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CEO Update August 22

During the spring and summer, we have made significant progress in development. The first solar panels have been tested, and we have also had time to do a lot of driving.

An intense summer is transitioning into an even more intense autumn! Never before have so many negative signals such as electricity and energy crisis, inflation, drought, and heatwaves appeared simultaneously. However, despite all these gloominess, this is the foundation for why we at Clean Motion, since our start in 2010, are focused on finding resource and energy-efficient solutions. We have now begun test driving our new electric vehicle, and so far, the results exceed my high expectations. There is still much work to be done, but with our experience and new collaborations, we have come a long way in the development of our new vehicle. I look forward to presenting a brand new vehicle during the autumn, with the potential to be the absolute best economic and sustainable solution for the cities of the future.

World events This spring and summer have shown a series of signs that the climate has already changed. In addition, when we face an energy and electricity crisis in Europe, it becomes clear that today's large and heavy vehicles are not significantly better just because they are electrified.

Electrification suddenly seems like a less good idea when you have to pay 4€/kWh, which happened recently in the Baltic states. Tomorrow's solutions must be based on resource and energy efficiency, which is Clean Motion's DNA. Unfortunately, this aspect is lacking in the populist election debate. Even former representatives of the free market are competing over how tax money should be used for the state to take care of rising electricity bills, instead of encouraging electricity customers to increase their energy efficiency.

The importance of energy-efficient vehicles An important part of electrification is, of course, batteries and battery production. Today's electric vehicles have been designed with gigantic batteries, which can be sold thanks to government subsidies.

However, lithium batteries are energy-intensive to manufacture, and it takes about 80kWh of electrical energy to produce 1 kWh of batteries. Nowadays, a normal battery size for a car is about 70kWh. For Northvolt One, in Skellefteå, this is not a significant problem, but for a factory in Gothenburg, Mariestad, or Germany, it means that only in direct electricity costs an increased cost of 28,000 SEK for a battery pack (at 4 SEK/kWh higher electricity price). Operating costs will not be a winning argument either. In addition to this, the prices of raw materials are rising. Although these expected cost increases will, of course, affect Clean Motion, they will affect heavier vehicle alternatives to an even greater extent, which means that our competitiveness will be significantly strengthened.

Suddenly, it seems quite obvious not only to electrify but to focus on resource and energy efficiency. This has always been the focus of our solutions, first in Zbee and then, to an even greater extent, in our project Re:Volt.

The electric vehicle EVIG (formerly Re:Volt) During the spring and summer, we have made significant progress in development. The first solar panels have been tested, and we have also had time to do a lot of driving. Development will continue to be intense during the autumn, but I can say that I am filled with confidence. William Collings, who has worked with us for 11 years and has been responsible for electrical systems and software, recently assumed the position of CTO and will drive the Re:Volt project to completion. We have also decided to rename the product to a more Swedish name that better describes our product characteristics (and is easier to protect in terms of trademarks). The name will be EVIG.

Collaboration Projects All collaboration projects are in full swing. We will start writing commercial agreements during the third quarter and continue to expect to be able to supply our partners with vehicles during the fourth quarter. In our collaboration projects, we have delved deeply into our customers' operations. For example, in the project that I call "Five ants are more than four elephants", we have calculated that four 3.5-ton trucks can be replaced by five of our EVIGs. This means significantly lower costs. This calculation is also a clear sign of what needs to happen for a faster transition to sustainable alternatives. If the tax on labor had been reduced and the tax instead directed towards resource consumption, this would immediately lead to an even faster transition. The ability to meet transport needs with smaller vehicles also has the potential to reduce the need for heavy trucks and alleviate the acute shortage of truck drivers.

Same components, new markets With this summer's soaring electricity prices, we have started looking at the possibility of using our components in the electricity system to create a product for households. A carport containing four solar cell roofs and battery packs with accompanying electronics and connectivity could be a solution for achieving intelligent electricity production and energy storage. At a quick market overview, it seems we can develop a very competitive product, with a target price of around 140 TSEK (after grants), which with the current energy market would have a payback period of around six years. At first glance, it appears we have very good conditions to create a good product with a competitive price that also helps lower the product cost for EVIG through larger component volumes. However, reaching production start with EVIG is prioritized, but we will take a closer look at this project later this year for a possible launch in 2023.

JV with The Techno Creatives Last week, we announced a JV with The Techno Creatives. The name of the company will be Electric Vehicle Cloud Technology AB and will develop our services for connected vehicles. The advantages of the JV company are that it lifts a large cost mass from our own development budget, The Techno Creatives contribute 7.5 MSEK to the JV company, while we benefit from previous work and expertise from The Techno Creatives. It also opens up the possibility of selling the solution to third parties. I see connected vehicles as an absolute necessity for commercial vehicle fleets, and with this collaboration, it provides relief for our own development operations, which can focus more on vehicle development. I am very positive about this JV, it is very logical on a technical level. It is also positive that we now have a new, financially strong shareholder who last week owned 1.4 million shares (1.1m on 30/6 according to Euroclear) and who also plans to buy shares for an additional 2.5 MSEK during the third quarter to reach just over 5% ownership.

We are fully charged with energy!

Göran Folkesson CEO Clean Motion AB