Q4 2021 Arrival SA Earnings Call
My name is Megan and I will be your operator today before I hand, the call over to the arrival team I'd like to go over just a few housekeeping notes for the program.
As a reminder, this webinar is being recorded after the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time. Please use the raise hand function located at the bottom of your screen. If you plan to ask a question. Please ensure you have set your zoom name to display your full name.
And firm.
Thank you for your attendance today I will now turn the call over to potash Sony Investor Relations for arrival.
Okay.
Yes.
Yes.
[music].
Yes.
Thank you all for joining us today to discuss the fourth quarter and full year 2021 financial results. My name is <unk> VP of Investor Relations and with me today is Dennis first though.
So all of industrial Ecuador, President, Mike <unk>, CEO of automotive and John Wozniak CFO before we begin I'd like to remind everyone that certain statements made on this call. Today are forward looking statements. These statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs assumptions and.
The information currently available to us.
We believe these expectations are reasonable we undertake no obligation to revise any statements to reflect changes that occur. After this call descriptions of these factors and other risks that cause actual results to differ materially from these forward looking statements are discussed in more detail in our filings with the SEC and our fourth quarter 2021 preliminary earnings release.
<unk> issued today on the second of March during the call. We also refer to certain non <unk> financial measures that should be considered in addition to and not as a substitute for or in isolation from Ohio partners results for further information. Please refer to our Investor Relations website at investors don't unrivaled com with that in mind I'll turn it over to Dennis.
Yes.
Yeah.
Yes.
Thank you Michelle and thanks to everyone for joining also the rigor.
Arrival on the mission.
To make air clean, but equation all vehicles with electric before we get into the details of our earnings call.
I would like to show you an important achievements and our progress with all of them skateboard structure being assembled in the Microfracture using <unk>.
<unk> developed robotics hardware and software with milestone Bruce or a new market to design to assemble vehicles is working with that I want to remind everyone. <unk> is unique we address large and expanding total addressable market.
<unk> will be replaced with electric demand is huge the total automotive market for all vehicle classes will be approximately 100 million vehicles per year, we target to have more than 100 micro factors over time equivalent to 1 million vehicles per year.
Our initial focus as commercial vehicles, but we believe this market can produce all vehicle types.
The arrival integrate vehicles with best in class attributes and user experience.
Our target is to be number one in tissue, which is the number one criteria for fleet customers and number one in vehicle uptime.
We believe all Mike Refractories I superior method enabled by hardware software materials and Nextgen robotics.
Tradable components software and data significantly increases the life of vehicle and revenue potential.
Once we have developed helped to accelerate time to market for new models and various principally in Q1 was a transformative year and we accomplished a lot including remarkable progress with development of our enabling technologies micro factories vehicle platforms new materials.
<unk> software, a new Gen robotics, becoming a public company.
Proving ground testing and validation for Boston Van <unk>.
Advanced relationship with global companies, such as <unk>, Microsoft and others as the top service network in the U S Europe and.
United Kingdom looking to have a priority for the year is start of production of Boston them and delivering the highest quality vehicles possible with that overview, let me now hand over to <unk> president of <unk>.
[music]. Thanks, Dennis in Q4, we successfully completed our first capital raise and our full attention has been on working towards our key milestones on Boston, but the market continues to support our rapid shift to evs, including the signing of the bipartisan infrastructure.
Bill that includes $4 billion for zero emission transit buses and president and <unk> executive order committing the U S to net zero by 2050 with 100% of new vehicle purchases to be EV by 2035, and the U K bus back better which includes 3 billion pounds of funding. This shift is happening all around.
A world and create favorable market for arrival to drive growth in the years to come across multiple vehicles segments. This momentum and our products, which have been showcasing in the U S and EU continue to translate into strong demand with our nonbinding orders and LOI more than doubling to circa 134000 vehicles the van.
Speed of volume player for arrival and we are on track to start production in Q3 on our bus program first bus one of the largest U K operators has worked together with local authorities in England to submit zero emission bus regional areas or zebra funding applications, which.
Which would potentially see up to 193 of arrivals New electric bus models introduced across first bus.
