Nonmonetary assets and liabilities are remeasured into the applicable functional currencies at historical
exchange rates. Transactions in currencies other than the applicable functional currencies during the period are converted into the functional
currencies at the applicable rates of exchange prevailing at the transaction dates. Transaction gains and losses are recognized in the
consolidated statements of operations.

 RMB is not a fully convertible currency. All
foreign exchange transactions involving RMB must take place either through the People's Bank of China (the "PBOC")
or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are
the rates of exchange quoted by the PBOC, which are determined largely by supply and demand. Translation of amounts from RMB into US
dollars has been made at the following exchange rates for the respective periods:

 Balance sheet, except for equity accounts

 RMB 6.9091 to US$ 1.00

 Income statement and cash flows

 RMB 6.7264 to US$ 1.00

 Balance sheet, except for equity accounts

 RMB 7.0971 to US$ 1.00

 Income statement and cash flows

 RMB 7.0719 to US$ 1.00

 (i)
 Intangible Assets

 Intangible assets are stated in the balance sheet
at cost less accumulated amortization and impairment, if any. The costs of the intangible assets are amortized on a straight-line basis
over their estimated useful lives. The respective amortization periods for the intangible assets are as follows:

 Computer software

 – 1 - 10 years

 Sewage discharge permit

 – 5 - 7 years

 (j)
 Impairment of Long-lived Assets (including amortizable intangible assets) other than goodwill

 Long-lived assets, which include property, plant
and equipment, prepaid land use rights, leased assets and intangible assets, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable.

 Recoverability of long-lived assets to be held
and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be
generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge
is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is generally measured
based on either quoted market prices, if available, or discounted cash flow analyses.

 (k)
 Goodwill

 Goodwill represents
the excess of the purchase price over the fair value of the identifiable net assets acquired in a business combination. The Company assesses
goodwill for impairment in accordance with ASC subtopic 350-20, Intangibles—Goodwill and Other: Goodwill ("ASC
350-20"), which requires that goodwill be tested for impairment at the reporting unit level at least annually and more frequently
upon the occurrence of certain events, as defined by ASC 350-20.

 A reporting unit is
defined as an operating segment or one level below an operating segment referred to as a component. The Company determines its reporting
units by first identifying its operating segments, and then assesses whether any components of these segments constituted a business
for which discrete financial information is available and where the Company's segment manager regularly reviews the operating results
of that component.

 F- 22

 In January 2017, the
FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairment by
eliminating Step two from the goodwill impairment test. If the carrying amount of a reporting unit exceeds its fair value, an impairment
loss shall be recognized in an amount equal to that excess, versus determining an implied fair value in Step two to measure the impairment
loss. The Company adopted this guidance on a prospective basis on January 1, 2023 with no material impact on its
consolidated financial statements and related disclosures as a result of adopting the new standard.

 The Company has the option to assess qualitative factors first to determine
whether it is necessary to perform the quantitative impairment test in accordance with ASC 350-20. If the Company believes, as a result
of the qualitative assessment, that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount,
the quantitative impairment test described above is required. Otherwise, no further testing is required. In the qualitative assessment,
the Company considers primary factors such as industry and market considerations, overall financial performance of the reporting unit,
and other specific information related to the operations. The quantitative goodwill impairment test, used to identify both the existence
of impairment and the amount of impairment loss, compares the fair value of a reporting unit with its carrying amount, including goodwill. If
the carrying amount of a reporting unit is greater than zero and its fair value exceeds its carrying amount, goodwill of the reporting
unit is considered not impaired.

 (l)
 Long-term investments

 The Company's
long-term investments include equity investments in entities and non-marketable equity.

 Investments in entities
in which the Company can exercise significant influence and holds an investment in voting common stock or in substance common stock (or
both) of the investee but does not own a majority equity interest or control are accounted for using the equity method of accounting
in accordance with ASC topic 323, Investments — Equity Method and Joint Ventures ("ASC 323"). Under the equity method,
the Company initially records its investments at fair value. The Company subsequently adjusts the carrying amount of the investments
to recognize the Company's proportionate share of each equity investee's net income or loss into earnings after the date
of investment. The Company evaluates the equity method investments for impairment under ASC 323. An impairment loss on the equity method
investments is recognized in earnings when the decline in value is determined to be other-than-temporary.

 Equity securities with
readily determinable fair values and over which the Company has neither significant influence nor control through investments in common
stock or in-substance common stock are measured at fair value, with changes in fair value reported through earnings.

 Equity securities without
readily determinable fair values and over which the Company has neither significant influence nor control through investments in common
stock or in-substance common stock are measured and recorded using a measurement alternative that measures the securities at cost minus
impairment, if any, plus or minus changes resulting from qualifying observable price changes.

 Available-for-sale debt
security investments are reported at estimated fair value with the aggregate unrealized gains and losses, net of tax, reflected in accumulated
other comprehensive loss in the consolidated balance sheets. Gain or losses are realized when the investments are sold or when dividends
are declared or payments are received or when other than temporarily impaired.

 Held-to-maturity debt
security investment are reported at amortized cost. The securities are held to collect contractual cash flows, and the Company has the
positive intent and ability to hold those securities to maturity.

 The Company monitors
its investments measured under equity method for other-than-temporary impairment by considering factors including, but not limited to,
current economic and market conditions, the operating performance of the companies including current earnings trends and other company-specific
information.

 F- 23

 (m)
 Revenue Recognition

 The Company recognizes revenues when its customer
obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for
those goods. The Company recognizes revenues following the five step model prescribed under ASU No. 2014-09: (i) identify contract(s)
with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the
transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance
obligation.

 Revenues from product sales are recognized when
the customer obtains control of the Company's product, which occurs at a point in time, typically upon delivery to the customer.
The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset
that it would have recognized is one year or less or the amount is immaterial.

 Revenues from product sales are recorded net
of reserves established for applicable discounts and allowances that are offered within contracts with the Company's customers.

 Product revenue reserves, which are classified
as a reduction in product revenues, are generally characterized in the categories: discounts and returns. These reserves are based on
estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable as the
amount is payable to the Company's customer.

 Practical expedients and exemption

 The Company has not occurred any costs to obtain
contracts, and does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one
year or less.

 Contract liabilities

 The Company's contract liabilities consist
of deferred revenue associated with batteries development and deposits received from customers allocated to the performance obligations
that are unsatisfied, Changes in contract liability balances were not materially impacted by business acquisition, change in estimate
of transaction price or any other factors during any of the years presented. The table below presents the activity of the deferred batteries
development and sales of batteries revenue during the years ended December 31, 2022 and 2023, respectively:

 2022

 2023

 Balance at beginning of year

 $
 784,000

 $
 1,869,525

 Development fees collected/ deposits received

 1,115,010

 -

 Development and sales of batteries revenue recognized

 -

 ( 1,060,535
)

 Exchange realignment

 ( 29,485
)

 ( 24,990
)

 Balance at end of year

 $
 1,869,525

 $
 784,000

 (n)
 Cost of Revenues

 Cost of revenues consists primarily of material
costs, employee compensation, depreciation and related expenses, which are directly attributable to the production of products. Write-down
of inventories to lower of cost or market is also recorded in cost of revenues.

 F- 24

 (o)
 Income Taxes

 Income taxes are accounted for under the asset
and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss
and tax credit carry forwards. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more
likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates applied
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the statement of operations and comprehensive loss in the period that
includes the enactment date.

 The impact of an uncertain income tax positions
on the income tax return must be recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant
tax authority. An uncertain income tax position will not be recognized if it has less than a 50 % likelihood of being sustained. Interest
and penalties on income taxes will be classified as a component of the provisions for income taxes.

 (p)
 Non-controlling Interests

 For the Company's non-wholly owned subsidiary,
a non-controlling interest is recognized to reflect the portion of equity that is not attributable, directly or indirectly, to the Company.
Non-controlling interests are classified as a separate line item in the equity section of the Company's consolidated balance sheets
and have been separately disclosed in the Company's consolidated statements of comprehensive loss to distinguish the interests
from that of the Company. Cash flows related to transactions with non-controlling interests are presented under financing activities
in the consolidated statements of cash flows.

 (q)
 Research and Development and Advertising Expenses

 Research and development and advertising expenses
are expensed as incurred. Research and development expenses consist primarily of remuneration for research and development staff, depreciation
and material costs for research and development. Advertising expenses was $ 334,556 and $ 1,640,476 for the years ended December 31, 2022
and 2023.

 (r)
 Bills Payable

 Bills payable represent bills issued by financial
institutions to the Company's vendors. The Company's vendors receive payments from the financial institutions directly upon
maturity of the bills and the Company is obliged to repay the face value of the bills to the financial institutions.

 (s)
 Warranties

 The Company provides a manufacturer's warranty
on all its products. It accrues a warranty reserve for the products sold, which includes management's best estimate of the projected
costs to repair or replace items under warranty. These estimates are based on actual claims incurred to date and an estimate of the nature,
frequency and costs of future claims. These estimates are inherently uncertain given the Company's relatively short history of
sales of its current products, and changes to its historical or projected warranty experience may cause material changes to the warranty
reserve in the future.

 (t)
 Government Grants

 The Company's subsidiaries in China receive
government subsidies from local Chinese government agencies in accordance with relevant Chinese government policies. In general, the
Company presents the government subsidies received as part of other income unless the subsidies received are earmarked to compensate
a specific expense, which have been accounted for by offsetting the specific expense, such as research and development expense, interest
expenses and removal costs. Unearned government subsidies received are deferred for recognition until the criteria for such recognition
could be met.

 Grants applicable to land are amortized over
the life of the depreciable facilities constructed on it. For research and development expenses, the Company matches and offsets the
government grants with the expenses of the research and development activities as specified in the grant approval document in the corresponding
period when such expenses are incurred.

 F- 25

 (u)
 Share-based Compensation

 The Company adopted the provisions of ASC Topic
718 which requires the Company to measure and recognize compensation expenses for an award of an equity instrument based on the grant-date
fair value. The cost is recognized over the vesting period (or the requisite service period). ASC Topic 718 also requires the Company
to measure the cost of a liability classified award based on its current fair value. The fair value of the award will be remeasured subsequently
at each reporting date through the settlement date. Changes in fair value during the requisite service period are recognized as compensation
cost over that period. Further, ASC Topic 718 requires the Company to estimate forfeitures in calculating the expense related to stock-based
compensation.

 The fair value of each option award is estimated
on the date of grant using the Black-Scholes Option Valuation Model. The expected volatility was based on the historical volatilities
of the Company's listed common stocks in the United States and other relevant market information. The Company uses historical data
to estimate share option exercises and employee departure behavior used in the valuation model. The expected terms of share options granted
is derived from the output of the option pricing model and represents the period of time that share options granted are expected to be
outstanding. Since the share options once exercised will primarily trade in the U.S. capital market, the risk-free rate for periods within
the contractual term of the share option is based on the U.S. Treasury yield curve in effect at the time of grant.

 (v)
 Retirement and Other Postretirement Benefits

 Contributions to retirement schemes (which are
defined contribution plans) are charged to cost of revenues, research and development expenses, sales and marketing expenses and general
and administrative expenses in the statement of operations and comprehensive loss as and when the related employee service is provided.

 Full time employees of the Company in the PRC
participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing
fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the PRC subsidiary of the Company
make contributions to the government for these benefits based on certain percentages of the employees' salaries, up to a maximum
amount specified by the local government. The Company has no legal obligation for the benefits beyond the contributions made. Total amounts
of such employee benefit expenses, which were expensed as incurred, were approximately $ 2,589,157 (RMB 17,405,185) and $ 2,952,247 (RMB 20,877,994) for
the years ended December 31, 2022 and 2023, respectively.

 (w)
 Income (loss) per Share

 Basic income (loss) per share is computed by
dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share
is computed similar to basic net income per share except that the denominator is increased to include the number of additional common
shares that would have been outstanding if all the potential common shares pertaining to warrants, stock options, and similar instruments
had been issued and if the additional common shares were dilutive. Diluted income (loss) per share is based on the assumption that all
dilutive convertible shares and stock options and warrants were converted or exercised. Dilution is computed by applying the treasury
stock method for the outstanding unvested restricted stock, options and warrants, and the if-converted method for the outstanding convertible
instruments. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at
the time of issuance, if later) and as if funds obtained thereby were used to purchase common stock at the average market price during
the period. Under the if-converted method, outstanding convertible instruments are assumed to be converted into common stock at the beginning
of the period (or at the time of issuance, if later).

 (x)
 Use of Estimates

 The
preparation of the consolidated financial statements in accordance with US GAAP requires management of the Company to make a number of
estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates. Significant items subject to such estimates and assumptions include revenue recognition, the recoverability
of the carrying amount of long-lived assets, depreciable lives
of long-lived assets, allowance for current expected credit loss, unrecognized tax benefits, impairment on goodwill and inventories,
valuation allowance for receivables and deferred tax assets, provision
for warranty and sales returns, valuation of share-based compensation expense and warrants liability. Actual results could differ from
those estimates.

 F- 26

 (y)
 Commitments and Contingencies

 Liabilities for loss contingencies arising from
claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred
and the amount of the assessment can be reasonably estimated.

 (z)
 Warrant Liability

 For warrants that are not indexed to the Company's
stock, the Company records the fair value of the issued warrants as a liability at each balance sheet date and records changes in the
estimated fair value as a non-cash gain or loss in the consolidated statement of operations and comprehensive income. The warrant liability
is recognized in the balance sheet at the fair value (level 3). The fair value of these warrants has been determined using the Binomial
model.

 (aa)
 Comprehensive Income (Loss)

 Comprehensive income is defined as the change
in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments
from owners and distributions to owners. Accumulated other comprehensive income includes cumulative foreign currency translation adjustment.

 (ab)
 Recent Accounting Pronouncements

 Recently Adopted Accounting Standards

 In June 2016, the FASB issued ASU No. 2016-13,
Financial Instruments-Credit Losses (Topic 326) ("ASU 2016-13"), which requires entities to measure all expected credit losses
for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.
ASU 2016-13 replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured
at amortized cost. ASU 2016-13 is to be adopted on a modified retrospective basis. In March 2022, the FASB issued ASU 2022-02, Topic
326. The ASU eliminates the accounting guidance for trouble debt restructurings by creditors in Subtopic 310-40, and enhances the disclosure
requirements for modifications of loans to borrowers experiencing financial difficulty. Additionally, the ASU requires disclosure of
gross writeoffs of receivables by year of origination for receivables within the scope of Subtopic 326-20, Financial Instruments - Credit
Losses - Measured at Amortized Cost. This ASU is effective for periods beginning after December 15, 2022. The Company applied the new
standard beginning January 1, 2023 using the modified retrospective method. This adoption did not have material impact on the Company's
consolidated financial statements.

 In January 2017, the FASB issued ASU No. 2017-04,
Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04
eliminates Step 2 of the two-step goodwill impairment test, under which a goodwill impairment loss was measured by comparing the implied
fair value of a reporting unit's goodwill with the carrying amount of that goodwill. ASU 2017-04 requires only a one-step quantitative
impairment test, whereby a goodwill impairment loss is measured as the excess of a reporting unit's carrying amount over its fair
value (not to exceed the total goodwill allocated to that reporting unit). Adoption of the ASUs is on a modified retrospective basis.
As a smaller reporting company, the standard will be effective for the Company for interim and annual reporting periods beginning after
December 15, 2022. The adoption did not have material impact on the Company's consolidated financial statement.

 Recently Issued But Not Yet Adopted Accounting
Pronouncements

 In October 2021, the FASB issued ASU 2021-08,
Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires
the recognition and measurement of contract assets and contract liabilities acquired in a business combination in accordance with ASC
606, Revenue from Contracts with Customers. This creates an exception to the general recognition and measurement principles in ASC 805.
As a smaller reporting company, ASU 2021-08 will be effective for the Company for interim and annual reporting periods beginning after
December 15, 2023, with early adoption permitted. The amendments in this ASU should be applied prospectively to business combinations
occurring on or after the effective date of the amendments. The Company does not anticipate that the adoption of this guidance will have
a material impact on the consolidated financial statements.

 F- 27

 In March 2023, the FASB issued ASU 2023-01, Lease
(Topic 842): Common Control Arrangements, which clarifies the accounting for leasehold improvements associated with leases between entities
under common control (hereinafter referred to as common control lease). ASU 2023-01 requires entities to amortize leasehold improvements
associated with common control lease over the useful life to the common control group (regardless of the lease term) as long as the lessee
controls the use of the underlying asset through a lease, and to account for any remaining leasehold improvements as a transfer between
entities under common control through an adjustment to equity when the lessee no longer controls the underlying asset. This ASU will
be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption
is permitted for both interim and annual financial statements that have not yet been made available for issuance. An entity may apply
ASU 2023-01 either prospectively or retrospectively. The Company is currently evaluating the impact that the adoption of ASU 2023-01
will have on the consolidated financial statement presentations and disclosures.

 In March 2023, the FASB issued ASU No. 2023-02,
Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional
Amortization Method, that is intended to improve the accounting and disclosures for investments in tax credit structures. This ASU allows
reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of
the program giving rise to the related income tax credits. For public business entities, the amendments are effective for fiscal years
beginning after December 15, 2023, including interim periods within those fiscal years. For all other entities, the amendments are effective
for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted
for all entities in any interim period. The Company does not anticipate that the adoption of ASU 2023-02 to have material impact on the
consolidated financial statement presentation or disclosures.

 In
October 2023, the FASB issued Accounting Standards Update No. 2023-06 to clarify or improve disclosure and presentation requirements
of a variety of topics, which will allow users to more easily compare entities subject to the SEC's existing disclosures with those entities
that were not previously subject to the requirements, and align the requirements in the FASB accounting standard codification with the
SEC's regulations. The Company is currently evaluating the provisions of the amendments and the impact on its consolidated
financial statement presentations and disclosures.

 Other accounting standards that have been issued
or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a
material impact on the Company's consolidated financial statements upon adoption.

 3. Pledged deposits

 Pledged deposits as of December 31, 2022 and 2023 consisted of pledged
deposits with banks for bills payable (note 15).