Subject to running successful trials of green commercial contracts and the outcome of the full zebra process you can see here the feedback from Jeanette Bell describing a strong relationship between first bus and arrival, we will be certifying the bus and starting a public road trials with first as planned and I want to remind everyone that the sales cycle for bus stops withdrawals, but one or two quarters.
We are seeing increased demand in the U K through next year and ongoing into the future, which enables us to begin production locally as part of our commitment to support first buses goal of a fully zero emission bus fleet by 2035, and the increased demand from other operators. The decision has been made and produced vehicles in the UK in the second half of 'twenty to Brookfield will continue at a later date Mike.
We will go into further details on this but we believe the simplified approach reduces cost and logistical complexity and is aligned with our customers' bush for local government funding and our ability to bring production to demand I truly believe only a company like arrival. We've it's agile approach is able to quickly respond to strategic decisions in this fashion today I wanted to take it.
People into the arrival software ecosystem the significant data, we generate and how this is expected to act as a multiplier for per vehicle revenue for arrival arrivals unique quality is that we're vertically integrated this means we design and build not just our vehicles, but all of the core systems software and sensors within them as most OEM.
<unk> is a mixture of primarily third party components. They are limited in their ability to collect such a holistic and complete dataset, thereby limiting the insights that can generate and the improvements that can offer the customers. All the arrival systems are designed in a way that <unk> structured data about the health performance and efficiency. It is also possible.
To send raw data about any signal or parameter, which is available in any system hardware shared across all vehicles, regardless of form factor the bus van and car all use the same components, allowing us to capture combined data of all vehicles use cases and fleets. We've arrived connected device platform.
You can collect data from our vehicles at all phases from early development through off the market until end of life.
In case of accidents and faults, we can automatically generate pack and publish the dataset, which gives clear sequence and the root cause and when coupled with machine learning intelligence means we can continuously identify patents and generate deep insights and build new features such as predictive maintenance advanced driver monitoring.
And many many others, thereby constantly improving the uptime of vehicles and reducing the TCE for our customers.
Our in House software ecosystem is four key objectives in mind, one deliver best in class digital services and data to our customers to continue.
<unk> vehicle improvement through hardware plug and play architectures and software updates three tools to rapidly bring new products to market and four to optimize our production processes to generate efficiency gains. Some examples about digital services include the move up which will power self service vehicles and trials and <unk>.
This delivery, giving users control over their vehicle and reducing the need for dealerships.
16 inch touch screen inside the vehicle, which is integrated with mobile apps and backend systems to manage the fleet vehicle jobs and assist drivers in our fleet studio, which allows fleet owners large and small to manage their fleet at all times. The extensive telemetered data that comes off each vehicle has also made available directly in the cloud.
<unk> in a way that customers can seamlessly integrate into their existing tools or use out of.
It is important to note that we believe this is a large competitive advantage commercial vehicles are high utilization vehicles running considerably more miles than passenger vehicles, and we believe we will be able to collect more data per vehicle than anyone in the industry and we have the control of the hardware and software that enables us.
To improve the vehicle considerably and every dollar we save on the TCR makes our vehicle the most competitive product on the market. We considered these data and software packages a significant multiplier to rivals revenue, we've only touched the surface here on wallet arrival software ecosystem is capable of with that I will hand over to Mike.
Yes.
Yes.
Thanks, Avinash today I will go through the significant progress, we're making intermix factories, the development of our enabling technologies and the status of vehicle testing and certification for both for the bus and demand at our Bicester Micro factory installations has continued at pace with 6%.
Seven technology, so already installed most importantly, as Dennis highlighted we've recently completed our first robotic assembly of the vans skateboard structure using them I expect technology, so although only the skateboard and structure of the ban was assembled it demonstrates the production capability of the cell each subsequent step of assembly in the technology.
We will use the same fundamental technology. So we expect progressed rapidly from this first results. This is a significant achievement and a critical step forward towards micro factory production. The skateboard structure Assembly also use the other key element of our micro factory method or autonomous mobile robots or <unk> or <unk> are used to move vehicles.
In parts through the factory and a more flexible replacement for the traditional assembly by <unk> path is controlled dynamically. They don't follow a path. So the offer us great flexibility in the operation of the micro factories.
<unk> are designed to operate either singly origin groups in each band Micro factory is expected to utilize approximately 140 <unk>. We continue to expand our U S operations in advance of band started production in our Charlotte Micro factory, we produced our first composite panels on production equipment in the U S and we've also announced a.
Battery module manufacturing facility in Charlotte, that's anticipated to bring it to an additional 150 jobs to the area. This battery module manufacturing facility is envisioned to eventually support production at both Charlotte and Rock Hill as we progress towards start of production, we continue to monitor our supply chain and associated logistics. Unfortunately.
We are starting to see some delays in parts and equipment delivery. While these delays have not yet affected or certain production timing. We will watch these areas closely in the coming months turning to our key milestones. We achieved our first two bus milestones in Q4 2021 with <unk> production and proven drug trials, both starting in December we intend to deliver vehicles for UK.
Based public road trials with first class in Q1 2022, we've completed the build of the first trial of US and the second one is currently being assembled these trials are expected to last between three to six months and we will continue to build their buses for trials in the second half of the year. Our intent originally had been to build both right hand drive in left hand drive.
And the Rockville micro factory, however, because we've seen significant potential near term customer demand for buses in the U K, we have decided to shift our focus to producing buses in the UK to be clear we are still expecting to build buses at rock Hill at a future date as far as development milestones. We have begun building. The final printed versions of both our bus.
And band. These vehicles are the final step in the vehicle development process and are the vehicles used for trials testing and certification prior to production. Currently we have three buses in testing with two of <unk> testing facility in Spain, and one in the U K, we have a further 16 built and vendor we recently completed.
<unk> bus primary structured certification as well as steering and braking based calibration. We continue to target completing bus certification yet in Q1 of 2022, you can see in these videos examples of the testing our buses are undergoing including abuse and fatigue testing of suspensions closures exterior and interior panels.
<unk>, we've already built two prototypes for use in our initial testing and demonstrations to customers. We recently completed the first prototype and for European certification testing with break in styrene calibration stability control and cold environment tests already completed in Sweden, we have a further 11 bands under construction that will be used.
For further testing in the UK Europe and the U S. These vans will be a combination of both right hand drive and left hand drive vehicles, and we intend to achieve both product certification in Q2 of 2022 as a result of all these developments we've updated our target milestones for this year, taking advantage of our ability flyer capital and Manny.
Packaging capacity to those regions in those products, where we see the strongest customer demand.
Finally to reiterate we believe the landscape were in structure built using <unk> as a key step forward for proving our unique manufacturing method.
It's truly exciting share enabling technologies come together on the factory floor and with that I'll pass it over to John .
Thanks, Mike first I'd like to cover our preliminary Q4 and full year 2021 results all amounts referenced in my comments are in U S dollars using average exchange rates over the relevant period for conversion for the fourth.
<unk> of 2021, the expected loss for the period was between $40 million to $52 million compared to a loss for the period of $40 million in the fourth quarter of 2020, the expected adjusted EBITDA loss was between 56% at $66 million.
Compared to a loss of $44 million in the fourth quarter of 2020 as of the end of the year. The company had 637 million shares outstanding the weighted average shares outstanding in Q4 or $612 million.
Capital expenditures in Q4 were approximately $90 million to $100 million compared to 56 million in the fourth quarter of 2020 during the quarter. The company raised a combined $648 million through a $338 million secondary offering of the company's shares.
And the issuance of $310 million in convertible Green bonds. The company ended Q4 with approximately $900 million of cash and cash equivalents.
For the full year 2021, the expected loss for the period was approximately $1 3 billion compared.
Compared to a loss of $95 million in 2020.
Full year 2021 loss included a onetime noncash charge of $1 $2 billion associated with the merger of arrival and.
We expected adjusted EBITDA loss was between $178 million and $188 million compared to a loss of 93 million in 2020 capital expenditures for the year are expected to be between 315 and $325 million compared.