 4. Trade and Bills Receivable, net

 Trade and bills receivable as of December 31,
2022 and 2023:

 2022

 2023

 Trade receivable

 $
 23,422,733

 $
 29,368,296

 Less: Allowance for credit losses

 ( 2,274,513
)

 ( 3,198,249
)

 21,148,220

 26,170,047

 Bills receivable

 6,265,355

 2,483,000

 $
 27,413,575

 $
 28,653,047

 F- 28

 Included in trade and bills receivables are retention
receivables of $ 1,066,146 and $ 65,162 as of December 31, 2022 and 2023. Retention receivables are interest-free and recoverable either
at the end of the retention period of three to five years since the sales of the EV batteries or 200,000 km since the sales of the motor
vehicles (whichever comes first).

 An analysis of the allowance for the credit losses
are as follows:

 Balance as at December 31, 2022

 $
 2,274,513

 Adoption of ASC Topic 326

 -

 Balance as at January 1, 2023

 2,274,513

 Current period provision, net

 1,012,404

 Reversal – recoveries by cash

 ( 10,250
)

 Written-off

 ( 14,661
)

 ( 63,757
)

 Balance as at December 31, 2023

 $
 3,198,249

 5. Inventories

 Inventories as of December 31, 2022 and 2023
consisted of the following:

 2022

 2023

 Raw materials

 $
 7,101,426

 $
 3,779,414

 Work in progress

 17,274,033

 9,525,568

 Finished goods

 25,070,832

 20,108,440

 $
 49,446,291

 $
 33,413,422

 During the years ended December 31, 2022 and
2023 write-downs of obsolete inventories to lower of cost or net realizable value of $ 1,658,432 and $ 3,554,962, respectively, were charged
to cost of revenues.

 6. Prepayments and Other Receivables

 Prepayments and other receivables as of December
31, 2022 and 2023 consisted of the following:

 2022

 2023

 Value added tax recoverable

 $
 4,234,082

 $
 5,248,210

 Prepayments to suppliers

 220,671

 1,341,596

 Deposits

 43,914

 108,492

 Staff advances

 51,826

 113,336

 Prepaid operating expenses

 706,190

 645,390

 Receivables from sales of vehicles

 371,105

 -

 Others

 294,292

 292,458

 5,922,080

 7,749,482

 Less: Allowance for doubtful accounts

 ( 7,000
)

 ( 290,228
)

 $
 5,915,080

 $
 7,459,254

 An analysis of the allowance for credit losses
are as follows:

 Balance as at December 31, 2022

 $
 7,000

 Adoption of ASC Topic 326

 -

 Balance as at January 1, 2023

 7,000

 Current period provision, net

 284,238

 ( 1,010
)

 Balance as at December 31, 2023

 $
 290,228

 F- 29

 7. Property, Plant and Equipment, net

 Property, plant and equipment as of December
31, 2022 and 2023 consisted of the following:

 2022

 2023

 Buildings

 $
 47,086,680

 $
 45,843,428

 Leasehold improvements

 5,156,705

 7,214,436

 Machinery and equipment

 71,665,842

 83,625,645

 Office equipment

 1,545,026

 1,983,601

 Motor vehicles

 507,882

 727,452

 125,962,135

 139,394,562

 Impairment

 ( 13,025,161
)

 ( 17,358,096
)

 Accumulated depreciation

 ( 22,932,447
)

 ( 30,407,634
)

 Carrying amount

 $
 90,004,527

 $
 91,628,832

 During
the years ended December 31, 2022 and 2023, the Company incurred depreciation expense of $ 9,414,421 and $ 10,422,306, respectively.

 The Company has not yet obtained the property
ownership certificates of the buildings in its Dalian manufacturing facilities with a carrying amount of $ 7,360,242 as of December 31,
2022. The Company built its facilities on the land for which it had already obtained the related land use right. The Company has submitted
applications to the Chinese government for the ownership certificates on the completed buildings located on these lands. However, the
application process takes longer than the Company expected and it has not obtained the certificates as of the date of this report. However,
since the Company has obtained the land use right in relation to the land, the management believe the Company has legal title to the
buildings thereon albeit the lack of ownership certificates. The Company has obtained the remaining property ownership certificates on
July 6, 2023.

 During the course of the Company's strategic review of its operations
in the years ended December 31, 2022 and 2023, the Company assessed the recoverability of the carrying value of certain property, plant
and equipment which resulted in impairment losses of approximately $ 4,831,708 and $ 7,070,236, respectively. The impairment charge represented
the excess of carrying amounts of the Company's property, plant and equipment over the estimated fair value of the Company's
production facilities in Hitrans primarily for the production of materials used in manufacturing of lithium batteries due to underperformance
of Hitrans reporting unit. No impairment charge was recorded on the Company's production facilities in Dalian and Nanjing in the
years ended December 31, 2022 and 2023.

 8. Construction in Progress

 Construction in progress as of December 31, 2022
and 2023 consisted of the following:

 2022

 2023

 Construction in progress

 $
 7,828,975

 $
 24,876,463

 Prepayment for acquisition of property, plant and equipment

 2,125,227

 12,921,399

 Carrying amount

 $
 9,954,202

 $
 37,797,862

 Construction in progress as of December 31, 2022
and 2023 mainly comprised capital expenditures for the construction of the facilities and production lines of CBAK Power, Nanjing CBAK
and Hitrans.

 For the years ended December 31, 2022 and 2023,
the Company capitalized interest of $ 162,052 and $ 870,670, respectively, to the cost of construction in progress.

 F- 30

 9. Long-term investments, net

 Long-term investments as of December 31, 2022 and 2023, consisted
of the following:

 2022

 2023

 Investments in equity method investees

 $
 289,473

 $
 1,926,611

 Investments in non-marketable equity

 655,764

 638,394

 $
 945,237

 $
 2,565,005

 The following is the carrying value of the long-term investments:

 2022

 2023

 Carrying

 Economic Interest

 Carrying

 Economic Interest

 Investments in equity method investees

 Guangxi Guiwu CBAK New Energy Technology Co., Ltd (a)

 $
 289,473

 20 %

 $
 254,475

 20 %

 Zhejiang Shengyang Renewable Resources Technology Co., Ltd. (b)

 -

 n/a

 1,672,136

 26 %

 $
 289,473

 $
 1,926,611

 Investments in non-marketable equity

 Hunan DJY Technology Co., Ltd

 $
 655,764

 $
 638,394

 Nanjing CBAK Education For Industry Technology Co., Ltd

 -

 -

 $
 655,764

 $
 638,394

 (a)
 Investments in Guangxi Guiwu CBAK New Energy Technology Co., Ltd

 Balance as at January 1, 2022

 $
 -

 Investments made

 297,336

 Income from investment

 -

 ( 7,863
)

 Balance as of December 31, 2022

 289,473

 Loss from investment

 ( 27,428
)

 ( 7,570
)

 Balance as of December 31, 2023

 $
 254,475

 In August 2022, Nanjing CBAK, along with two unrelated
third parties of the Company, Guangxi Guiwu Recycle Resources Company Limited ("Guangxi Guiwu") and Mr. Weidong Xu, an unrelated
third party entered into an investment agreement to jointly set up a new company - Guangxi Guiwu CBAK New Energy Technology Co., Ltd ("Guangxi
Guiwu CBAK") in which each party holding 20 %, 60 % and 20 % equity interests and voting rights, respectively. Guangxi Guiwu engages
in the business of recycling power batteries. The Company applies the equity method of accounting to account for the equity investments
in common stock, over which it has significant influence but does not own a majority equity interest or otherwise control. Pursuant to
the Company's articles of association and relevant PRC regulations, each party was required to contribute the capital on or before
December 31, 2023. As of December 31, 2023 and current, Nanjing CBAK, Guanxi Guiwu and Mr. Weidong Xu had contributed capital of $ 0.3
million (RMB 2 million), $ 0.9 million (RMB 6 million) and $ 0.3 million (RMB 2 million), respectively.

 F- 31

 For the year ended December 31, 2022 and 2023,
share of loss from the above equity investment was nil and $ 27,428.

 (b)
 Investments in Zhejiang Shengyang Renewable Resources Technology Co.,
 Ltd.

 Balance as at January 1, 2023

 $
 -

 Investments made

 4,044,175

 Loss from investment

 ( 2,366,080
)

 ( 5,959
)

 Balance as of December 31, 2023

 $
 1,672,136

 On
September 27, 2023, Hitrans, entered into an Equity Transfer Contract (the "Equity Transfer Contract") with Mr. Shengyang
Xu, pursuant to which Hitrans will initially acquire a 26 % equity interest in Zhejiang Shengyang Renewable Resources Technology Co.,
Ltd. ("Zhejiang Shengyang") from Mr. Xu, an individual who currently holds 97 % of Zhejiang Shengyang, for a price of RMB 28.6
million (approximately $ 3.9 million) (the "Initial Acquisition"). Hitrans shall pay the Initial Acquisition price in two
(2) installments as follows: (i) 50 % of the price due within five business days following the execution of the Equity Transfer Contract
and satisfaction of other conditions precedent set forth in the same; and (ii) the remaining 50 % of the price due within five business
days following Mr. Xu successful transfer to Hitrans of the 26 % equity interest in Zhejiang Shengyang. Within fifteen business days after
Hitrans has paid 50 % of the price, or RMB 14.3 million, the parties shall complete the registration of equity change with the local governmental
authorities. Zhejiang Shengyang is a material suppliers of Hitrans since June 2020. On November 6, 2023, Hitrans completed the registration
of 26 % equity interest of Zhejiang Shengyang. The Company recorded an impairment loss of $ 2.4 million (RMB 16.7 million) from the investment
to Zhejinag Shengyang for the year ended December 31, 2023.

 And within three months following the Initial Acquisition, Mr. Xu shall
transfer an additional 44 % equity interest in Zhejiang Shengyang to Hitrans at the same price per share as that of the Initial Acquisition
(the "Follow-on Acquisition"). The parties shall enter into another agreement to detail the terms of the Follow-on Acquisition.
Neither Mr. Xu, nor Zhejiang Shengyang, is related to the Company.

 Investments in non-marketable equity

 2022

 December 31

 2023

 Cost

 $
 1,302,630

 $
 1,268,124

 Impairment

 ( 646,866
)

 ( 629,730
)

 Carrying amount

 $
 655,764

 $
 638,394

 On April 21, 2021, CBAK Power, along with Shenzhen
BAK Power Battery Co., Ltd (BAK Shenzhen), Shenzhen Asian Plastics Technology Co., Ltd (SZ Asian Plastics) and Xiaoxia Liu (collectively
the "Investors"), entered into an investment agreement with Junxiu Li, Hunan Xintao New Energy Technology Partnership, Xingyu
Zhu, and Jiangsu Saideli Pharmaceutical Machinery Manufacturing Co., Ltd for an investment in Hunan DJY Technology Co., Ltd ("DJY"),
a privately held company. CBAK Power has paid $ 1.40 million (RMB 9,000,000) to acquire 9.74 % of the equity interests of DJY.
CBAK Power along with other three new investors has appointed one director on behalf of the Investors to the Board of Directors of DJY.
DJY is unrelated third party of the Company engaging in in research and development, production and sales of products and services to
lithium battery positive cathode materials producers, including the raw materials, fine ceramics, equipment and industrial engineering.

 On April 2023, DJY board declared dividend of
$ 0.8 million (approximately RMB 6 million). The dividend was distributed in May 2023 and based on the paid up capital of each shareholders,
the dividend income shared by CBAK Power was $ 82,637 (approximately RMB 0.6 million) which was included in other income (expense) for the
year ended December 31, 2023. No dividend was declared in 2022.

 F- 32

 On November 28, 2022, Nanjing CBAK along with
Shenzhen Education for Industry Investment Co., Ltd. and Wenyuan Liu, an individual investor, set up Nanjing CBAK Education For Industry
Technology Co., Ltd ("CBAK Education") with a registered capital of RMB 5 million (approximately $ 0.7 million), in which each
party holding 10 %, 60 % and 30 % equity interests of CBAK Education, respectively. The investment is for training skillful workforce for
Nanjing CBAK.

 Non-marketable equity securities are investments
in privately held companies without readily determinable market value. The Company measures investments in non-marketable equity securities
without a readily determinable fair value using a measurement alternative that measures these securities at the cost method minus impairment,
if any, plus or minus changes resulting from observable price changes on a non-recurring basis. The fair value of non-marketable equity
securities that have been remeasured due to impairment are classified within Level 3. The Company adjusts the carrying value of non-marketable
equity securities which have been remeasured during the period and recognize resulting gains or losses as a component of other operating
income (expense), net. No impairment was recorded on the non-marketable equity securities for the year ended December 31, 2022 and 2023,
respectively.

 10. Lease

 (a)
 Prepaid land use rights

 Prepaid
 land

 lease payments

 as of January 1, 2022

 $
 13,797,230

 Amortization
 charge for the year

 ( 338,706
)

 Foreign
 exchange adjustment

 ( 1,097,361
)

 Balance as of December
 31, 2022

 12,361,163

 Amortization
 charge for the period

 ( 322,160
)

 Foreign
 exchange adjustment

 ( 326,299
)

 as of December 31, 2023

 $
 11,712,704

 In August 2014 and November 2021, the Company
acquired land use rights to build a factory of the Company in Dalian and Zhejiang, PRC.

 Lump sum payments were made upfront to acquire
the leased land from the owners with lease periods of 36 to 50 years, and no ongoing payments will be made under the terms of these land
leases.

 No impairment loss was made to the carrying amounts
of the prepaid land use right for the year ended December 31, 2022 and 2023.

 (b)

 Operating lease

 In April 2018, Hitrans entered into a lease agreement
for staff quarters spaces in Zhejiang with a five year term, commencing on May 1, 2018 and expiring on April 30, 2023. The monthly rental
payment is approximately RMB 18,000 ($ 2,605) per month. In 2018, lump sum payments were made to landlord for the rental of staff quarter
spaces and no ongoing payments will be made under the terms of these leases.

 On January 14, 2021, Nanjing Daxin entered
into a lease agreement for manufacturing, warehouse and office space in Tianjing with a three year term, commencing on March 1, 2021
and expiring on February 29, 2024. The monthly rental payment is approximately RMB 73,143 ($ 10,586) per month. On February 28, 2022, Nanjing
Daxin early terminated the lease after one-year non-cancellable period.

 On April 6, 2021, Nanjing CBAK entered into
a lease agreement for warehouse space in Nanjing with a three year term, commencing on April 15, 2021 and expiring on April 14, 2024.
The monthly rental payment is approximately RMB 97,743 ($ 14,146) per month.

 F- 33

 On June 1, 2021, Nanjing Daxin entered into
a lease agreement for manufacturing, warehouse and office space in Wuxi with a three year term, commencing on June 1, 2021 and expiring
on May 31, 2024. The monthly rental payment is approximately RMB 238,095 ($ 34,461) per month for the first year and approximately RMB 277,778
($ 40,205) per month from the second year. In May 2022, Nanjing Daxin early terminated the lease after one-year non-cancellable period.

 On June 1, 2021, Hitrans entered into a lease
agreement with liquid gas supplier for a five year term for supplying liquid nitrogen and oxygen, commencing on July 1, 2021. The monthly
rental payment is approximately RMB 5,310 ($ 769) per month.

 On December 9, 2021, Hitrans entered into a lease
agreement for another staff quarters spaces in Zhejiang with a three year term, commencing on December 10, 2021 and expiring on December
9, 2024. The monthly rental payment is approximately RMB 10,400 ($ 1,505) per month for the first year, RMB 10,608 ($ 1,535) and RMB 10,820
($ 1,566) per month from the second year and third year, respectively.

 On March 1, 2022, Hitrans entered into a lease
agreement for extra staff quarters spaces in Zhejiang with a five year term, commencing on March 1, 2022 and expiring on February 28,
2027. The monthly rental payment is approximately RMB 15,840 ($ 2,293) per month for the first year, with 2 % increase per year.

 On August 1, 2022, Hitrans entered into a lease
agreement for warehouse spaces in Zhejiang with a one and half years term, commencing on August 1, 2022 and expiring on January 31, 2024.
The monthly rental payment is RMB 60,394 ($ 8,741) per month.

 On October 20, 2022, CBAK Power entered into
a lease agreement for staff quarters spaces in Dalian with a five year term, commencing on October 20, 2022 and expiring on October 19,
2025. The monthly rental payment is RMB 61,905 ($ 8,960) per month.

 On December 20, 2022, Hitrans entered into a
lease agreement for extra staff quarters spaces in Zhejiang with a five year term commencing on December 20, 2022 and expiring on December
19, 2027. The monthly rental payment is RMB 52,000 ($ 7,526) per month for the first year, with 2 % increase per year.

 On December 30, 2022, Hitrans entered into a
lease agreement with liquid gas supplier for a five year term for supplying liquid nitrogen and oxygen to December 29, 2027 The monthly
rental payment is approximately RMB 7,265 ($ 1,052) per month.

 On April 20, 2023, Hitrans entered into another lease agreement for
extra staff quarters spaces in Zhejiang with a three year term commencing on May 1, 2023 and expiring on April 30, 2026. The monthly rental
payment is RMB 28,000 ($ 3,945) per month.

 Nanjing CBAK entered into a lease agreement for
office and factory spaces in Nanjing for a period of one year, commencing on August 1, 2023 and expiring on July 31, 2024. The monthly
rental payment is approximately RMB 160,743 ($ 22,649) per month.

 CBAK Shangqiu entered into a lease agreement
for staff quarters spaces in Shangqiu with a six year sterm commencing on October 1, 2023 and expiring on September 30, 2029. The monthly
rental payment is RMB 11,400 ($ 1,606) per month.