Compared to $122 million in 2020. These results are preliminary and we expect to release full financial statements on April 8th when we file our 20-F with the SEC turning to our outlook for 2022, we expect an adjusted EBITDA loss of between $185 million and two.
<unk> hundred $25 million and capex of between $380 million and $420 million and we expect to end the year with between $150 million and $250 million of cash and cash equivalents. We continue to expect band production to begin in Bicester in Q3.
2022, and in Charlotte of Q4 of 2022, and we expect to produce and sell between 400 600 vans. This year as we ramp production in these two micro factories.
Or bus we will be building saleable buses in the U K and expect the majority of these will be used in trials in 2022.
Priority for this year is completing vehicle certification starting production with our unique method and ensuring the highest possible quality from our production methods as.
As we look beyond 2022.
Want to reiterate why we believe the unit of economics on our micro factories differentiates arrival and is expected to yield attractive margins over the long term.
Our long term production and non production Capex target remains at $50 million per micro factory van micro factories are expected to produce 10000 vehicles per year on two shifts and we continue to expect to generate $100 million of margin per year at full capacity, we expect to achieve these capex in <unk>.
And targets over the next few years as we optimize the bill of materials on our vehicles and improve efficiency in our micro factories. We believe this to be an important and achievable target. So much so that 50% of the long term compensation of the senior leadership team is tied to meeting both the micro factory production and margin targets.
Finally, I'd like to remind you why we think arrival has an attractive business.
We see a large growing demand as we start production this year and we will deliver our first vehicles to our customers. We have significant upside from data and digital services and we have attractive unit economics, and a capex advantage from our micro factory approach that allows us to scale rapidly to one hundreds of micro factory.
With the flexibility to produce many vehicle types in summary, we are well positioned for accelerated growth as we ramp production and scale our micro factories over the next several years I will now hand, the call back to <unk> to wrap up.
Yes.
No.
Okay.
In conclusion, we have a very large addressable market supported by accelerated industry tailwind and have seen our backlog continued to grow at an impressive rate as more customers experience our products to approximately 134000 vehicles, we have deepened our relationship with one of the largest U K bus operators and hence have flex.
<unk> moved initial production to the U K to support this potential demand man will start production in Q3 in Vista, and Charlotte and Q4 on the manufacturers we have crossed a major development milestone with the Vance capable build you have seen today, our software ecosystem is pervasive through everything we do and is expected to be a significant revenue multiplier as we can.
Continued to lower Tcl and provide customer facing software packages. The entire arrival organization is all hands on deck focused on achieving certification with our vehicles already commencing testing and validation. We're looking forward to seeing the very first vehicles produced from a micro factory and vehicles in the hands of our customers by the end of the year, Thank you and with that.
We open to Q&A.
At this time I would like to turn the floor over to Dennis Maribor for opening remarks, and then we will hold a Q&A session.
Dennis.
Okay.
Yes first of all quickly typically allow me to turn on the video.
Okay.
Hello, everyone.
I will repeat my statement the gruesome with emotional about this but I need to address.
So I would like to.
I want to address any concerns related to my mission of Yolanda.
On Russia.
Momentum and strong leggings or with determination booming economy.
I was born in Georgia and worked in Russia.
My wife, Ricky and I'll, let Russell 2000.
Before premier events.
I was shocked at that time and up to two years in France, we moved to London in 2016, where I found with newer hurdle.
We have no connection to the Russian government to 94.
I have only one.
We have a chance to breathe a meaningful impact globally.
I founded this company in your key within the completions to make our clean everywhere, replacing vehicles with electric.
<unk> is a multinational company, Duke and vendors, we have a brief in multiple countries and our duty is to support our team members and mainly we believe.
Currently we do not see the current situation for the material impact on our business operations.
We have no part in Russia.
And our people can work from anywhere as a monster to move working during pandemic.
We are monitoring and we will provide updates should there be any material changes.
Let me now move to Q&A. Thank you.
Thank you Dennis I would like to remind everyone to ask a question. Please use the raise hand function located at the bottom of your screen.
Alright, it looks like our first question.
Is from Brian Johnson with Barclays. Brian Your line is open.
Okay.
Hello.
All of that is that a muted can you hear me.
Thanks.
Two questions first and thank you Dennis appreciate your comments.
The first question is around the skateboard assembly milestone can you drill down on that a bit and.
Kind of give us a sense of.
A few things what went into that.
Is that a more critical gating factor than actually assembling that rest of the chassis and the body of that and I think third kind of related to that when I think of skateboards I think.
Metal frames traditional welding kind of plucking battery modules, and assembling them, which sounds and I'm not a manufacturing that's different from the challenge.
Assembling the plastic bodies. So just maybe kind of talk a bit more on that and my second question is a little bit different it's just around the competitive dynamics within the bus market yes.
So when the first time.
Stage, we finished and why it is so much important for us at this stage includes all political electric technology. So there is a process, where you need to pick up the parts using.
Like LG Tvs to 3% depreciation during the first half the lifted like in a special position than they are across Colorado, we cannot them on the Cline view them as women's fleece looking slightly structure and then the other fresh like a gift.
Also sold so what is important with this stage is that we actually did.
Cool.
Several of these microwave technology within the cell and all of them work. The way we have a good plan. So for that reason this hour.
Very important milestones I'd actually like another important things that's actually achievements with book right now.
According to our plans. So we are not lasers that and this is very very important so that it is actually developing.
How we work with.
This is very very important states.
For us so we expect that a lot of operations within the vehicle and actually we already.
We're recording this.
Before and after that we already did the others basically.
<unk> preclinical as well so.
Actually putting the coops on the structure and will do.
Panels with multiple depth geologic executive Steve Microtechnology.
The reason, we expected we're actually going to go through those stage quicker than we're doing this in the first one was the first one was that we're seeing what could be electric.
Micro technologies coming together, another very important thing because that's actually robotically work.
And this technology for quite a long time, but we work.
Waiting for the courts will rightfully. So we assumed originally look of.
That's the so the.
The parts arrived when we did the full cycle.
Doing this within the field.
<unk> from our vehicles and for that reason.
For monthly are extremely excited about this because this actually prove that our model works.
So our testing, which we're doing right now don't have the power market of design works, so that article or a different type of interfaces actually can.
They work really well, but from other side is up like the assembly processes also works as well so both candidates for <unk>.
Improved.
On this page our conversations with them have been like with the <unk> Digital Park, we are quite happy with where the <unk> book.
Obviously look we're still going through a certification process, probably we can get some other.
Surprises there, but we don't expect.
Okay.
Sure.
There will be some.
Brian .
That's the problem wells.
So just to follow up there kind of Wednesday milestone of creating using the micro factory process to create the full body.
The state board into the vehicle.
We are.
We are starting to plateau production. This was done in Q3.
And this is the data we were talking in the range of four look time and we're not moving at this stage. So it's still women and that's our total targets. The company. So if you ask me when we will see the true clinical product. Please assemble is going to be Q3 for them.
In 2022, but obviously, we will see early results and we will update you with our progress.
When we will start with when we report Q1 Q2.
Okay and second question I get from investors is.
The original badge.
Back in 2017, when I first met you.
It was all about ltvs coming in there would that be kind of landscape there.
Bus is also increasingly key part of it as you emphasize that's going to be the initial focus in the UK.
That being said you've got a number of competitors in the bus space.
Certainly daimler's there can you give us a sense of why you think youll have a competitive advantage in the bus space, Yes, absolutely first of all we believe that we have better products.
If you would just see on the attributes of the product we have and the user experience the creative enough.
The software features and smart.
<unk>.
Features we have within the product itself, which is absolutely unique.
Unique to the market.
So we see we still see that our products benefit position so much stronger than any other company will reduce announced their product. So thats number one.
What is important.
I think I need to exercise there is that we are using a lot of technologies, we're bringing as well.
Like our common products when demand for example box has a lot of components reduced.
From the back including for example, generically.
We've never been done in the history before normally buffett huge steering wheel hours. This is exactly the same as the vessels.
And.