 Operating lease expenses for the years ended
December 31, 2022 and 2023 for the capitation agreement was as follows:

 2022

 2023

 Operating lease cost – straight line

 $
 495,478

 $
 680,076

 F- 34

 (c)
 Company as lessee - Finance lease

 2022

 2023

 Property, plant and equipment, at cost

 $
 1,890,396

 $
 4,598,426

 Accumulated depreciation

 ( 251,626
)

 ( 828,351
)

 Impairment

 ( 662,006
)

 ( 3,770,075
)

 Property, plant and equipment, net under finance lease

 976,764

 -

 Finance lease liabilities, current

 844,297

 1,643,864

 Finance lease liabilities, non-current

 -

 -

 Total finance lease liabilities

 $
 844,297

 $
 1,643,864

 The components of finance lease expenses for the years ended December
31, 2022 and 2023 were as follows:

 2022

 2023

 Finance lease cost:

 Depreciation of assets

 $
 76,861

 $
 114,123

 Interest of lease liabilities

 8,672

 12,915

 Total lease expenses

 $
 85,533

 $
 127,038

 The following is a schedule, by years, of maturities of lease liabilities
as of December 31, 2023:

 Operating

 leases

 Finance

 leases

 2024

 $
 718,807

 $
 1,691,536

 2025

 284,202

 -

 2026

 160,210

 -

 2027

 31,559

 -

 2028

 19,275

 -

 Thereafter

 14,457

 -

 Total undiscounted cash flows

 1,228,510

 1,691,536

 Less: imputed interest

 ( 61,216
)

 ( 47,672
)

 Present value of lease liabilities

 $
 1,167,294

 $
 1,643,864

 Lease term and discount rate:

 2022

 2023

 Weighted-average remaining lease term (years)

 Land use rights

 37.9

 36.9

 Operating leases

 3.39

 2.71

 Finance lease

 0.5

 0.96

 Weighted-average discount rate

 Land use rights

 Nil

 Nil

 Operating lease

 4.94
 %

 4.69
 %

 Finance lease

 1.40

 1.37
 %

 F- 35

 Supplemental cash flow information related to leases where the Company
was the lessee for the year ended December 31, 2022 and 2023 was as follows:

 2022

 2023

 Operating cash outflows from operating assets

 $
 230,382

 $
 369,608

 11. Intangible Assets, net

 Intangible assets as of December 31, 2022 and
2023 consisted of the followings:

 2022

 2023

 Computer software at cost

 $
 104,211

 $
 139,732

 Sewage discharge permit*

 1,762,129

 1,715,450

 1,866,340

 1,855,182

 Accumulated amortization

 ( 557,282
)

 ( 1,013,822
)

 $
 1,309,058

 $
 841,360

 Amortization expenses were $ 513,311 and $ 472,980
for the years ended December 31, 2022 and 2023, respectively.

 Total future amortization expenses for finite-lived
intangible assets were estimated as follows:

 2024

 $
 120,896

 2025

 469,557

 2026

 200,893

 2027

 9,197

 2028

 8,236

 Thereafter

 32,581

 Total

 $
 841,360

 12. Acquisition of subsidiaries

 On April 1, 2021, CBAK Power entered into a framework
investment agreement with Hangzhou Juzhong Daxin Asset Management Co., Ltd. ("Juzhong Daxin") for a potential acquisition
of Hitrans. Juzhong Daxin is the trustee of 85 % of registered equity interests (representing 78.95 % of paid-up capital) of Hitrans and
has the voting right over the 85 % of registered equity interests. Subject to definitive acquisition agreements to be entered into among
the parties, including shareholders owning the 85 % of equity interests of Hitrans, CBAK Power intends to acquire 85 % of equity interests
of Hitrans in cash in 2021. CBAK Power has paid $ 3.10 million (RMB 20,000,000) to Juzhong Daxin as a security deposit in April 2021. Hitrans
is an unrelated third party of the Company engaging in researching, manufacturing and trading of raw materials and is one of the major
suppliers of the Company in fiscal 2020.

 On July 20, 2021, CBAK Power entered into a framework
agreement relating to CBAK Power's investment in Hitrans, pursuant to which CBAK Power acquires 81.56 % of registered equity interests
(or representing 75.57 % of paid-up capital) of Hitrans (the "Acquisition Agreement"). Under the Acquisition Agreement, CBAK
Power acquires 60 % of registered equity interests (representing 54.39 % of paid-up capital) of Hitrans from Zhejiang Meidu Graphene Technology
Co., Ltd. ("Meidu Graphene") valued at RMB 118 million ($ 18.5 million) and 21.56 % of registered equity interests (representing
 21.18 % of paid-up capital) of Hitrans from Hitrans's management shareholders valued at approximately RMB 40.74 million ($ 6.4 million).
Two individuals among Hitrans management shareholders, including Hitrans's CEO, Mr. Haijun Wu ("Mr. Wu"), keeping 2.50 %
registered equity interests (representing 2.46 % of paid-up capital) of Hitrans and New Era Group Zhejiang New Energy Materials Co., Ltd.
("New Era") continue to hold 15 % registered equity interests (representing 21.05 % of paid-up capital) of Hitrans after the
acquisition.

 F- 36

 As of the date of the Acquisition Agreement,
the 25 % registered equity interests (representing 24.56 % of paid-up capital) of Hitrans held by Hitrans management shareholders was frozen
as a result of a litigation arising from the default by Hitrans management shareholders on debts borrowed from Zhejiang Meidu Pawn Co.,
Ltd. ("Pawn Co.") whereby the 25 % registered equity interests (representing 24.56 % of paid-up capital) of Hitrans was pledged
as collateral. Mr. Junnan Ye ("Mr. Ye"), acting as an intermediary, first acquire 22.5 % registered equity interests (representing
 22.11 % of paid-up capital) of Hitrans, free of any encumbrances, from Hitrans management shareholders. Pursuant to the Acquisition Agreement,
within five days of CBAK Power's obtaining 21.56 % registered equity interests (representing 21.18 % of paid-up capital) of Hitrans
from Mr. Ye, CBAK Power pays approximately RMB 40.74 million ($ 6.4 million) in cash, which amount shall be used toward the repayment of
debts due to Pawn Co. On July 23, 2021, CBAK Power paid RMB 40.74 million (approximately $ 6.4 million) in cash to Mr. Ye.

 In addition, as of the date of the Acquisition
Agreement, Meidu Graphene's 60 % registered equity interests (representing 54.39 % of paid-up capital) of Hitrans was frozen as a
result of a litigation arising from Hitrans's failure to make payments to New Era in connection with the purchase of land use rights,
plants, equipment, pollution discharge permit and other assets (the "Assets") under certain asset transfer agreements as
well as Meidu Graphene's guarantee for Hitrans's payment obligations thereunder.

 As a part of the transaction, CBAK Power entered
into a loan agreement with Hitrans to lend Hitrans approximately RMB 131 million ($ 20.6 million) (the "Hitrans Loan") by remitting
approximately RMB 131 million ($ 20.6 million) into the account of Shaoxing Intermediate People's Court (the "Court")
to remove the freeze on Meidu Graphene's 60 % registered equity interests (representing 54.39 % of paid-up capital) of Hitrans. Moreover,
Juzhong Daxin returns RMB 10 million ($ 1.6 million) of the security deposit to CBAK Power before CBAK Power wires approximately RMB 131
million ($ 20.6 million) to the Court. Juzhong Daxin retained RMB 5 million ($ 0.78 million) as commission for facilitating the acquisition
and RMB 5 million ($ 0.78 million) recognized as compensation expense to another potential buyer. On July 27, 2021, Juzhong Daxin returned
RMB 7 million ($ 1.1 million) of the security deposit to CBAK Power. The remaining RMB 3 million ($ 0.5 million) had not yet been repaid
by Juzhong Daxin up to the date of this report (Note 17). The Company is still negotiating with Juzhong Daxin, as Juzhong Daxin believes
that according to the Security Acquisition Framework Agreement entered into between CBAK Power and Juzhong Daxin, CBAK Power should pay
RMB 3 million ($ 0.5 million) as risk premium for facilitating the acquisition. CBAK Power believes it is not reasonable to pay any of
the risk premium in accordance with the terms of the agreement and Juzhong Daxin should return RMB 3 million ($ 0.5 million) to CBAK Power.
CBAK Power has taken legal action for the outstanding balance.

 CBAK Power shall pay all other fees due to Juzhong
Daxin in accordance with the Letter of Intent. According to the Acquisition Agreement, Mr. Ye first acquire 60 % registered equity interests
(representing 54.39 % of paid-up capital) of Hitrans, free of any encumbrances, from Meidu Graphene. Thereafter, CBAK Power assigns RMB 118
million ($ 18.5 million) of the Hitrans Loan to Mr. Junnan Ye as consideration for the acquisition of 60 % registered equity interests
(representing 54.39 % of paid-up capital) of Hitrans from Mr. Ye (the "Assignment"). Hitrans shall repay RMB 118 million ($ 18.5
million) to Mr. Ye in accordance with a separate loan repayment agreement (the "Loan Repayment Agreement") entered into among
Mr. Ye, Hitrans, CBAK Power and Mr. Wu in July 2021. Under the Loan Repayment Agreement, Hitrans shall repay Mr. Ye at least RMB 70 million
($ 10.86 million) within two months of obtaining the title to the Assets from New Era and the remaining RMB 48 million ($ 7.41 million)
by December 31, 2021, with a fixed interest of RMB 3.5 million ($ 0.54 million) which can be reduced by up to RMB 1 million ($ 0.15 million)
if the loan is settled before its due date. CBAK Power provides guarantee to Mr. Ye on Hitrans's repayment obligations under the
Loan Repayment Agreement. Hitrans shall repay the remaining approximately RMB 13 million ($ 2.02 million) of the Hitrans Loan to CBAK Power
at an interest rate of 6 % per annum, maturing in one year from the date of the Assignment. As of December 31, 2021, Hitrans has repaid
RMB 93 million ($ 14.6 million) and interest incurred was RMB 0.9 million ($ 0.1 million) recorded as finance cost for the year ended December
31, 2021. As of January 29, 2022, Hitrans has repaid all the loan principals of RMB 118 million ($ 18.5 million) and interests of RMB 3.5
million ($ 0.54 million) to Mr. Ye (Note 15).

 The transfer of 81.56 % registered equity
interests (representing 75.57 % of paid-up capital) of Zhejiang Hitrans to CBAK Power has been registered with the local government and
CBAK Power had paid approximately RMB 40.74 million (approximately $ 6.4 million) in cash to Mr. Ye. In addition, CBAK Power had wired
approximately RMB 131 million (approximately $ 20.6 million) to the Court and the Acquisition was completed on November 26, 2021.

 F- 37

 Upon the closing of the Acquisition, CBAK Power
became the largest shareholder of Hitrans holding 81.56 % of the Company's registered equity interests (representing 75.57 % of paid-up
capital of the Company). As required by applicable Chinese laws, CBAK Power and Management Shareholders are obliged to make capital contributions
of RMB 11.1 million ($ 1.7 million) and RMB 0.4 million ($ 0.06 million), respectively, for the unpaid portion of Hitrans's registered
capital in accordance with the articles of association of Hitrans.

 The Company completed the valuations necessary
to assess the fair values of the tangible and intangible assets acquired and liabilities assumed, resulting from which the amount of
goodwill was determined and recognized as of the respective acquisition date. The following table summarizes the estimated aggregate
fair values of the assets acquired and liabilities assumed as of the closing date, November 26, 2021.

 Cash and bank

 $
 7,323,654

 Debts product

 3,144

 Trade and bills receivable, net

 37,759,688

 13,616,922

 Prepayments and other receivables

 1,384,029

 Income tax recoverable

 47,138

 Amount due from trustee

 11,788,931

 Property, plant and equipment, net

 21,190,890

 Construction in progress

 2,502,757

 Intangible assets, net

 1,957,187

 Prepaid land use rights, noncurrent

 6,276,898

 Leased assets, net

 48,394

 Deferred tax assets

 1,715,998

 Short term bank loan

 ( 8,802,402
)

 Other short term loans – CBAK Power

 ( 20,597,522
)

 Trade accounts and bills payable

 ( 38,044,776
)

 Accrued expenses and other payables

 ( 7,439,338
)

 Deferred government grants

 ( 290,794
)

 Land appreciation tax

 ( 464,162
)

 Deferred tax liabilities

 ( 333,824
)

 Net assets

 29,642,812

 Less: Waiver of dividend payable

 1,250,181

 Total net assets acquired

 30,892,993

 Non-controlling interest ( 24.43 %)

 ( 7,547,158
)

 Goodwill

 1,606,518

 Total identifiable net assets

 24,952,353

 The components of the consideration transferred to effect the Acquisition
are as follows:

 RMB

 USD

 Cash consideration for 60 % registered equity interest (representing 54.39 % of paid-up capital) of Hitrans from Meidu Graphene

 118,000,000

 18,547,918

 Cash consideration for 21.56 % registered equity interest (representing 21.18 % of paid-up capital) of Hitrans from Hitrans management

 40,744,376

 6,404,435

 Total Purchase
 Consideration

 158,744,376

 24,952,353

 The transaction resulted in a purchase price
allocation of $ 1,606,518 to goodwill, representing the financial, strategic and operational value of the transaction to the Company.
Goodwill is attributed to the premium that the Company paid to obtain the value of the business of Hitrans and the synergies expected
from the combined operations of Hitrans and the Company, the assembled workforce and their knowledge and experience in provision of raw
materials used in manufacturing of lithium batteries. The total amount of the goodwill acquired is not deductible for tax purposes.

 F- 38

 13. Goodwill

 The movement of the goodwill for the year ended December 31,
2022 and 2023 are as follows:

 Balance as of January 1, 2022

 $
 1,645,232

 Impairment of goodwill

 ( 1,556,078
)

 ( 89,154
)

 Balance as of December 31, 2022 & December 31, 2023

 $
 -

 The Company performed goodwill impairment test
at the reporting unit level on an annual basis and between annual tests when an event occurs or circumstances change indicating the asset
might be impaired. As of December 31, 2022, the Company performed testing on reporting unit of NCM precursor and cathode materials products
("Hitrans Reporting unit").

 The Company first assessed qualitative factors
to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. For those reporting
units where it is determined that it is more likely than not that their fair values are less than the units' carrying amounts,
the Company will perform the first step of a two-step quantitative goodwill impairment test. After performing the assessment, if the
carrying amounts of the reporting units are higher than their fair values, the Company will perform the second step of the two-step quantitative
goodwill impairment test.

 The Company performed qualitative assessments
for Hitrans reporting unit. Based on the requirements of ASC 350-20-35-3C through ASC 350-20-35-3G, the Company evaluated all relevant
factors, weighed all factors in their totality. For the year ended December 31, 2022, as the financial performance of Hitrans reporting
unit was below original expectations, fair value of this reporting unit was indicated to be lower than its carrying value. For this reporting
unit, where it was determined that it was more likely than not that its fair value was less than the units' carrying amount after
performing the qualitative assessment, as a result, the Company performed the two-step quantitative goodwill impairment test for these
two reporting units.

 For the two-step goodwill impairment test, the
Company estimated the fair value with either income approach or asset approach for specific reporting unit components. With the income
approach, the Company estimates the fair value of the reporting units using discounted cash flows. Forecasts of future cash flows are
based on the best estimate of future net sales and operating expenses, based primarily on expected expansion, pricing, market share,
and general economic conditions. Certain estimates of discounted cash flows involve businesses with limited financial history and developing
revenue models. Changes in these forecasts could significantly change the amount of impairment recorded, if any. Asset based approach
is used in evaluating the fair value of some specific components which is deemed as the most prudent approach due to the unpredictability
of future cash flows.

 The result of step one impairment test for the
Hitrans reporting unit failed, with its determined fair value lower than the book value. The Company performed step two impairment test,
applying the income approach, resulting an impairment loss of goodwill of $ 1,556,078 for the year ended December 31, 2022. The impairment
loss of goodwill was primarily attributable to the impairment related to Hitrans reporting unit as the financial performance of the reporting
unit of Hitrans continued to fall below the Company's original expectations.

 14. Deposit paid for acquisition of long-term investments

 Deposit paid for acquisition of long-term investments
as of December 31, 2022 and 2023 consisted of the following:

 2022

 2023

 Investments in non-marketable equity

 $
 -

 $
 7,101,492

 F- 39

 On September 27, 2023, Nanjing CBAK New Energy Technology Co., Ltd.
("Nanjing CBAK") entered into an Equity Transfer Agreement (the "Equity Transfer Agreement") with Shenzhen BAK
Battery Co., Ltd. ("SZ BAK"), under which SZ BAK shall sell a five percent ( 5 %) equity interest in Shenzhen BAK Power Battery
Co., Ltd. ("BAK SZ") to Nanjing CBAK for a purchase price of RMB 260 million (approximately $ 35.7 million) (the "Target
Equity"). Pursuant to the terms of the Equity Transfer Agreement, Nanjing CBAK will pay the Target Equity in three (3) installments
as follows: (i) RMB40 million (approximately $5.5 million) due prior to December 31, 2023; (ii) RMB90 million (approximately $12.4 million)
due prior to September 30, 2024, and (iii) the remaining Target Equity balance of RMB130 million (approximately $17.8 million) due following
SZ BAK's successful transfer to Nanjing CBAK of the five percent (5%) equity interest in BAK SZ. Upon Nanjing CBAK having paid RMB130
million of the Target Equity, the parties shall work together to complete the registration of equity change with the local governmental
authorities. The Company has contributed RMB 50.4 million (approximately $ 7.1 million) as of December 31, 2023. Up to the date of this
report, Nanjing CBAK has paid RMB 67.8 million (approximately $ 9.6 million) to SZ BAK. The Equity Transfer Agreement may be terminated
in writing through negotiation by all parties and the deposit paid was refundable on demand.

 SZ BAK and BAK SZ were the Company's former
subsidiary up to June 30, 2014. Mr, Xiangqian Li, the Company's former CEO, is the director of SZ BAK and BAK SZ.

 The Company will measure the investments in BAK
SZ as non-marketable equity securities without a readily determinable fair value using a measurement alternative that measures these
securities at the cost method minus impairment, if any, plus or minus changes resulting from observable price changes on a non-recurring
basis upon the completion. The fair value of non-marketable equity securities that have been remeasured due to impairment are classified
within Level 3.

 15. Trade and Bills Payable

 Trade and bills payable as of December 31, 2022
and 2023 consisted of the followings:

 2022

 2023

 Trade payable

 $
 32,516,445

 $
 26,764,807

 Bills payable

 – Bank acceptance bills

 34,974,990

 55,664,768

 $
 67,491,435

 $
 82,429,575

 All the bills payable are of trading nature and will mature within
one year from the issue date.

 The bank acceptance bills were pledged by:

 (i)
 the
 Company's bank deposits (Note 3);

 (ii)
 $ 3.4 million and $ 0.3 million of the Company's bills receivable as of December 31, 2022 and 2023, respectively (Note 4).

 (iii)

 the Company's prepaid land use rights (Note 10)

 16. Loans

 Bank loans:

 Bank borrowings as of December 31, 2022 and 2023
consisted of the followings:

 2022

 2023

 Short-term bank borrowings

 $
 14,907,875

 $
 32,587,676

 F- 40

 On November 16, 2021, the Company obtained banking
facilities from Shaoxing Branch of Bank of Communications Co., Ltd with a maximum amount of RMB 120.1 million (approximately $ 16.6 million)
with the term from November 18, 2021 to November 18, 2026. The facility was secured by the Company's land use rights and buildings.
Under the facility, the Company has borrowed RMB 59.0 million (approximately $ 8.5 million) as of December 31, 2022.

 In
January 2023, the Company renewed the banking facilities with Shaoxing Branch of Bank of Communications Co., Ltd with a maximum amount
of RMB 160.0 million (approximately $ 22.1 million) with the term from January 2023 to December 2027. The facility was secured by the Company's
land use rights and buildings. Under the facility, the Company has borrowed RMB 142.8 million (approximately
$ 20.1 million) as of December 31, 2023, bearing interest at 3.55 %
to 3.65 % per annum expiring through February to May 2024.

 On April 19, 2021, the Company obtained five-year
acceptance bills facilities from Bank of Ningbo Co., Ltd with a maximum amount of RMB 84.4 million (approximately $ 11.6 million). Any
amount drawn under the facilities requires security in the form of cash or bank acceptance bills receivable of at least the same amount.
Under the facilities, as of December 31, 2021, the Company borrowed a total of RMB 10 million (approximately $ 1.4 million) from Bank of
Ningbo Co., Ltd in the form of bills payable for a various term expiring from January to February 2022, which was secured by the Company's
cash totaling RMB 10 million (approximately $ 1.4 million). The Company repaid the bills in January to February 2022.

 On March 21, 2022, the Company renewed the above
acceptance bills facilities from Bank of Ningbo Co., Ltd with a maximum amount of RMB 71.6 million ($ 9.9 million) with other terms remain
the same. Under the facilities, as of December 31, 2022 and 2023, the Company borrowed a total of RMB 15.9 million (approximately $ 2.3
million) and RMB 45.4 million (approximately $ 6.4 million), respectively, in the form of bills payable for various terms expiring from
January 2024 to May 2024, which was secured by the Company's cash totaling RMB 15.9 million (approximately $ 2.3 million) and RMB 45.4
million (approximately $ 6.4 million) (Note 3), respectively.

 On
January 17, 2022, the Company obtained a one-year term facility from Agricultural Bank of China with a maximum amount of RMB 10 million
(approximately $ 1.4 million) bearing interest at 105 % of benchmark rate of the People's Bank of China ("PBOC") for
short-term loans, which is 3.85 % per annum. The facility was guaranteed by the Company's CEO, Mr. Yunfei Li and Mr. Yunfei Li's
wife Ms. Qinghui Yuan and secured by an unrelated third party, Jiangsu Credits Financing Guarantee Co., Ltd. The Company borrowed RMB 10
million (approximately $ 1.4 million) on January 20, 2022 for a term until January 16, 2023. The Company repaid RMB 10 million (approximately
$ 1.4 million) early on January 5, 2023. On January 6, 2023, the Company borrowed a one-year term loan of RMB 10 million (approximately
$ 1.4 million) for a period of one year to January 4, 2024, bearing
interest at 120 % of benchmark rate of the PBOC for short-term loans, which is 3.85 % per annum, while other terms and guarantee remain
the same.

 On
February 9, 2022, the Company obtained a one-year term facility from Jiangsu Gaochun Rural Commercial Bank with a maximum amount of RMB 10
million (approximately $ 1.4 million) bearing interest at 124 % of benchmark rate of the People's Bank of China ("PBOC")
for short-term loans, which is 4.94 % per annum. The facility was guaranteed by the Company's CEO, Mr. Yunfei Li and Mr. Yunfei
Li's wife Ms. Qinghui Yuan. The Company borrowed RMB10 million (approximately $1.4 million) on February 17, 2022 for a term until
January 28, 2023. The Company repaid RMB10 million (approximately $1.4 million) on January 16, 2023. On January 17, 2023, the Company
borrowed a one-year loan of RMB10 million (approximately $1.4 million) bearing
interest at 129% of benchmark rate of PBOC for short-term loans, which is 4.70% per annum for a term until January 13, 2024.

 On March 8, 2022, the Company obtained a one-year
term facility from China Zheshang Bank Co., Ltd. Shangyu Branch with a maximum amount of RMB 10 million (approximately $ 1.4 million) bearing
interest at 5.5 % per annum. The facility was guaranteed by 100 % equity in CBAK Power held by BAK Asia and the Company's CEO, Mr.
Yunfei Li. The Company borrowed RMB 10 million (approximately $ 1.4 million) on the same date. On May 17, 2022, the Company repaid the
loan principal and related loan interests early.

 On
April 28, 2022, the Company obtained a three-year term facility from Industrial and Commercial Bank of China Nanjing Gaochun branch,
with a maximum amount of RMB 12 million (approximately $ 1.7 million) with the term from April 21, 2022 to April 21, 2025. The facility
was guaranteed by the Company's CEO, Mr. Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan. Under the facility, the Company
borrowed RMB 10 million (approximately $ 1.5 million) on April 29, 2022, bearing interest at 3.95 % per annum for a term until April 29,
2023. The Company repaid RMB 10 million (approximately $ 1.4 million) on April 19, 2023. On April 20, 2023, the Company borrowed another
one-year loan of RMB 10 million (approximately $ 1.4 million) bearing interest at 102.5 % of benchmark rate of PBOC for short-term loans,
which is 3.90 % per annum for a term until April 19, 2024.

 F- 41

 On June 22, 2022, the Company obtained another
one-year term facility from China Zheshang Bank Co., Ltd. Shangyu Branch with a maximum amount of RMB 10 million (approximately $ 1.4 million)
bearing interest at 4.5 % per annum. The facility was guaranteed by 100 % equity in CBAK Power held by BAK Asia and the Company's
CEO, Mr. Yunfei Li. The Company borrowed RMB 10 million (approximately $ 1.4 million) on the same date for a term until June 21, 2023.
On November 10, 2022, the Company repaid the loan principal and the related loan interests early.

 On September 25, 2022, the Company entered into
another one-year term facility with Jiangsu Gaochun Rural Commercial Bank with a maximum amount of RMB 9 million (approximately $ 1.3 million)
bearing interest rate at 4.81 % per annum. The facility was guaranteed by 100 % equity in CBAK Nanjing held by BAK Investment and the Company's
CEO, Mr. Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan. The Company borrowed RMB 9 million (approximately $ 1.3 million) on
September 27, 2022 for a term until September 24, 2023. The Company repaid the loan on September 24, 2023.

 The
Company entered into another one-year term facility with Jiangsu Gaochun Rural Commercial Bank with a maximum amount of RMB 9 million
(approximately $ 1.2 million) bearing interest rate at 4.6 % per annum for a period from September 27, 2023 to August 31, 2024. The facility
was guaranteed by 100 % equity in CBAK Nanjing held by BAK Investment and the Company's CEO, Mr. Yunfei Li and Mr. Yunfei Li's
wife Ms. Qinghui Yuan. The Company borrowed RMB 9 million (approximately $ 1.3 million) on
September 27, 2023 for a term until September August 31, 2024.

 On
November 8, 2022, the Company entered into a short-term loan agreement with China CITIC Bank Shaoxing Branch to August 9, 2023 with a
maximum amount of RMB10 million (approximately $1.4 million) bearing interest rate at 4.35% per annum. The Company borrowed RMB10 million
(approximately $1.4 million) on the same date. The Company has repaid RMB5 million (approximately $0.7 million), RMB0.2 million (approximately
$0.1 million) and RMB4.8, million (approximately $0.7 million) on November 16, 2022, December 27, 2022 and August 9, 2023, respectively.
The Company entered into another short-term loan agreement with China CITIC Bank Shaoxing Branch for a one-year short-term loan agreement
with a maximum amount of RMB0.2 million (approximately $0.1 million) for December 27, 2022 to December 27, 2023, bearing interest rate
at 4.20% per annum. The Company entered into another loan agreement with China CITIC Bank Shaoxing Branch for a short-term loan of RMB 4.8
million (approximately $ 0.7 million) from August 10, 2023 to May 2, 2024, bearing interest rate at 4.3 % per annum.

 On December 9, 2022, the Company obtained a RMB 5
million (approximately $ 0.7 million) letter of credit from China CITIC Bank for a period to October 30, 2023 for settlement of Hitrans
purchase. The Company utilized RMB 1.5 million (approximately $ 0.2 million) letter of credit at an interest rate of 2.7 % for a period of
one year to January 5, 2023.

 On
January 7, 2023, the Company obtained a two-year term facility from Postal Savings Bank of China, Nanjing Gaochun Branch with a maximum
amount of RMB10 million (approximately $1.4 million) for a period from January 7, 2023 to January 6, 2025. The facility was guaranteed
by the Company's CEO, Mr. Yunfei Li, Mr. Yunfei Li's wife Ms. Qinghui Yuan and CBAK New Energy (Nanjing) Co., Ltd. The Company
borrowed RMB 5 million (approximately $ 0.7 million) on January 12, 2023 for a term of one year until January 11, 2024, bearing interest
at 3.65 % per annum. The Company repaid the above early on June 15, 2023. On June 27, 2023, the Company entered into another loan agreement
for one year from June 27, 2023 to June 26, 2024 under the two-year term facility for a maximum loan amount of RMB 10 million (approximately
$ 1.4 million) bearing interest rate at 3.65 % pr annum. The Company
borrowed RMB 10 million (approximately $ 1.4 million) on the same
date. The loan was guaranteed by the Company's CEO, Mr. Yunfei Li, Mr. Yunfei Li's wife Ms. Qinghui Yuan and CBAK New Energy
(Nanjing) Co., Ltd.

 F- 42

 On
March 29, 2023, the Company and Bank of China Limited entered into a short-term loan agreement for one year from March 29, 2023 to March
28, 2024 for a maximum loan amount to RMB 5 million (approximately $ 0.7 million) bearing interest rate at 3.65 % per annum. The Company
borrowed RMB 5 million (approximately $ 0.7 million) on the same
date. The loan was secured by the Company's buildings in Dalian.

 On
April 19, 2023, the Company and Bank of Nanjing Gaochun Branch entered into a short-term loan agreement for one year from April 10, 2023
to April 9, 2024 for RMB 10 million (approximately $ 1.4 million) bearing interest rate at 3.7 % per annum. The
Company borrowed RMB 10 million (approximately $ 1.4 million) on April 23, 2023. The loan was guaranteed by the Company's CEO, Mr.
Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan.

 On June 9, 2023, the Company and China Zheshang
Bank Co., Ltd Shangyu Branch entered into a short-term loan agreement for one year from June 9, 2023 to June 7, 2024 for a maximum loan
amount to RMB 4 million (approximately $ 0.6 million) bearing interest rate at 4.55 % per annum. The Company borrowed RMB 4 million (approximately
$ 0.6 million) on the same date. The Company early repaid the loan principal and related loan interests on December 22, 2023.

 On
July 31, 2023, the Company obtained a three-year term facility from Bank of China Gaochun Branch, with a maximum amount of RMB 10 million
(approximately $ 1.4 million) with the term from July 31, 2023 to July 30, 2026. The facility was guaranteed by the Company's CEO,
Mr, Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan. Under the facility, the Company borrowed RMB 10 million (approximately
$ 1.4 million) on July 31, 2023, bearing interest rate at 3.15 %
per annum.

 On
August 3, 2023, the Company and Bank of China entered into a short term loan agreement for one year from August 3, 2023 to August 2,
2024 for a maximum amount of RMB 10 million (approximately $ 1.4 million) bearing interest rate at 3.55 % per annum. The Company borrowed
RMB 10 million (approximately $ 1.4 million) on September 27, 2023.
The loan was secured by the Company's buildings in Dalian.

from Agricultural Bank of China totaling RMB 4.6 million (approximately $ 0.7 million) for various terms expiring in April 2024, which
was secured by the Company's cash totaling RMB 4.6 million (approximately $ 0.7 million) (Note 3).

from China Zheshang Bank Co. Ltd Shenyang Branch totaling RMB 174.0 million (approximately $ 24.5 million) for various terms expiring through
January to June 2024, which was secured by the Company's cash totaling RMB 174 million (approximately $ 24.5 million) (Note 3).

from China Zheshang Bank Co. Ltd Shangyu Branch totaling RMB 109.9 million (approximately $ 15.5 million) for various terms expiring through
January to June 2024, which was secured by the Company's cash totaling RMB 106.3 million (approximately $ 15.0 million) (Note 3)
and the Company's bills receivable totaling RMB 2 million (approximately $ 0.3 million) (Note 4).

from China Merchants Bank Dalian Branch totaling RMB 9.3 million (approximately $ 1.3 million) for various terms through June 2024, which
was secured by the Company's cash totaling RMB 9.3 million (approximately $ 1.3 million) (Note3).

from Bank of China Limited totaling RMB4.9 million (approximately $ 0.7 million) for various terms through January 2024, which was secured
by the Company's cash totaling RMB 4.9 million (approximately $ 0.7 million) (Note 3).

from Jiangsu Gaochun Rural Commercial Bank totaling RM30.6 million (approximately $ 4.3 million) for various terms expiring through March
to April 2024, which was secured by the Company's cash totaling RMB 30.6 million (approximately $ 4.3 million) (Note 3).

from China CITIC Bank totaling RMB 0.4 million (approximately $ 0.1 million) for various terms expiring through March 2024, which was secured
by the Company's cash totaling RMB 0.6 million (approximately $ 0.1 million) (Note 3).

 F- 43

from Bank of Ningbo Shaoxing Shangyu Branch totaling RMB 6.7 million (approximately $ 0.9 million) for various terms expiring through May
2024, which was secured by the Company's cash totaling RMB 6.7 million (approximately $ 0.9 million) (Note 3).

 The facilities were also secured by the Company's
assets with the following carrying amounts:

 2022

 2023

 Pledged deposits (note 3)

 $
 30,836,864

 $
 54,167,834

 Bills receivables (note 4)

 3,383,130

 281,805

 Right-of-use assets (note 10)

 5,598,716

 5,287,708

 Buildings

 4,419,749

 9,707,862

 $
 44,238,459

 $
 69,445,209

 As of December 31, 2023, the Company had unutilized
committed banking facilities totaled $ 2.8 million.

 During the years ended December 31, 2022 and
2023, interest of $ 646,013 and $ 637,667 were incurred on the Company's bank borrowings, respectively.

 Other short-term loans:

 Other short-term loans as of December 31, 2022
and 2023 consisted of the following:

 Note

 2022

 2023

 Advance from related parties

 – Mr. Xiangqian Li, the Company's Former CEO

 (a)

 $
 100,000

 $
 100,000

 – Mr. Yunfei Li

 (b)

 223,927

 160,536

 323,927

 260,536

 Advances from unrelated third party

 – Mr. Wenwu Yu

 (c)

 15,896

 1,385

 – Ms. Longqian Peng

 (c)

 276,905

 7,179

 – Suzhou Zhengyuanwei Needle Ce Co., Ltd

 (d)

 72,368

 70,452

 365,169

 79,016

 $
 689,096

 $
 339,552

 (a)
 Advances
from Mr. Xiangqian Li, the Company's former CEO, was unsecured, non-interest bearing and repayable on demand.

 (b)
 Advances
from Mr. Yunfei Li, the Company's CEO, was unsecured, non-interest bearing and repayable on demand.

 (c)
 Advances
from unrelated third parties were unsecured, non-interest bearing and repayable on demand.

 (d)
 In
2019, the Company entered into a short term loan agreement with Suzhou Zhengyuanwei Needle Ce Co., Ltd, an unrelated party to loan RMB0.6
million (approximately $0.1 million), bearing annual interest rate of 12%. As of December 31, 2023, loan amount of RMB0.5 million ($72,368)
remained outstanding.

 During the year ended December 31, 2022,
Ms. Xiangyu Pei, the Company's Interim CFO advances RMB 10 million (approximately $ 1.4 million) to the Company. The loan was unsecured,
non-interest bearing and repayable on demand. The Company fully repaid in November 2022.

 During the years ended December 31,
2022 and 2023, interest of $ 9,044 and $ 8,062 were incurred on the Company's borrowings from unrelated parties, respectively.

 F- 44

 17. Accrued Expenses and Other Payables

 Accrued expenses and other payables as of December
31, 2022 and 2023 consisted of the following:

 2022

 2023

 Construction costs payable

 $
 2,143,730

 $
 15,571,808

 Equipment purchase payable

 9,710,187

 13,665,499

 Liquidated damages*

 1,210,119

 1,210,119

 Accrued staff costs

 2,961,781

 3,386,142

 Customer deposits

 4,845,382

 2,875,131

 Deferred revenue (note 2m)

 1,869,525

 784,000

 Accrued expenses

 2,476,605

 2,781,730

 Dividend payable to non-controlling interest to Hitrans

 1,290,942

 1,256,745

 Other payable

 182,915

 461,366

 26,691,186

 41,992,540

 Less: non-current portion

 Deferred revenue

 1,085,525

 -

 $
 25,605,661

 $
 41,992,540

 *
 On
August 15, 2006, the SEC declared effective a post-effective amendment that the Company had filed on August 4, 2006, terminating the
effectiveness of a resale registration statement on Form SB-2 that had been filed pursuant to a registration rights agreement with certain
shareholders to register the resale of shares held by those shareholders. The Company subsequently filed Form S-1 for these shareholders.
On December 8, 2006, the Company filed its Annual Report on Form 10-K for the year ended September 30, 2006 (the "2006 Form 10-K").
After the filing of the 2006 Form 10-K, the Company's previously filed registration statement on Form S-1 was no longer available
for resale by the selling shareholders whose shares were included in such Form S-1. Under the registration rights agreement, those selling
shareholders became eligible for liquidated damages from the Company relating to the above two events totaling approximately $ 1,051,000.
As of December 31, 2022 and 2023, no liquidated damages relating to both events have been paid.