So.
What is important because we are a 2007 hundred people company and we have more than 1000 software engineers working in our company and make it the software you don't see any other company in the world, which countries potential vessel.
People in the.
You should go into the product.
The reason, we are getting much better book for.
For the second quarter close that loop, because we were using components combined.
We see that the cost of alfalfa lower swap because normally if you are even super successful bus company and you're producing let's say chicken thousand buses a year you come on the market. When you say like I Wonder why motor Chicken thousand motors, the social volume that normally you'd be huge price for them.
Our case of course, we building bus using for example, our buckets full motors from them exactly the same orders.
Are you using as many dependence of demand inside the box. So again something that should never be done before and for this reason, we are getting benefits with cost benefits which are.
Not possible to get the direct just normal available.
And for that reason, we feel very very confident and strong.
<unk>.
Okay. Thank you.
Your next question comes from Steven Fisher with UBS. Steven Your line is open please make sure youre on mute Ed.
Thanks.
Good morning, Good afternoon can you hear me okay.
Yes Stephen.
Great. Thanks.
So you mentioned some delays on parts and deliveries that you are starting to see can you talk about how broad that is and what's the risk that that might shift out any of your timelines.
Yes, I'd say, so right now we're seeing.
Constraints in two areas it probably won't surprise, you theyre generally industry wide.
Obviously battery itself.
Or an issue, although our that we've mitigated our constraint for this year, we secured <unk>.
Reduction capacity on two lines with LG, which is the equivalent of about 82 million.
<unk> per line.
It allows us to assemble battery packs for between 18000 20000 vehicles.
The ads per line, so we feel pretty good about that we're also seeing constraints.
In chipsets and.
Semiconductors, we have been able to stockpile those.
And we think we've got enough lined up for startup production this year and the volumes that we've guided to.
But just in general with a lot of the economic uncertainty that's out there we continue to see issues with the supply just with logistics.
We continue to see issues.
With inflation and obviously, we have a conflict now.
And we need to continue to monitor the situation, but where we sit right now at least we feel very confident about our ability to secure all the necessary parts for production this year and even as we ramp up production into next year, but it's something that we need to monitor on a daily basis.
Obviously, there is uncertainty there.
We if we could see constraints that we don't anticipate right now.
<unk>.
If I may I, just want to exelon for discretion from two sides.
The majority of what John said is more of a long term approach of stripes for the group's batteries because we'll also.
We do encourage bold claim and we secured our position chief Victoria. So we placed some of the chips because of 60 weeks lead time, and we placed the orders for those cheap with long time ago, we stockpiled up so we don't see the issues here, but honestly we have.
Everyday we can if we can have sometimes delay the one week or two weeks for some of the parts, which are coming but because of our flexible nature, we can always.
We're all learning every day, so we feel like our operational team is planning for in the morning <unk>. Okay, guys like we have those parts of Iraq like denim like what do we do and based on that kind of Bacon aggressively change the plan and so for that reason, we just say that we of course, we impact that.
Same as any other company with the just.
And stability with a supply chain, but it doesn't make material.
<unk> right now and operations personnel flexible method.
Methanol has been fixed allows us to address.
Let's say that historically, so but look.
Look I mean of course, we see a condominium pricing is growing high rate lock versus local disciplined from Russia, and nobody knows it's going to be available in the market will not and so on so of course, it will make it back on.
Everything I mean, not on the us as a company, but any others.
What we.
Happy with it that.
<unk> allows us to be flexible.
That's where we can simply capable so actually our microelectronics approach in our work in this method, which reflect the supply chain.
Our very strong competitive advantages.
Thanks for that and then.
Nice to see the ramp up in the LOI is I'm wondering if you could just give us a sense of how many binding orders you have and how you see those.
Non binding LOI is ramping into actual binding orders. Thank you.
Yes, David.
In terms of the south conversion.
I think what's important is right now we're going through the process of showing our vehicles to customers and I think youll see any impact of that in the doubling of the of the LOI.
I expect us to start converting this year.
To remind everyone that the <unk>.
<unk> sales cycle is different to the bus possible typically.