 On November 9, 2007, the Company completed a
private placement for the gross proceeds to the Company of $ 13,650,000 by selling 3,500,000 shares of common stock at the price of $ 3.90
per share. Roth Capital Partners, LLC acted as the Company's exclusive financial advisor and placement agent in connection with
the private placement and received a cash fee of $ 819,000. The Company may have become liable for liquidated damages to certain shareholders
whose shares were included in a resale registration statement on Form S-3 that the Company filed pursuant to a registration rights agreement
that the Company entered into with such shareholders in November 2007. Under the registration rights agreement, among other things, if
a registration statement filed pursuant thereto was not declared effective by the SEC by the 100th calendar day after the closing of
the Company's private placement on November 9, 2007, or the "Effectiveness Deadline", then the Company would be liable
to pay partial liquidated damages to each such investor of (a) 1.5% of the aggregate purchase price paid by such investor for the shares
it purchased on the one month anniversary of the Effectiveness Deadline; (b) an additional 1.5% of the aggregate purchase price paid
by such investor every thirtieth day thereafter (pro rated for periods totaling less than thirty days) until the earliest of the effectiveness
of the registration statement, the ten-month anniversary of the Effectiveness Deadline and the time that the Company is no longer required
to keep such resale registration statement effective because either such shareholders have sold all of their shares or such shareholders
may sell their shares pursuant to Rule 144 without volume limitations; and (c) 0.5% of the aggregate purchase price paid by such investor
for the shares it purchased in the Company's November 2007 private placement on each of the following dates: the ten-month anniversary
of the Effectiveness Deadline and every thirtieth day thereafter (prorated for periods totaling less than thirty days), until the earlier
of the effectiveness of the registration statement and the time that the Company no longer is required to keep such resale registration
statement effective because either such shareholders have sold all of their shares or such shareholders may sell their shares pursuant
to Rule 144 without volume limitations. Such liquidated damages would bear interest at the rate of 1% per month (prorated for partial
months) until paid in full.

 F- 45

 On December 21, 2007, pursuant to the registration
rights agreement, the Company filed a registration statement on Form S-3, which was declared effective by the SEC on May 7, 2008. As
a result, the Company estimated liquidated damages amounting to $ 561,174 for the November 2007 registration rights agreement. As of December
31, 2022 and 2023, the Company had settled the liquidated damages with all the investors and the remaining provision of approximately
$ 159,000 was included in other payables and accruals.

 18. Balances and Transactions with Related Parties

 The principal related parties with which the
Company had transactions during the years presented are as follows:

 Name
 of Entity or Individual

 Relationship
 with the Company

 New Era Group Zhejiang New Energy Materials Co., Ltd.

 Shareholder of company's subsidiary

 Zhengzhou BAK Battery Co., Ltd

 Note a

 Shenzhen BAK Battery Co., Ltd ("SZ BAK")

 Former subsidiary and refer to Note b

 Shenzhen BAK Power Battery Co., Ltd ("BAK SZ")

 Former subsidiary and refer to Note b

 Zhejiang
 Shengyang Renewable Resources Technology Co., Ltd.

 Note c

 Fuzhou
 BAK Battery Co., Ltd

 Note d

 (a)
 Mr.
Xiangqian Li, the Company's former CEO, is a director of Zhengzhou BAK Battery Co., Ltd. Zhengzhou BAK Battery Co., Ltd is a wholly
owned subsidiary of BAK SZ.

 (b)
 Mr.
Xiangqian Li, the Company's former CEO, is a director of Shenzhen BAK Battery Co., Ltd and Shenzhen BAK Power Battery Co., Ltd.
On September 27, 2023, Nanjing CBAK New Energy Technology Co., Ltd. ("Nanjing CBAK") entered into an Equity Transfer Agreement
(the "Equity Transfer Agreement") with Shenzhen BAK Battery Co., Ltd. ("SZ BAK"), under which SZ BAK shall sell
a five percent ( 5 %) equity interest in Shenzhen BAK Power Battery Co., Ltd. ("BAK SZ") to Nanjing CBAK for a purchase price
of RMB 260 million (approximately $ 35.7 million) (note 13).

 (c)
 On
September 27, 2023, Hitrans entered into an Equity Transfer Contract (the "Equity Transfer Contract") with Mr. Shengyang
Xu, pursuant to which Hitrans will initially acquire a 26 % equity interest in Zhejiang Shengyang Renewable Resources Technology Co.,
Ltd. ("Zhejiang Shengyang") from Mr. Xu, an individual who currently holds 97 % of Zhejiang Shengyang, for a price of RMB 28.6
million (approximately $ 3.9 million) (the "Initial Acquisition"). Neither Mr. Xu, nor Zhejiang Shengyang is related to the
Company.

 (d)
 Zhengzhou
BAK Battery Co., Ltd has 51 % equity interest in Fuzhou BAK Battery Co., Ltd. Zhengzhou BAK Battery Co., Ltd is a wholly owned subsidiary
of BAK SZ.

 Related party transactions

 The Company entered into the following
significant related party transactions:

 For the
 year ended
 2022

 For the
 year ended
 2023

 Purchase of batteries from Zhengzhou BAK Battery Co., Ltd

 $
 26,819,454

 $
 10,999,732

 Purchase of materials from Zhejiang Shengyang Renewable Resources Technology Co., Ltd.

 20,303,783

 12,725,193

 Sales of cathode raw materials to Zhengzhou BAK Battery Co., Ltd

 53,236,804

 27,872,002

 Sales of cathode raw materials to Shenzhen BAK Power Battery Co., Ltd

 8,681,496

 66,560

 Sales of batteries to Fuzhou BAK Battery Co., Ltd

 -

 105,010

 F- 46

 Related party balances

 Apart from the above, the Company recorded the
following significant related party balances as of December 31, 2022 and 2023:

 Receivables from former subsidiary

 2022

 2023

 Receivables from Shenzhen BAK Power Battery Co., Ltd

 $
 5,518,052

 $
 74,946

 Balance as of December 31, 2022 and 2023 represented
trade receivable for sales of cathode raw materials to Shenzhen BAK Power Battery Co., Ltd.

 Other balances due from/ (to) related parties

 2022

 2023

 Trade receivable, net – Zhengzhou BAK Battery Co., Ltd (i)

 $
 9,156,383

 $
 12,441,715

 Bills receivable – Issued by Zhengzhou BAK Battery Co., Ltd (ii)

 $
 2,941,683

 $
 -

 Trade payable, net – Zhengzhou BAK Battery Co., Ltd (iii)

 $
 5,629,343

 $
 803,685

 Trade payable, net – Zhejiang Shengyang Renewable Resources Technology Co., Ltd

 $
 3,201,814

 $
 3,489,324

 Deposit paid for acquisition of long-term investments – Shenzhen BAK Power Battery Cp., Ltd (note 14)

 $
 -

 7,101,492

 Dividend payable to non-controlling interest of Hitrans (note 17)

 $
 1,290,942

 $
 1,256,745

 (i)
 Representing trade receivable from sales of cathode raw materials to Zhengzhou BAK Battery Co., Ltd. Up to the date of this report, Zhengzhou BAK Battery Co., Ltd. repaid $ 7.4 million to the Company.

 (ii)
 Representing
bills receivable issued by Zhengzhou BAK Battery Co., Ltd. The Company endorsed the bills receivable as of December 31, 2022 to suppliers
for settling trade payable subsequent to December 31, 2022.

 (iii)
 Representing
trade payable on purchase of batteries from Zhengzhou BAK Battery Co., Ltd.

 Payables to a former subsidiary

 Payables to a former subsidiary as of December
31, 2022 and 2023 consisted of the following:

 2022

 2023

 Payables to Shenzhen BAK Power Battery Co., Ltd

 $
 ( 358,067
)

 $
 ( 411,111
)

 Balance as of December 31, 2022 and 2023 consisted
of payables for purchase of inventories from Shenzhen BAK Power Battery Co., Ltd.

 F- 47

 19. Deferred Government Grants

 Deferred government grants as of December 31,
2022 and 2023 consist of the following:

 2022

 2023

 Total government grants

 $
 6,876,735

 $
 6,578,863

 Less: Current portion

 ( 1,299,715
)

 ( 375,375
)

 Non-current portion

 $
 5,577,020

 $
 6,203,488

 Government grants that are received in advance
are deferred and recognized in the consolidated statements of operations over the period necessary to match them with the costs that
they are intended to compensate. Government grants in relation to the achievement of stages of research and development projects are
recognized in the consolidated statements of operations when amounts have been received and all attached conditions have been met. Non-refundable
grants received without any further obligations or conditions attached are recognized immediately in the consolidated statements of operations.

 On October 17, 2014, the Company received a subsidy
of RMB 46,150,000 pursuant to an agreement with the Management Committee dated July 2, 2013 for costs of land use rights and to be used
to construct the new manufacturing site in Dalian. Part of the facilities had been completed and was operated in July 2015 and the Company
has initiated amortization on a straight-line basis over the estimated useful lives of the depreciable facilities constructed thereon.

 On June 23, 2020, BAK Asia, the Company wholly-owned
Hong Kong subsidiary, entered into a framework investment agreement with Jiangsu Gaochun Economic Development Zone Development Group
Company ("Gaochun EDZ"), pursuant to which the Company intended to develop certain lithium battery projects that aim to have
a production capacity of 8Gwh. Gaochun EDZ agreed to provide various support to facilitate the development and operation of the projects.
As of the date of this report, the Company received RMB 47.1 million (approximately $ 6.82 million) subsidy from Gaochun EDZ. The Company
will recognize the government subsidies as income or offsets them against the related expenditures when there are no present or future
obligations for the subsidized projects.

 For the year ended December 31, 2021, the Company
recognized RMB 10 million ($ 1.6 million) as other income after moving of the Company facilities to Nanjing. Remaining subsidy of RMB 37.1
million (approximately $ 5.9 million) was granted to facilities the construction works and equipment in Nanjing. The construction works
have been completed in November 2021 and the production line was fully operated in January 2022. The Company has initiated amortization
on a straight-line basis over the estimated useful lives of the depreciable facilities constructed thereon.

 On November 2, 2023, the Company received a subsidiary of RMB 8.4 million
($ 1.2 million) for its development of new production line. The Company has initiated amortization on a straight-line basis over the estimated
useful lives of the depreciable facilities constructed thereon.

 Government grants were recognized in the consolidated statements of
operations as follows:

 2022

 2023

 $
 2,146,341

 $
 1,253,899

 Research and development expenses

 17,568

 16,710

 General and administrative expenses

 40,226

 38,261

 Other income (expenses), net

 2,040,615

 153,153

 $
 4,244,750

 $
 1,462,023

 20. Product Warranty Provisions

 The Company maintains a policy of providing after
sales support for certain of its new EV and LEV battery products introduced since October 1, 2015 by way of a warranty program. The limited
cover covers a period of six to twenty four months for battery cells, a period of twelve to twenty seven months for battery modules for
light electric vehicles (LEV) such as electric bicycles, and a period of three years to eight years (or 120,000 or 200,000 km if reached
sooner) for battery modules for electric vehicles (EV). The Company accrues an estimate of its exposure to warranty claims based on both
current and historical product sales data and warranty costs incurred. The Company assesses the adequacy of its recorded warranty liability
at least annually and adjusts the amounts as necessary.

 F- 48

 Warranty expense is recorded as a component of
sales and marketing expenses. Accrued warranty activity consisted of the following:

 2022

 2023

 Balance at beginning of year

 $
 2,028,266

 $
 476,828

 Warranty costs incurred

 ( 81,954
)

 16,359

 Provision (reversal) for the year

 ( 1,344,572
)

 66,182

 ( 124,912
)

 ( 9,925
)

 Balance at end of year

 476,828

 549,444

 Less: Current portion

 ( 26,215
)

 ( 23,870
)

 Non-current portion

 $
 450,613

 $
 525,574

 21. Income Taxes, Deferred Tax Assets and Deferred Tax Liabilities

 (a)

 Income taxes in the
 consolidated statements of comprehensive loss(income)

 The Company's provision for income taxes
credit consisted of:

 2022

 2023

 PRC income tax

 $

 $

 Current income tax credit, net

 -

 -

 Deferred income tax credit (expenses)

)

 $

 $
)

 United States Tax

 CBAK is a Nevada corporation that is subject
to U.S. federal tax and state tax. On December 31, 2017 the U.S. government enacted comprehensive tax legislation commonly referred to
as the Tax Cuts and Jobs Act (the "Tax Act"). The Tax Act makes broad and complex changes to the U.S. tax code, including,
but not limited to, (1) reducing the U.S. federal corporate income tax rate from 35 percent to 21 percent; (2) requiring companies to
pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal corporate
income taxes on dividends from foreign subsidiaries; (4) providing modification to subpart F provisions and new taxes on certain foreign
earnings such as Global Intangible Low-Taxed Income (GILTI). Except for the one-time transition tax, most of these provisions go into
effect starting January 1, 2018.

 The Global Intangible Low-taxed Income (GILTI)
is a new provision introduced by the Tax Cuts and Jobs Act. U.S. shareholders, who are domestic corporations, of controlled foreign corporations
(CFCs) are eligible for up to an 80 % deemed paid foreign tax credit (FTC) and a 50 % deduction of the current year inclusion with the
full amount of the Section 78 gross-up subject to limitation. This new provision is effective for tax years of foreign corporations beginning
after December 31, 2017. The Company has evaluated whether it has additional provision amount resulted by the GILTI inclusion on current
earnings and profits of its foreign controlled corporations. The Company has made an accounting policy choice of treating taxes due on
future U.S. inclusions in taxable amount related to GILTI as a current period expense when incurred. As of December 31, 2022 and 2021,
the Company does not have any aggregated positive tested income; and as such, does not have additional provision amount recorded for
GILTI tax.

 No provision for income taxes in the United States
has been made as CBAK had no taxable income for the years ended December 31, 2022 and 2023.

 F- 49

 Hong Kong Tax

 The Company's subsidiaries in Hong Kong
are subject to Hong Kong profits tax rate of 16.5 % and did not have any assessable profits arising in or derived from Hong Kong for the
years ended December 31, 2022 and 2023 and accordingly no provision for Hong Kong profits tax was made in these periods.

 PRC Tax

 The CIT Law in China applies an income tax rate
of 25 % to all enterprises but grants preferential tax treatment to High-New Technology Enterprises. CBAK Power was regarded as a "High-new
technology enterprise" pursuant to a certificate jointly issued by the relevant Dalian Government authorities. Under the preferential
tax treatment, CBAK Power was entitled to enjoy a tax rate of 15 % for the years from 2021 to 2024 provided that the qualifying conditions
as a High-new technology enterprise were met. Hitrans was regarded as a "High-new technology enterprise" pursuant to a certificate
jointly issued by the relevant Zhejiang Government authorities. Under the preferential tax treatment, Hitrans was entitled to enjoy a
tax rate of 15 % for the years from 2021 to 2024 provided that the qualifying conditions as a High-new technology enterprise were met.
Nanjing CBAK was regarded as a "High-new technology enterprise" pursuant to a certificate jointly issued by the relevant Nanjing
Government authorities. Under the preferential tax treatment, Nanjing CBAK was entitled to enjoy a tax rate of 15 % for the years from
2023 to 2025 provided that the qualifying conditions as a High-new technology enterprise were met.

 A reconciliation of the provision for income
taxes determined at the statutory income tax rate to the Company's income taxes is as follows:

 2022

 2023

 Income (loss) before income taxes

 $
 ( 12,556,018
)

 $
 ( 6,053,182
)

 United States federal corporate income tax rate

 %

 %

 Income tax credit computed at United States statutory corporate income tax rate

 ( 2,636,764
)

 ( 1,271,168
)

 Reconciling items:

 Over provision of deferred taxation in prior year

 Rate differential for PRC earnings

 ( 685,944
)

 ( 160,672
)

 Tax effect of entity at preferential tax rate

 683,459

 1,918,084

 Non-deductible (income) expenses

 ( 978,010
)

 171,936

 Share based payments

 13,481

 257,407

 Tax effect of utilisation of tax losses previously not recognised

 ( 885,021
)

 ( 222,354
)

 Valuation allowance on deferred tax assets

 3,260,592

 1,792,912

 Income tax (credit) expenses

 $
 ( 1,228,207
)

 $
 2,486,145

 (b)

 Deferred tax assets
 and deferred tax liabilities

 The tax effects of temporary differences that
give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2022 and 2023 are presented below:

 2022

 2023

 Deferred tax assets

 Trade accounts receivable

 $
 1,976,354

 1,156,095

 554,041

 2,942,702

 Property, plant and equipment

 2,353,141

 2,398,035

 Non-marketable equity securities

 161,716

 157,432

 Equity method investment

 157,432

 380,982

 Intangible assets

 97,468

 31,601

 Accrued expenses, payroll and others

 224,795

 541,665

 Provision for product warranty

 119,207

 136,611

 Net operating loss carried forward

 34,379,188

 36,103,945

 Valuation allowance

 ( 37,122,551
)

 ( 43,645,828
)

 Deferred tax assets, non-current

 $
 2,743,359

 203,240

 Deferred tax liabilities, non-current

 Long-lived assets arising from acquisitions

 $
 256,380

 $
 203,240

 F- 50

 As
of December 31, 2023, the Company's U.S. entity had net operating loss carry forwards of $ 103,580,741, of which $ 102,293 available
to reduce future taxable income which will expire in various years through 2035 and $ 103,478,448 available to offset capital gains recognized
in the succeeding 5 tax years. As of December 31, 2023, the Company's PRC subsidiaries had net operating loss carry forwards of
$ 65,349,412, which will expire in various years through 2023 to 2032. Management believes it is more likely than not that the Company
will not realize these potential tax benefits as these operations will not generate any operating profits in the foreseeable future.
As a result, a valuation allowance was provided against the full amount of the potential tax benefits.

 According to the PRC Tax Administration and Collection
Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or its
withholding agent. The statute of limitations extends to five years under special circumstances, which are not clearly defined. In the
case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion.

 The impact of an uncertain income tax positions
on the income tax return must be recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant
tax authority. An uncertain income tax position will not be recognized if it has less than a 50 % likelihood of being sustained. Interest
and penalties on income taxes will be classified as a component of the provisions for income taxes.

 22. Statutory reserves

 As stipulated by the relevant laws and regulations
in the PRC, company established in the PRC (the "PRC subsidiary") is required to maintain a statutory reserve made out of
profit for the year based on the PRC subsidiary' statutory financial statements which are prepared in accordance with the accounting
principles generally accepted in the PRC. The amount and allocation basis are decided by the director of the PRC subsidiary annually
and is not to be less than 10 % of the profit for the year of the PRC subsidiary. The aggregate amount allocated to the reserves will
be limited to 50 % of registered capital for certain subsidiaries. Statutory reserve can be used for expanding the capital base of the
PRC subsidiary by means of capitalization issue.

 In addition, as a result of the relevant PRC
laws and regulations which impose restriction on distribution or transfer of assets out of the PRC statutory reserve, $ 1,230,511 and
$ 1,230,511 representing the PRC statutory reserve of the subsidiary as of December 31, 2022 and 2023, are also considered under restriction
for distribution.

 23. Fair Value of Financial Instruments

 ASC Topic 820, Fair Value Measurement and
Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the
measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable
inputs when measuring fair value. Certain current assets and current liabilities are financial instruments. Management believes their
carrying amounts are a reasonable estimate of fair value because of the short period of time between the origination of such instruments
and their expected realization and, if applicable, their current interest rates are equivalent to interest rates currently available.
The three levels of valuation hierarchy are defined as follows:

 Level
 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 Level
 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that
 are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

 Level
 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 F- 51

 The fair value of warrants was determined using
the Binomial Model, with level 3 inputs (Note 27).

 The fair value of share options was determined
using the Binomial Model, with level 3 inputs (Note 25).

 The carrying amounts of financial assets and
liabilities, such as cash and cash equivalents, pledged deposits, trade accounts and bills receivable, other receivables, balances with
former subsidiaries, notes payable, other short-term loans, short-term and long-term bank loans and other payables approximate their
fair values because of the short maturity of these instruments or the rate of interest of these instruments approximate the market rate
of interest.

 24. Employee Benefit Plan

 Full time employees of the Company in the PRC
participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing
fund and other welfare benefits are provided to the employees. The Company accrues for these benefits based on certain percentages of
the employees' salaries, up to a maximum amount specified by the local government. The total employee benefits expensed as incurred
were $ 2,589,157 (RMB 17,405,185) and $ 2,952,247 (RMB 20,877,994) for the years ended December 31, 2022 and 2023, respectively.

 25. Share-based Compensation

 Restricted Shares and Restricted Share Units

 Restricted shares granted on June 30, 2015

 On June 12, 2015, the Board of Director approved
the CBAK Energy Technology, Inc. 2015 Equity Incentive Plan (the "2015 Plan") for Employees, Directors and Consultants of
the Company and its Affiliates. The maximum aggregate number of Shares that may be issued under the Plan is ten million ( 10,000,000)
Shares.

 On June 30, 2015, pursuant to the 2015 Plan,
the Compensation Committee of the Company's Board of Directors granted an aggregate of 690,000 restricted shares of the Company's
common stock, par value $ 0.001, to certain employees, officers and directors of the Company with a fair value of $ 3.24 per share on June
30, 2015. In accordance with the vesting schedule of the grant, the restricted shares will vest in twelve equal quarterly installments
on the last day of each fiscal quarter beginning on June 30, 2015 (i.e. last vesting period: quarter ended March 31, 2018). The Company
recognizes the share-based compensation expenses on a graded-vesting method.

 All the restricted shares granted in respect
of the restricted shares granted on June 30, 2015 have been vested on March 31, 2018.

 As of December 31, 2023, there was no unrecognized
stock-based compensation associated with the above restricted shares. As of December 31, 2023, 1,667 vested shares were to be issued.

 Restricted shares granted on April 19, 2016

 On April 19, 2016, pursuant to the Company's
2015 Plan, the Compensation Committee of the Board of Directors of the Company granted an aggregate of 500,000 restricted shares of the
Company's common stock, par value $ 0.001, to certain employees, officers and directors of the Company, of which 220,000 restricted
shares were granted to the Company's executive officers and directors. There are three types of vesting schedules. First, if the
number of restricted shares granted is below 3,000, the shares will vest annually in 2 equal installments over a two year period with
the first vesting on June 30, 2017. Second, if the number of restricted shares granted is larger than or equal to 3,000 and is below
 10,000, the shares will vest annually in 3 equal installments over a three year period with the first vesting on June 30, 2017. Third,
if the number of restricted shares granted is above or equal to 10,000, the shares will vest semi-annually in 6 equal installments over
a three year period with the first vesting on December 31, 2016. The fair value of these restricted shares was $ 2.68 per share on April
19, 2016. The Company recognizes the share-based compensation expenses over the vesting period (or the requisite service period) on a
graded-vesting method.

 F- 52

 All the restricted shares granted in respect
of the restricted shares granted on April 16, 2016 had been vested on June 30, 2019.

 As of December 31, 2023, there was no unrecognized
stock-based compensation associated with the above restricted shares and 4,167 vested shares were to be issued.

 Restricted share units granted on August 23,
2019

 On August 23, 2019, pursuant to the Company's
2015 Plan, the Compensation Committee granted an aggregate of 1,887,000 restricted share units of the Company's common stock to
certain employees, officers and directors of the Company, of which 710,000 restricted share units were granted to the Company's
executive officers and directors. There are two types of vesting schedules, (i) the share units will vest semi-annually in 6 equal installments
over a three year period with the first vesting on September 30, 2019; (ii) the share units will vest annual in 3 equal installments
over a three year period with the first vesting on March 31, 2021. The fair value of these restricted shares was $0.9 per share on August
23, 2019. The Company recognizes the share-based compensation expenses over the vesting period (or the requisite service period) on a
graded-vesting method.

 The Company recorded non-cash share-based compensation
expense of $ 23,778 for the year ended December 31, 2022, in respect of the restricted shares granted on August 23, 2019.

 All the restricted share units granted in respect
of the restricted share units granted on August 23, 2019 had been vested on March 2022. As of December 31, 2023, there was no unrecognized
stock-based compensation associated with the above restricted share units.

 Restricted share units granted on October
23, 2020

 On October 23, 2020, pursuant to the Company's
2015 Plan, the Compensation Committee granted an aggregate of 100,000 restricted share units of the Company's common stock to an
employee of the Company. In accordance with the vesting schedule of the grant, the restricted shares will vest semi-annually in 6 equal
installments over a three year period with the first vesting on October 30, 2020. The fair value of these restricted shares was $ 3 per
share on October 23, 2020. The Company recognizes the share-based compensation expenses over the vesting period (or the requisite service
period) on a graded-vesting method.

 The Company recorded non-cash share-based compensation
expense of $ 40,415 for the year ended December 31, 2022, in respect of the restricted shares granted on October 23, 2020 of which allocated
to research and development expenses.

 The Company recorded non-cash share-based compensation
expense of $ 6,529 for the year ended December 31, 2023, in respect of the restricted shares granted on October 23, 2020 of which allocated
to research and development expenses.

 As of December 31, 2023, non-vested restricted
share units granted on October 23, 2020 are as follows:

 Non-vested share units as of January 1, 2023

 16,665

 Vested

 ( 16,665
)

 Non-vested share units as of December 31, 2023

 -

 All the restricted share units granted on October
23, 2020 had been vested on April 30, 2023. As of December 31, 2023, there was no unrecognized stock-based compensation with the above
restricted share units.

 Employees Stock Ownership Program on November
29, 2021

 On November 29, 2021, pursuant to the Company's
2015 Plan, the Compensation Committee granted options to obtain an aggregate of 2,750,002 share units of the Company's common stock
to certain employees, officers and directors of the Company, of which options to obtain 350,000 share units were given to the Company's
executive officers and directors with an option exercise price of $ 1.96 based on fair market value. The vesting of shares each year is
subject to certain financial performance indicators. The shares will be vested semi-annually in 10 equal installments over a five year
period with the first vesting on May 30, 2022. The options will expire on the 70-month anniversary of the grant date.

 F- 53

 The fair value of the stock options granted to
directors of the Company is estimated on the date of the grant using the Binomial Model. The fair value of the options was calculated
using the following assumptions: estimated life of six months to five years, volatility of 106.41 %, risk free interest rate of 1.26 %,
and dividend yield of 0 %. The fair value of 350,000 stock options to directors of the Company was $ 479,599 at the grant date. During
the year ended December 31, 2022 and 2023, the Company recorded nil as stock compensation expenses, respectively.

 The fair value of the stock options granted to
certain employees and officers of the Company is estimated on the date of the grant using the Binomial Model. The fair value of the options
was calculated using the following assumptions: estimated life of six months to five years, volatility of 106.41 %, risk-free interest
rate of 1.26 % and dividend yield of 0 %. The fair value of 2,400,002 stock options to certain employees and officers of the Company was
$ 2,805,624 at the grant date. During the year ended December 31, 2022 and 2023, the Company recorded nil as stock compensation expenses,
respectively.

 As of December 31, 2023, there was unrecognized
stock-based compensation $ 1,328,299 associated with the above options granted.

 Restricted share units granted and stock ownership
program on April 11, 2023

 On April 11, 2023, pursuant to the Company's
2015 Plan, the Compensation Committee granted an aggregate of 894,000 restricted share units and 2,124,000 options to certain employees,
officers and directors of the Company, of which 230,000 restricted share units and 460,000 options were granted to the Company's
executive officers and directors. The restricted share units will vest semi-annually on June 30, 2023 and December 31, 2023. The fair
value of these restricted shares units was $ 0.95 per share on April 11, 2023. The Company recognizes the share-based compensation expenses
over the vesting period (or the requisite service period) on a graded-vesting method. The option exercise price was $ 0.9780. The shares
will be vested semi-annually in 4 equal installments over a 2 year period with the first vesting on June 30, 2024. The options will expire
on the 70-month anniversary of the grant date.

 The Company recorded
non-cash share-based compensation expense of $ 831,250 for the year ended December 31, 2023, in respect of the restricted share units
granted on April 11, 2023.

 The fair value of the stock options granted to
directors and certain employees and officers of the Company is estimated on the date of the grant using the Binomial Model. The fair
value of the options was calculated using the following assumptions: estimate life of 5.83 years, volatility of 106.59 %, risk free interest
rate of 3.51 % and dividend yield of 0 %. The fair value of options of the Company was $ 838,190 at the grant date. For the year ended December
31, 2023, the Company recorded $ 343,960 as share-based compensation expenses in respect of the stock options granted on April 11, 2023.

 As of December 31, 2023, non-vested restricted
share units granted on April 11, 2023 are as follows:

 Non-vested share units as of April 11, 2023

 Granted

 894,000

 Vested

 ( 875,000
)

 Forfeited

 ( 19,000
)

 Non-vested share units as of December 31, 2023

 -

 All the restricted share units granted on April
11, 2023 had been vested on December 31, 2023. As of December 31, 2023, there was no unrecognized stock-based compensation with the above
restricted share units.

 F- 54

 Restricted share units granted and stock ownership
program on August 22, 2023

 On
August 22, 2023, pursuant to the Company's 2015 Plan, the Compensation Committee granted an aggregate of 40,000 restricted share
units and 160,000 options to employees of the Company. The restricted share units will vest semi-annually on October 15, 2023 and April
15, 2023. The fair value of these restricted shares units was $ 0.88 per share on August 22, 2023. The Company recognizes the share-based
compensation expenses over the vesting period (or the requisite service period) on a graded-vesting method. The option exercise price
was $ 0.8681. The shares will be vested semi-annually in 4 equal instalments over a 2 year period with the first vesting on February 15,
2025. The options will expire on the 70-month anniversary of the grant date.

 The Company recorded non-cash share-based compensation
expense of $ 34,086 for the year ended December 31, 2023, in respect of the restricted share units granted on August 22, 2023.

 The fair value of the stock options granted to
directors and certain employees and officers of the Company is estimated on the date of the grant using the Binomial Model. The fair
value of the options was calculated using the following assumptions: estimate life of 5.83 years, volatility of 106.34 %, risk free interest
rate of 4.47 % and dividend yield of 0 %. The fair value of options of the Company was $ 56,521 at the grant date. For the year ended December
31, 2023, the Company recorded $ 9,922 as share-based compensation expenses in respect of the stock options granted on August 22, 2023.

 As of December 31, 2023, non-vested restricted
share units granted on August 22, 2023 are as follows:

 Non-vested share units as of August 22, 2023

 Granted

 40,000

 Vested

 ( 20,000
)

 Forfeited

 -

 Non-vested share units as of December 31, 2023

 20,000

 As
of December 31, 2023, there was unrecognized stock-based compensation $ 55,746 associated with the above restricted share units and options
granted and nil vested shares were to be issued.

 Stock option activity under the Company's
stock-based compensation plans is shown below:

 Number of
 Shares

 Average
 Exercise Price
 per Share

 Aggregate
 Intrinsic
 Value*

 Weighted
 Average
 Remaining
 Contractual
 Term in
 Years

 Outstanding at January 1, 2023

 1,650,086

 1.96

 -

 4.7

 Exercisable at January 1, 2023

 549,958

 1.96

 $
 -

 4.7

 Granted

 2,284,000

 0.97

 -

 5.8

 Exercised

 -

 -

 -

 -

 Forfeited

 ( 70,000
)

 0.98

 -

 5.8

 Outstanding at December 31, 2023

 3,864,086

 $
 1.39

 $
 -

 4.3

 Exercisable at December 31, 2023

 549,958

 $
 1.96

 $
 -

 3.7

 *
 The
intrinsic value of the stock options at December 31, 2023 is the amount by which the market value of the Company's common
stock of $ 1.05 as of December 31, 2023 exceeds the average exercise price of the option. As of December 31, 2023, the intrinsic
value of the outstanding and exercisable stock options was $ nil.

 As the Company itself is an investment holding
company which is not expected to generate operating profits to realize the tax benefits arising from its net operating loss carried forward,
no income tax benefits were recognized for such stock-based compensation cost under the stock option plan for the year ended December
31, 2022 and 2023.

 F- 55

 26. Income (Loss) Per Share

 Basic EPS is computed by dividing net income
by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar to basic net income per share
except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the
potential common shares pertaining to warrants, stock options, and similar instruments had been issued and if the additional common shares
were dilutive. Diluted earnings per share are based on the assumption that all dilutive convertible shares and stock options and warrants
were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding unvested restricted stock,
options and warrants, and the if-converted method for the outstanding convertible instruments. Under the treasury stock method, options
and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later) and as if funds obtained
thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, outstanding
convertible instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if
later).

 The following is the calculation of income (loss)
per share:

 2022

 2023

 $
)

 $
)

 Less: Net loss attributable to non-controlling interests

 1,879,365

 6,090,270

 Net loss attributable to shareholders of CBAK Energy Technology, Inc.

)

 ( 2,449,057
)

 Weighted average shares used in basic and diluted computation

 88,927,671

 89,252,085

 Loss per share of common stock – basic and diluted

 $
 ( 0.11
)

 $
 ( 0.03
)

 Note:
 Including 22,501 and 5,384 vested restricted shares granted pursuant to the 2015 Plan that were not yet issued as of December 31, 2022 and 2023, respectively.

 For the year ended December 31, 2022, 2,200,044
unvested options and all the outstanding warrants were anti-dilutive and excluded from shares used in the diluted computation.

 For the year ended December 31, 2023, 20,000 unvested restricted shares
units, 3,224,128 unvested options and all the outstanding warrants were anti-dilutive and excluded from shares used in the diluted computation.

 27. Warrants

 On December 8, 2020, the Company entered in a
securities purchase agreement with certain institutional investors, pursuant to which the Company issued in a registered direct offering,
an aggregate of 9,489,800 shares of its common stock at a price of $ 5.18 per share, for aggregate gross proceeds to the Company of approximately
$ 49 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company. As part of the
transaction, the institutional investors also received warrants ("Investor Warrants") for the purchase of up to 3,795,920
shares of the Company's common stock at an exercise price of $ 6.46 per share exercisable for 36 months from the date of issuance.
The options were expired as of the report date. In addition, the placement agent for this transaction also received warrants ("Placement
Agent Warrants") for the purchase of up to 379,592 shares of the Company's common stock at an exercise price of $ 6.475 per
share exercisable for 36 months after 6 months from the issuance. The Company has performed a thorough reassessment of the terms of its
warrants with reference to the provisions of ASC Topic 815-40-15-7I, regarding its exposure to changes in currency exchange rates. This
reassessment has led to the management's conclusion that the Company's warrants issued to the investors should not be considered
indexed to the Company's own stock because the warrants are denominated in U.S. dollar, which is different from the Company's
functional currency, Renminbi. Warrants are remeasured at fair value with changes in fair value recorded in earnings in each reporting
period.

 F- 56

 On February 8, 2021, the Company entered into
another securities purchase agreement with the same investors, pursuant to which the Company issued in a registered direct offering,
an aggregate of 8,939,976 shares of common stock of the Company at a per share purchase price of $ 7.83. In addition, the Company issued
to the investors (i) in a concurrent private placement, the Series A-1 warrants to purchase a total of 4,469,988 shares of common stock,
at a per share exercise price of $ 7.67 and exercisable for 42 months from the date of issuance; (ii) in the registered direct offering,
the Series B warrants to purchase a total of 4,469,988 shares of common stock, at a per share exercise price of $ 7.83 and exercisable
for 90 days from the date of issuance; and (iii) in the registered direct offering, the Series A-2 warrants to purchase up to 2,234,992
shares of common stock, at a per share exercise price of $ 7.67 and exercisable for 45 months from the date of issuance. The Company received
gross proceeds of approximately $ 70 million from the registered direct offering and the concurrent private placement, before deducting
fees to the placement agent and other estimated offering expenses of $ 5.0 million payable by the Company. In addition, the placement
agent for this transaction also received warrants ("Placement Agent Warrants") for the purchase of up to 446,999 shares of
the Company's common stock at an exercise price of $ 9.204 per share exercisable for 36 months after 6 months from the issuance.

 On May 10, 2021, the Company entered into that
Amendment No. 1 to the Series B Warrant (the "Series B Warrant Amendment") with each of the holders of the Company's
outstanding Series B warrants. Pursuant to the Series B Warrant Amendment, the term of the Series B warrants was extended from May 11,
2021 to August 31, 2021.

 As of the date of this report, Series B warrant, along with Series
A-2 warrants, had both expired.

 There was a total of 5,296,579 warrants issued
and outstanding as of December 31, 2023.