Typically require trials they lost one or two quarters away commencing goes initially rebel.
Partner in first half.
But we do need to run those trials the codell conducting two binding motive when it comes to the band its really once we hit that certification.
And that is being planned for Q2.
That's where we really see a conversion across the binding notice.
And as industry tailwind, a really big deal, we mentioned some of them, but the commercial vehicle segment in particular.
Requirements are also driving a bus transition so when you see that growing backlog.
I think that.
Towards the our sales team is really focused on that right now and thats going to progress.
Thank you.
Your final question comes from Michael <unk> with Aaron Berg, Michael Your line is open please remember to limit alright.
Hi can you guys hear me.
Great. Thanks for taking my questions. So the first one it seems like you mentioned the delay or I guess, maybe the push out of the production at the rock Hill facility. It seems like potentially that is because you see stronger demand in the U K U K customers, if I'm understanding that correctly, but I know previously you said demand is not really an issue for you guys right. It's more so just getting too.
To production. So just maybe if you could provide a bit more detail around the decision to push out the start of production at Rockdale that'd be great.
Okay.
Happy to give you a little bit more background on that Stephen.
I would make the point.
We are pleased Mike.
If you don't mind I will do look very short kind of places.
Simple answer here is.
We have very strong client in UK.
They are having more than 5000 buses and obviously with all the push from governments and local pressure with local operators to switch to electric.
So we have a local customers who want to buy on local products and for us It's a business.
So originally we wanted to build those vehicles noteworthy Chris wants to develop our U S presence on our operations there.
This customer and therefore this customer it makes a lot of business sense to make it here in the UK.
And for that reason liquid during this and again like we see the advantage of our organization to pursue we are in like a standard relationship building. The factory Youre doing this you are putting the capex there and then like you plan to change them. So youll wholesaler should continue should we not we will reinvest that in our case the crystal borrower that we can reuse equipment.
We are using.
<unk>.
Leaving the building, where you think extended warehouse, which is quite cheap when compared with the production sites. It's not specialty deal. It allows us to give us to do.
So that we can react with demand. So it's purely business decision. It makes much more sense for us as we position stood in for Brookfield were not constantly. This approach. We are just saying that we're going to do it a bit later when it will creep like right.
There are two aspects of that so we need to have a U S based products that we need to have the U S buses typically within the United States and the like.
And the liquids.
Our customers in United States.
Their plants or align fragrance with outlets as well. So the point here is the fact that they are moving from <unk> It doesn't make.
The impact in.
In terms of our work in the business and this is very briefly.
Important elements, so we support our customer here.
And they're planning to do the first thing next year anyway.
We do like in preparation of all the bulk Confederations company here. So so we are quite pleased with the developer.
And let me just add we still see significant opportunity in the U S market, obviously with the passage of the infrastructure law. There is a significant funding there for EV buses.
As we've said we will be building use buses in the future as Dennis explain it is just we have a near term customer demand we have.
Trials that will be starting here very shortly and of course, the governments and the customers are interested in having the buses built locally.
Sales cycle as I said, its the two quarters quarters, two quarters of trials with us.
And so because we're already going to be commencing those locally it just makes sense that will lead on any production from that asset.
Yes.
Charlottesville stopped production for bad in Q4 this year, yes, what is important about <unk>.
This debate as a base, we're confirming all of them.
Base rates within the space, which is changing its production in the.
On Rockdale, but it's not a delay it's a business decision to move <unk> and another important thing is not in terms of our trials like we're starting to see plant based.
Like we like so actually.
Okay.
Wasn't aware of it.
In that regard.
Hello, everyone I will now pass the call over to CEO Avinash for closing remarks.
Thanks, Thanks, everyone. So banker training in our things.
Just to sum up we do see a rapid transition.
And demand.
We started out our backlog is growing.
And more than doubling.
As products get out everybody.
Our method of vertical integration, which would seem to be.
The books set the skateboard being assembled into the major milestone in that vertical integration allows us to scale rapidly.
Thank you everyone for joining we're really excited about this year.
This concludes today's call you may now disconnect.