 The fair value of the outstanding warrants was
calculated using Binomial Model based on backward induction with the following assumptions:

 Warrants issued in the 2020 Financing

 Warrants holder

 Investor

 Placement
 Agent

 Appraisal Date

 2022

 2022

 Market price per share (USD/share)

 $
 0.99

 $
 0.99

 Exercise price (USD/price)

 6.46

 6.475

 Risk free rate

 4.7
 %

 4.6
 %

 Dividend yield

 0.0
 %

 0.0
 %

 Expected term/ Contractual life (years)

 0.9 years

 1.4 years

 Expected volatility

 75.6
 %

 82.7
 %

 Appraisal Date

 2023

 2023

 Market price per share (USD/share)

 $
 n/a

 $
 1.05

 Exercise price (USD/price)

 n/a

 6.475

 Risk free rate

 n/a

 5.3
 %

 Dividend yield

 n/a

 %

 Expected term/ Contractual life (years)

 n/a

 0.4 year

 Expected volatility

 n/a

 53.90
 %

 F- 57

 Warrants issued in the 2021 Financing

 Warrants holder

 Investor

 Placement
 Agent

 Appraisal Date

 Series A1
 2022

 2022

 Market price per share (USD/share)

 0.99

 0.99

 Exercise price (USD/price)

 7.67

 9.204

 Risk free rate

 4.5
 %

 4.5
 %

 Dividend yield

 %

 %

 Expected term/ Contractual life (years)

 1.6 years

 1.6 years

 Expected volatility

 80.4
 %

 80.4
 %

 Appraisal Date

 2023

 2023

 Market price per share (USD/share)

 1.05

 1.05

 Exercise price (USD/price)

 7.67

 9.204

 Risk free rate

 5.1
 %

 5.1
 %

 Dividend yield

 %

 %

 Expected term/ Contractual life (years)

 0.6 year

 0.6 year

 Expected volatility

 63.00
 %

 63.00
 %

 The following is a reconciliation of the beginning
and ending balances of warrants liability measured at fair value on a recurring basis using Level 3 inputs:

 Year
ended
 2022

 2023

 Balance at the beginning of the year

 $
 5,846,000

 $

 Warrants issued to institution investors

 -

 -

 Warrants issued to placement agent

 -

 -

 Warrants redeemed

 -

 -

 Fair value change of the issued warrants included in earnings

 ( 5,710,000
)

 ( 136,000
)

 Balance at end of year

 -

 The following is a summary of the warrant activity:

 Number of

 Average
 Exercise

 Price

 Weighted

Average
 Remaining
 Contractual Term
 in Years

 Outstanding at January 1, 2023

 9,092,499

 $
 7.19

 1.33

 Exercisable at January 1, 2023

 9,092,499

 $
 7.19

 1.33

 Granted

 -

 -

 -

 Exercised / surrendered

 -

 -

 -

 Expired

 ( 3,795,920
)

 6.460

 -

 Outstanding at December 31, 2023

 5,296,579

 7.71

 0.60

 Exercisable at December 31, 2023

 5,296,579

 7.71

 0.60

 F- 58

 28. Commitments and Contingencies

 (i)

 Capital Commitments

 As of December 31, 2022 and 2023, the Company
had the following contracted capital commitments:

 2022

 2023

 For construction of buildings

 $
 21,406,584

 $
 1,104,571

 For purchases of equipment

 4,249,801

 31,437,525

 Capital injection

 137,739,785

 267,557,243

 $
 163,396,170

 $
 300,099,339

 (ii)

 Litigation

 During its normal course of business, the Company
may become involved in various lawsuits and legal proceedings. However, litigation is subject to inherent uncertainties, and an adverse
result may arise from time to time will affect its operation. Other than the legal proceedings set forth below, the Company is currently
not aware of any such legal proceedings or claims that the Company believe will have an adverse effect on the Company's operation,
financial condition or operating results.

 On July 7, 2016, Shenzhen Huijie Purification
System Engineering Co., Ltd ("Shenzhen Huijie"), one of the Company's contractors, filed a lawsuit against CBAK Power
in the Peoples' Court of Zhuanghe City, Dalian, (the "Court of Zhuanghe") for failure to pay pursuant to the terms
of the contract and entrusting part of the project of the contract to a third party without their prior consent. The plaintiff sought
a total amount of $ 1,241,648 (RMB 8,430,792), including construction costs of $ 0.9 million (RMB 6.1 million, which the Company already
accrued for at June 30, 2016), interest of $ 29,812 (RMB 0.2 million) and compensation of $ 0.3 million (RMB 1.9 million). On September 7,
2016, upon the request of Shenzhen Huijie for property preservation, the Court of Zhuanghe froze CBAK Power's bank deposits totaling
$ 1,210,799 (RMB 8,430,792) for a period of one year. On September 1, 2017, upon the request of Shenzhen Huijie, the Court of Zhuanghe
froze the bank deposits for another one year until August 31, 2018. The Court further froze the bank deposits for another one year until
August 27, 2019 upon the request of Shenzhen Huijie on August 27, 2018. On August 27, 2019, the Court froze the bank deposits for another
year until August 27, 2020, upon the request of Shenzhen Huijie. On June 28, 2020, the Court of Dalian entered the final judgement as
described below and the frozen bank deposit was released in July 2020.

 On June 30, 2017, according to the trial of first instance, the Court
of Zhuanghe ruled that CBAK Power should pay the remaining contract amount of RMB 6,135,860 (approximately $ 0.9 million) claimed by Shenzhen
Huijie as well as other expenses incurred including deferred interest, discounted charge on bills payable, litigation fee and property
preservation fee totaled $ 0.1 million. The Company has accrued for these amounts as of December 31, 2017. On July 24, 2017, CBAK Power
filed an appellate petition to the Intermediate Peoples' Court of Dalian ("Court of Dalian)" to appeal the adjudication
dated on June 30, 2017. On November 17, 2017, the Court of Dalian rescinded the original judgement and remanded the case to the Court
of Zhuanghe for retrial. The Court of Zhuanghe conducted a retrial and requested an appraisal to be performed by a third-party appraisal
institution on the construction cost incurred and completed by Shenzhen Huijie on the subject project. On November 8, 2018, the Company
received from the Court of Zhuanghe the construction-cost-appraisal report which determined that the construction cost incurred and completed
by Shenzhen Huijie for the subject project to be $ 1,344,605 (RMB 9,129,868). On May 20, 2019, the Court of Zhuanghe entered a judgment
that Shenzhen Huijie should pay back to CBAK Power $ 261,316 (RMB 1,774,337) (the amount CBAK Power paid in excess of the construction cost
appraised by the appraisal institution) and the interest incurred since April 2, 2019. Shenzhen Huijie filed an appellate petition to
the Court of Dalian. On June 28, 2020, the Court of Dalian entered the final judgment that Shenzhen Huijie should pay back to CBAK Power
$ 245,530 (RMB 1,667,146) (the amount CBAK Power paid in excess of the construction cost appraised by the appraisal institution) and the
interest incurred since April 2, 2019, and reimburse the litigation fees totaling $ 30,826 (RMB 209,312) that CBAK Power has paid. As of
December 31, 2022, CBAK Power have not received the final judgement amount totaled $ 276,356 (RMB 1,876,458) from Shenzhen Huijie. Shenzhen
Huijie filed an appellate petition to High Peoples' Court of Liaoning ("Court of Liaoning") to appeal the adjudication
dated on June 28, 2020. In April 2021, the Court of Liaoning rescinded the original judgement and remanded the case to the Court of Dalian
for retrial. On December 21, 2021, the Court of Dalian remanded the case to the Court of Zhuanghe for retrial. On April 28, 2023,
the Court of Zhuanghe made the judgement to dismiss the construction contract between Shenzhen Huijie and CBAK Power, other claims made
by Shenzhen Huijie and the following appellate petition by CBAK Power. Shenzhen Huijie filed an appellate petition to the Court of Dalian
to seek overturning the judgement by the Court of Zhuanghe, while CBAK Power filed an appellate petition to the Court of Dalian to seek
the return of all paid construction costs and the interests incurred. On November 15, 2023, the Court of Dalian made the final judgement
to dismiss the appellate petitions from both Shenzhen Huijie and CBAK Power. According to this final judgement, CBAK Power has no longer
had any obligations or liabilities to Shenzhen Huijie.

 F- 59

 In December 2020, CBAK Power received notice from
Court of Dalian Economic and Technology Development Zone that Haoneng filed another lawsuit against CBAK Power for failure to pay pursuant
to the terms of the purchase contract. Haoneng sought a total amount of $ 1.5 million (RMB 10,257,030), including equipment cost of $ 1.3
million (RMB 9,072,000) and interest amount of $ 0.2 million (RMB 1,185,030). In August 2021, CBAK Power and Haoneng reached an agreement
that the term of the purchase contract will be extended to December 31, 2023 under which CBAK Power and its related parties shall execute
the purchase of equipment in an amount not lower than $ 2.4 million (RMB 15,120,000) from Haoneng, or CBAK Power has to pay 15 % of the amount
equal to RMB 15,120,000 ($ 2.2 million) net of the purchased amount to Haoneng. Haoneng withdrew the filed lawsuit after the agreement.
As of December 31, 2023, the equipment was not received by CBAK Power, CBAK Power has included the equipment cost of $ 2.2 million (RMB 15,120,000)
under capital commitments.

 29. Concentrations and Credit Risk

 (a)

 Concentrations

 The Company had the following customers that
individually comprised 10 % or more of net revenue for the years ended December 31, 2022 and 2023 as follows:

 Sales of finished goods and raw materials

 Customer B

 $

 28,071,738

 11.29

 %

 *

 *

 Customer C

 *

 *

 %

 66,881,853

 32.7

 %

 Customer D

 57,856,658

 23.26

 %

 *

 *

 %

 Zhengzhou BAK Battery Co., Ltd (note 18)

 53,236,804

 21.40

 %

 27,872,002

 13.6

 %

 *
 Comprised less than 10 % of net revenue for the respective period.

 The Company had the following customers that
individually comprised 10 % or more of net trade receivable (included VAT) as of December 31, 2022 and 2023 as follows:

 Customer A

 $
 4,004,880

 18.94
 %

 $
 *

 *

 Customer D

 *

 *

 7,239,247

 27.7
 %

 Zhengzhou BAK Battery Co., Ltd (note 18)

 9,156,383

 43.30
 %

 12,441,715

 47.5
 %

 *
 Comprised less than 10 % of net accounts receivable for the respective period.

 The Company had the following suppliers that
individually comprised 10 % or more of net purchase for the years ended December 31, 2022 and 2023 as follows:

 2022

 2023

 Supplier A

 $
 33,781,075

 14.46
 %

 $
 18,786,335

 12.1
 %

 Supplier B

 *

 *

 17,786,678

 11.5
 %

 Zhengzhou BAK Battery Co., Ltd (note 18)

 26,819,454

 11.48
 %

 *

 *

 Supplier C

 24,720,344

 10.58
 %

 *

 *

 *
 Comprised less than 10 % of net purchase for the respective period.

 F- 60

 The Company had the following suppliers that
individually comprised 10 % or more of trade payable as of December 31, 2022 and 2023 as follows:

 December
31, 2023

 Supplier A

 $
 *

 *

 $
 2,689,740

 10.1
 %

 Supplier C

 4,064,942

 12.50
 %

 *

 *

 Zhengzhou BAK Battery Co., Ltd (note 18)

 5,629,343

 17.31
 %

 *

 *

 Zhejiang Shengyang Renewable Resources Technology Co., Ltd.

 *

 *

 3,498,324

 13.0
 %

 (b)

 Credit Risk

 Financial instruments that potentially subject
the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents and pledged deposits. As of
December 31, 2022 and 2023 substantially all of the Company's cash and cash equivalents were held by major financial institutions
and online payment platforms located in the PRC, which management believes are of high credit quality. The Company has not experienced
any losses on cash and cash equivalents to date. The Company does not require collateral or other securities to support financial instruments
that are subject to credit risk.

 For the credit risk related to trade accounts
receivable, the Company performs ongoing credit evaluations of its customers and, if necessary, maintains reserves for potential credit
losses.

 30. Segment Information

 The Company's
chief operating decision maker has been identified as the Chief Executive Officer ("CEO") who reviews financial information
of operating segments based on US GAAP amounts when making decisions about allocating resources and assessing performance of the
Company.

 As a result of the Hitrans
acquisition discussed in Note 12, the Company determined that Hitrans met the criteria for separate reportable segment given its financial
information is separately reviewed by the Company's CEO. As a result, the Company determined that for the year ended December 31,
2022 and 2023, it operated in two operating segments namely CBAK and Hitrans. CBAK's segment mainly includes the manufacture,
commercialization and distribution of a wide variety of standard and customized lithium ion rechargeable batteries for use in a wide
array of applications. Hitrans' segment mainly includes the development and manufacturing of NCM precursor and cathode materials.

 The Company primarily
operates in the PRC and substantially all of the Company's long-lived assets are located in the PRC.

 F- 61

 The
Company's chief operating decision maker evaluates performance based on each reporting segment's net revenue, cost of revenues,
operating expenses, operating income, finance income (expense), other income and net income. Net revenue, cost of revenues, operating
expenses, operating income, finance income (expense), other income (expenses) and net income (loss) by segment for the years ended December 31,
2022 and 2023 were as follows:

 For the year ended December 31, 2022

 CBAT

 Hitrans

 Corporate
 unallocated
 (note)

 Consolidated

 Net revenues

 $
 94,715,189

 $
 154,010,296

 $
 -

 $

 ( 86,333,047
)

 ( 144,297,114
)

 -

 ( 230,630,161
)

 Gross profit

 8,382,142

 9,713,182

 18,095,324

 ( 13,489,453
)

 ( 14,993,719
)

 ( 1,116,755
)

 ( 29,599,927
)

 Operating (loss) income

 ( 5,107,311
)

 ( 5,280,537
)

 ( 1,116,755
)

 ( 11,504,603
)

 Finance income (expenses), net

 929,756

 ( 438,387
)

 ( 309
)

 491,060

 Other income, net

 ( 3,590,693
)

 ( 3,661,782
)

 5,710,000

 ( 1,542,475
)

 Income tax credit

 -

 -

 Net income

 ( 7,768,248
)

 ( 8,152,499
)

 4,592,936

)

 For the year ended December 31, 2023

 CBAT

 Hitrans

 Corporate
 unallocated
 (note)

 Consolidated

 Net revenues

 $
 132,993,518

 $
 71,444,847

 $
 -

 $

 ( 101,413,350
)

 ( 71,300,692
)

 -

 ( 172,714,042
)

 Gross profit

 31,580,168

 144,155

 -

 31,724,323

 ( 20,861,844
)

 ( 17,159,677
)

 ( 954,614
)

 ( 38,976,135
)

 Operating income (loss)

 10,718,324

 ( 17,015,522
)

 ( 954,614
)

 ( 7,251,812
)

 Finance income (expenses), net

 337,243

 95,816

 ( 159
)

 432,900

 Other income (expenses), net

 2,906,648

 ( 2,276,918
)

 765,730

 Income tax expenses

 -

)

 -

)

 Net income (loss)

 13,962,215

 ( 21,682,769
)

 ( 818,773
)

)

 As of December 31, 2023

 Identifiable long-lived assets

 100,815,622

 42,249,656

 -

 143,065,278

 Total assets

 196,166,083

 84,950,872

 38,305

 281,155,260

 Note: The Company does
not allocate its assets located and expenses incurred outside China to its reportable segments because these assets and activities are
managed at a corporate level.

 Net revenues by product:

 The Company's products can be categorized
into high power lithium batteries and materials used in manufacturing of lithium batteries. For the product sales of high power lithium
batteries, the Company manufactured two types of Li-ion rechargeable batteries: battery pack and high-power cylindrical lithium battery
cell. The Company's battery products are sold to packing plants operated by third parties primarily for use in mobile phones and
other electronic devices. For the product sales of materials used in manufacturing of lithium batteries, the Company, via its subsidiary,
Hitrans, manufactured cathode materials and Precursor for use in manufacturing of cathode. Revenue from these products is as follows:

 2022

 2023

 High power lithium batteries used in:

 Electric vehicles

 $
 4,694,694

 $
 2,883,385

 Light electric vehicles

 6,415,277

 5,607,435

 Residential energy supply & uninterruptable supplies

 83,603,046

 124,502,698

 Trading of raw materials used in lithium batteries

 2,172

 -

 94,715,189

 132,993,518

 Materials used in manufacturing of lithium batteries

 Cathode

 75,331,144

 39,845,626

 Precursor

 78,679,152

 31,599,221

 154,010,296

 71,444,847

 Total consolidated revenue

 $

 $

 F- 62

 Net revenues by geographic area:

 The Company's operations are located in
the PRC. The following table provides an analysis of the Company's sales by geographical markets based on locations of customers:

 2022

 2023

 Mainland China

 $
 198,114,578

 $
 119,307,085

 Europe

 50,378,076

 78,575,290

 USA

 36,525

 5,216

 Others

 196,306

 6,550,774

 Total

 $

 $

 Substantially all of the Company's long-lived
assets are located in the PRC.

 31. CBAK Energy Technology, Inc. (Parent Company)

 Under PRC regulations, subsidiaries in PRC ("the
PRC subsidiaries") may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC GAAP. In addition,
the PRC subsidiaries are required to set aside at least 10 % of their after tax net profits each year, if any, to fund the statutory general
reserve until the balance of the reserves reaches 50 % of their registered capital. The statutory general reserves are not distributable
in the form of cash dividends to the Company and can be used to make up cumulative prior year losses, if any, and may be converted into
share capital by the issue of new shares to shareholders in proportion to their existing shareholdings, or by increasing the par value
of the shares currently held by them, provided that the reserve balance after such issue is not less than 25 % of the registered capital.
As of December 31, 2022 and 2023, additional transfers of $ 166,414,198 and $ 219,322,375 were required before the statutory general reserve
reached 50 % of the registered capital of the PRC subsidiaries. As of December 31, 2022 and 2023 there was $ 1,230,511 appropriation from
retained earnings and set aside for statutory general reserves by the PRC subsidiaries. The PRC subsidiaries did not have after tax net
profits since its incorporation and therefore no appropriation was made to fund its statutory general reserve as of December 31, 2022
and 2023.

 Schedule I of Article 504 of Regulation SX requires
the condensed financial information of the registrant (Parent Company) to be filed when the restricted net assets of consolidated subsidiaries
exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of this test, restricted
net assets of consolidated subsidiaries shall mean that amount of the registrant's proportionate share of net assets of consolidated
subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent
company by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party (i.e., lender, regulatory
agency, foreign government, etc.).

 F- 63

 SCHEDULE I – CONDENSED FINANCIAL INFORMATION
OF REGISTRANT

 PARENT COMPANY STATEMENTS OF OPERATIONS

 (Unaudited)

 2022

 2023

 REVENUE, net

 $
 -

 $
 -

 OPERATING EXPENSES:

 Salaries and consulting expenses

 227,588

 1,386,099

 General and administrative

 889,169

 794,262

 ( 1,116,757
)

 ( 2,180,361
)

 LOSS FROM OPERATIONS

 ( 1,116,757
)

 ( 2,180,361
)

 Changes in fair value of warrants liability

 5,710,000

 INCOME (LOSS) ATTRIBUTABLE TO PARENT COMPANY

 4,593,243

 ( 2,044,361
)

 EQUITY IN LOSS OF SUBSIDIARIES

 ( 14,041,689
)

 ( 609,897
)

 NET LOSS ATTRIBUTABLE TO SHAREHOLDERS

 $
)

 $
 ( 2,654,258
)

 F- 64

 PARENT COMPANY BALANCE SHEETS

 As of December 31, 2022 and 2023

 (Unaudited)

 2022

 2023

 ASSETS

 Interests in subsidiaries

 $
 119,120,917

 $
 114,257,553

 Cash and cash equivalents

 118,559

 26,922

 Total assets

 $
 119,239,476

 $
 114,284,475

 LIABILITIES AND SHAREHOLDERS' EQUITY

 CURRENT LIABILITIES:

 Accrued expenses and other payables

 1,608,102

 1,586,745

 Warrants liability

 -

 Total current liabilities

 1,744,102

 1,586,745

 SHAREHOLDERS' EQUITY

 117,495,374

 112,697,730

 Total liabilities and shareholders' equity

 $
 119,239,476

 $
 114,284,475

 F- 65

 PARENT COMPANY STATEMENTS OF CASH FLOWS

 (Unaudited)

 2022

 2023

 CASH FLOWS FROM OPERATING ACTIVITIES:

 $
)

 $
 ( 2,449,057
)

 Adjustments to reconcile net loss to net cash used in operating activities:

 Equity in loss of subsidiaries

 ( 14,041,689
)

 ( 815,098
)

 Share based compensation

 64,193

 1,225,747

 Changes in fair value of warrants liability

 ( 5,710,000
)

 ( 136,000
)

 Change in operating assets and liabilities

 Accrued expenses and other payable

 ( 2,127
)

 ( 21,357
)

 Net cash used in operating activities

 ( 29,138,069
)

 ( 2,195,765
)

 CASH FLOWS FROM INVESTING ACTIVITIES:

 Increase in interest in subsidiaries

 28,540,148

 2,104,128

 Net cash used in investing activities

 28,540,148

 2,104,128

 CHANGE IN CASH AND CASH EQUIVALENTS

 ( 597,921
)

 ( 91,637
)

 CASH AND CASH EQUIVALENTS, beginning of year

 716,480

 118,559

 CASH AND CASH EQUIVALENTS, end of year

 $
 118,559

 $
 26,922

 The condensed parent company financial statements
have been prepared using the equity method to account for its subsidiaries. Refer to the consolidated financial statements and notes
presented above for additional information and disclosures with respect to these financial statements.

 F- 66

 32. Subsequent events

 The Company has evaluated subsequent events through the date of the
issuance of the consolidated financial statements and the following subsequent event has been identified.

 On January 11, 2024, the Company utilized RMB 15 million (approximately
$ 2.1 million) banking facilities granted by Shaoxing Branch of Bank of Communications Co., Ltd at an interest rate of 3.45 % for a period
of one year to January 11, 2025. The Company borrowed RMB 15 million (approximately $ 2.1 million) on the same date.

 On January 18, 2024, the Company further utilized
RMB 14.7 million (approximately $ 2.1 million) banking facilities granted by Shaoxing Branch of Bank of Communications Co., Ltd at an interest
rate of 3.45 % for a period of one year to January 18, 2025. The Company borrowed RMB 14.7 million (approximately $ 2.1 million) on the same
date.

 On January 29, 2024, the Company utilized another
RMB 20 million (approximately $ 2.8 million) banking facilities granted by Shaoxing Branch of Bank of Communications Co., Ltd at an interest
rate of 3.45 % for a period of one year to January 29, 2025. The Company fully repaid the loan on February 1, 2024. The Company borrowed
RMB 20 million (approximately $ 2.8 million) on the same date.

 On February 2, 2024, the Company utilized another
RMB 30 million (approximately $ 4.2 million) banking facilities granted by Shaoxing Branch of Bank of Communications Co., Ltd at an interest
rate of 3.45 % for a period of one year to February 2, 2025. The Company borrowed RMB 30 million (approximately $ 4.2 million) on the same
date.

 On January 24, 2024, the Company entered into
a short-term credit-guaranteed loan agreement with Zhejiang Shangyu Rural Commercial Bank to January 17, 2025 with an amount of RMB 5 million
(approximately $ 0.7 million) bearing interest at 4.1 % per annum. The Company borrowed RMB 5 million (approximately $ 0.7 million) on the
same date.

 On February 20, 2024, the Company entered into
a six-month loan agreement with China Zheshang Bank Co., Ltd. Shengyang Branch to August 20, 2024 with an amount of RMB 5 million (approximately
$ 0.7 million) bearing interest at 3.1 % per annum. The loan was secured by restricted cash and bills receivables of the Company. The Company
borrowed RMB 5 million (approximately $ 0.7 million) on the same date.

 On February 28, 2024, the Company entered into
another six-month loan agreement with China Zheshang Bank Co., Ltd. Shengyang Branch to August 28, 2024 with an amount of RMB 8 million
(approximately $ 1.1 million) bearing interest at 3.1 % per annum. The loan was secured by restricted cash and bills receivables of the
Company. The Company borrowed RMB 8 million (approximately $ 1.1 million) on the same date.

 On March 8, 2024, the Company entered into a short-term
credit-guaranteed loan agreement with China Zheshang Bank Co., Ltd. Shangyu Branch to March 7, 2025 with an amount of RMB 3 million (approximately
$ 0.4 million) bearing interest at 4.05 % per annum. The Company borrowed RMB 3 million (approximately $ 0.4 million) on the same date.

 On March 13, 2024, the Company entered into another six-month loan
agreement with China Zheshang Bank Co., Ltd. Shengyang Branch to September 13, 2024 with an amount of RMB 2 million (approximately $ 0.3
million) bearing interest at 3.1 % per annum. The loan was secured by restricted cash and bills receivables of the Company. The Company
borrowed RMB 2 million (approximately $ 0.3 million) on the same date.

 F- 67

 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.

 On July 18, 2023, the Board of Directors of the Company approved the
dismissal of Centurion ZD CPA & Co. ("Centurion") as independent registered public accounting firm of the Company, effective
immediately.

 Centurion's reports on the consolidated financial statements
of the Company as of and for the years ended December 31, 2022 and 2021 contained no adverse opinion or disclaimer of opinion and were
not qualified or modified as to uncertainty, audit scope or accounting principle, except for an explanatory paragraph in such reports
regarding substantial doubt about the Company's ability to continue as a going concern.

 For the years ended December 31, 2022 and 2021, and in the subsequent
interim period through July 18, 2023, (i) there were no disagreements with Centurion (within the meaning of Item 304(a)(1)(iv) of Regulation
S-K ("Regulation S-K") of the rules and regulations of the SEC on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure that if not resolved to Centurion's satisfaction, would have caused Centurion
to make reference to the subject matter of the disagreements in connection with its reports; and (ii) there were no reportable events
(as defined by Item 304(a)(1)(v) of Regulation S-K), except for the material weaknesses in the Company's internal control over
financial reporting previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
As previously disclosed, the following control deficiencies were identified that represent material weaknesses as of December 31, 2022:
(1) we did not have appropriate policies and procedures in place to evaluate the proper accounting and disclosures of key documents and
agreements, and (2) we do not have sufficient and skilled accounting personnel with an appropriate level of technical accounting knowledge
and experience in the application of US GAAP commensurate with our financial reporting requirements.

 On July 18, 2023, the Board of Directors of the Company approved the
appointment of ARK Pro CPA & Co ("ARK") as its independent registered public accounting firm for the fiscal year ending
December 31, 2023. During the Company's fiscal years ended December 31, 2022 and 2021, and the subsequent interim period through
July 18, 2023, neither the Company nor anyone on its behalf has consulted with ARK on either (a) the application of accounting principles
to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the consolidated financial
statements of the Company and its subsidiaries, and no written report or oral advice was provided by ARK to the Company that ARK concluded
was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue,
or (b) any matter that was the subject of either a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K) or a reportable
event (as described in Item 304(a)(1)(v) of Regulation S-K).

 ITEM 9A. CONTROLS AND PROCEDURES.

 Evaluation of Disclosure Controls and Procedures

 As required by Rule 13a-15 under the Exchange
Act, our management has carried out an evaluation, with the participation and under the supervision of our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31,
2023. Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed
in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive
Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating
our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated,
can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in
evaluating and implementing possible controls and procedures.

 Management conducted its evaluation of disclosure
controls and procedures under the supervision of our Chief Executive Officer and our Chief Financial Officer. Based upon, and as of the
date of this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures
were ineffective as of December 31, 2023.

 Management's Annual Report on Internal Control over Financial
Reporting

 Management is responsible for establishing and
maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting refers to the
process designed by, or under the supervision of, our Chief Executive Officer and our Chief Financial Officer, and effected by our board
of directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and
the preparation of financial statements for external purposes in accordance with U.S. GAAP, and includes those policies and procedures
that:

 pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of our assets;

 provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being
made only in accordance with the authorization of our management and directors; and

 provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

 Management assessed the effectiveness of our
internal control over financial reporting as of December 31, 2023. In making this assessment, management used the framework set forth
in the report entitled Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, or COSO. The COSO framework summarizes each of the components of a company's internal control system, including (i)
the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring.

 Based on this evaluation, our Chief Executive
Officer and our Chief Financial Officer concluded that the Company's internal control over financial reporting as of December 31,
2023 were not effective because of the following material weaknesses in our internal control over financial reporting has been identified:

 –
 We did not have appropriate policies and procedures in place
to evaluate the proper accounting and disclosures of key documents and agreements.

 –
 We do not have sufficient and skilled accounting personnel with
an appropriate level of technical accounting knowledge and experience in the application of accounting principles generally accepted
in the United States commensurate with our financial reporting requirements.

 In order to cure the foregoing material weaknesses, we have taken or
are taking the following remediation measures:

 –

 We are in the process of hiring a permanent chief financial officer with significant U.S. GAAP and SEC reporting experience. Ms. Xiangyu Pei was appointed by the Board of Directors of the Company as the Interim Chief Financial Officer on August 23, 2019. Ms. Xiangyu Pei resigned as our Interim Chief Financial Officer on August 22, 2023 but has continued to serve in the Company's finance department and on the board of director. Mr. Jiewei Li was appointed as the Company's Chief Financial Officer on August 22, 2023.

 –
 We have regularly offered our financial personnel trainings
on internal control and risk management. We have regularly provided trainings to our financial personnel on U.S. GAAP accounting guidelines.
We plan to continue to provide trainings to our financial team and our other relevant personnel on the U.S. GAAP accounting guidelines
applicable to our financial reporting requirements.

 We intend to complete the remediation of the material
weaknesses discussed above as soon as practicable but we can give no assurance that we will be able to do so. Designing and implementing
an effective disclosure controls and procedures is a continuous effort that requires us to anticipate and react to changes in our business
and the economic and regulatory environments and to devote significant resources to maintain a financial reporting system that adequately
satisfies our reporting obligations. The remedial measures that we have taken and intend to take may not fully address the material weaknesses
that we have identified.

 Changes in internal control over financial reporting

 Except for the matters described above, there were no changes in our
internal controls over financial reporting during the fourth quarter of our fiscal year ended December 31, 2023 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 Report of Independent Registered Public Accounting Firm

 ARK Pro CPA & Co, our independent registered public accounting
firm has issued an attestation report regarding the effectiveness of our internal controls over financial reporting which is included
under Item 8 above.

 ITEM 9B. OTHER INFORMATION.

 We have no information to disclose that was required to be disclosed
in a report on Form 8-K during the fourth quarter of fiscal year 2023, but was not reported.

 During the fiscal quarter ended December 31,
2023, none of the Company's directors or executive officers adopted or terminated any contract, instruction or written plan for
the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any non-Rule
10b5-1 trading arrangement.

 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS.

 Not applicable.

 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 The information concerning our directors, executive officers, compliance
with Section 16(a) of the Exchange Act, and corporate governance required by this Item 10 of Form 10-K is incorporated by reference from
the information contained in the Definitive Proxy Statement for the Annual Meeting of Stockholders, which is expected to be filed within
120 days after our fiscal year ended December 31, 2023.

 ITEM 11. EXECUTIVE COMPENSATION.

 The information required by Item 11 of Form 10-K is incorporated herein
by reference from the information contained in the Definitive Proxy Statement for the Annual Meeting of Stockholders, which is expected
to be filed within 120 days after our fiscal year ended December 31, 2023.

 ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 The information required by Item 12 of Form 10-K is incorporated herein
by reference from the information contained in the Definitive Proxy Statement for the Annual Meeting of Stockholders, which is expected
to be filed within 120 days after our fiscal year ended December 31, 2023.

 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.

 The information required by Item 13 of Form 10-K is incorporated herein
by reference from the information contained in the Definitive Proxy Statement for the Annual Meeting of Stockholders, which is expected
to be filed within 120 days after our fiscal year ended December 31, 2023.

 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

 The information required by Item 14 of Form 10-K is incorporated herein
by reference from the information contained in the Definitive Proxy Statement for the Annual Meeting of Stockholders, which is expected
to be filed within 120 days after our fiscal year ended December 31, 2023.

 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

 (a)
 List of Documents Filed as a Part of This Report:

 (1)
 Consolidated Financial Statements:

 The financial statements are set forth under Item 8 of this annual
report on Form 10-K.

 (2)
 Financial Statement Schedules:

 Financial statement schedules have been omitted since they are either
not required, not applicable, or the information is otherwise included in the consolidated financial statements or notes thereto.

 (3)
 Index to Exhibits

 See exhibits listed under Item 15(b) below.

 (b)
 Exhibits:

 Exhibit No.

 Description

 2.1

 Articles of Merger (incorporated by reference to Exhibit 2.1 to the registrant's Current Report on Form 8- K filed on January 17, 2017)

 3.1

 Articles of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant's Annual Report on Form 10-K filed on December 8, 2006)

 3.2

 By-laws of the registrant (incorporated by reference to Exhibit 3.2 to the registrant's Annual Report on Form 10-K filed on December 19, 2007)

 3.3

 Certificate of Change Pursuant to NRS 78.209 filed by the Company on October 22, 2012 (incorporated by reference to Exhibit 3.1 to the registrant's Current Report on Form 8-K filed on October 26, 2012)

 3.4

 Certificate of Amendment to Articles of Incorporation filed by the Company on June 23, 2015 (incorporated by reference to Exhibit 3.1 to the registrant's Current Report on Form 8-K filed on June 26, 2015)

 3.5

 Certificate of Amendment to Articles of Incorporation filed by the Company on December 9, 2021 (incorporated by reference to Exhibit 3.1 to the registrant's Current Report on Form 8-K filed on December 13, 2021)

 4.1

 Description of Securities Registered Pursuant to Section 12 of the Exchange Act

 4.2

 Form of Amendment No. 1 to Series B Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.1 to the registrant's Current Report on Form 8-K filed on May 11, 2021)

 4.3

 Form of Investors Warrant (incorporated by reference to Exhibit 4.1 to the registrant's Current Report on Form 8-K filed on February 9, 2021)

 4.4

 Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.2 to the registrant's Current Report on Form 8-K filed on February 9, 2021)

 4.5

 Form of Investors Warrant (incorporated by reference to Exhibit 4.1 to the registrant's Current Report on Form 8-K filed on December 9, 2020)

 4.6

 Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.2 to the registrant's Current Report on Form 8-K filed on December 9, 2020)

 10.1

 Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form8-K filed on January 3, 2011)

 10.2

 CBAK Energy Technology, Inc. 2015 Equity Incentive Plan (incorporated by reference to Appendix D to the registrant's Definitive Proxy Statement on Schedule 14A filed April 24, 2015).

 10.3

 Form of Restricted Share Units Award Agreement Under 2015 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on August 29, 2019)

 10.4

 Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 99.1 to the registrant's Current Report on Form 8-K filed on July 6, 2015)

 10.5

 Form of Securities Purchase Agreement by and among the Company and the Investors (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on February 9, 2021)

 10.6

 Form of Registration Rights Agreement by and among the Company and the Investors (incorporated by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K filed on February 9, 2021)

 10.7

 Securities Purchase Agreement by and among the Company and the Investors (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on December 9, 2020)

 10.8

 English translation of Framework Agreement Relating to Dalian CBAK Power Battery Co., Ltd.'s Investment in Zhejiang Meidu Hitrans Lithium Battery Technology Co., Ltd., dated July 20, 2021 (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on July 26, 2021)

 10.9

 CBAK Energy Technology, Inc. 2023 Equity Incentive Plan (incorporated by reference to Appendix A to the registrant's Definitive Proxy Statement on Schedule 14A filed on October 20, 2023)

 10.10

 Form of Restricted Share Award Agreement under the 2023 Equity Incentive Plan

 10.11

 Form of Restricted Stock Unit Award Agreement under the 2023 Equity Incentive Plan

 10.12

 Form of Share Option Agreement under the 2023 Equity Incentive Plan

 14.1

 Code
 of Business Conduct and Ethics of the registrant (incorporated by reference to Exhibit 14.1 to the registrant's Quarterly Report
 on Form 10-Q filed on August 22, 2006)c

 21.1

 List of subsidiaries of the registrant.

 23.1

 Consent of Centurion ZD CPA & Co.

 23.2

 Consent of ARK Pro CPA & Co

 31.1

 Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 31.2

 Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 32.1

 Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 32.2

 Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 97.1

 Clawback Policy

 101.INS

 101.SCH

 Schema Document

 101.CAL

 Calculation Linkbase Document

 101.DEF

 Definition Linkbase Document

 101.LAB

 Label Linkbase Document

 101.PRE

 Presentation Linkbase Document

 Cover Page Interactive

 (c) Financial Statement Schedule

 See Item 15(a) above.

 ITEM 16. FORM 10-K SUMMARY

 None.

 SIGNATURES

 Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 Date: March 15, 2024

 By:

 /s/ Yunfei Li

 Yunfei Li

 Chief Executive Officer

 In accordance with the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 Signature

 Title

 Date

 /s/ Yunfei Li

 Chairman and Chief Executive Officer

 Yunfei Li

 (Principal Executive Officer)

 /s/ Jiewei Li

 Chief Financial Officer

 Jiewei Li

 (Principal Financial and Accounting Officer)

 /s/ J. Simon Xue

 Director

 J. Simon Xue

 /s/ Martha C. Agee

 Director

 Martha C. Agee

 /s/ Jianjun He

 Director

 Jianjun He

 /s/ Xiangyu Pei

 Director

 Xiangyu Pei

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