Q4 2022 Quantumscape Corp Earnings Call
Since and answers at the end if you'd like to ask a question. Please press star one on your telephone keypad.
Alex has conference over to our host John figure.
Thank you operator, good afternoon, and thank you to everyone for joining <unk> fourth quarter 2022 earnings call.
Supplement today's discussion. Please go to our IR website at IR Dot quantum state Dot com to view our shareholder letter.
Before we begin I want to call your attention to the safe Harbor provision for forward looking statements that is posted on our website as part of our quarterly update.
Forward looking statements generally relate to future events future technology progress or future financial or operating performance our.
Our expectations and beliefs regarding these matters may not materialize actual results in financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected.
There are risk factors that may cause actual results to differ materially from the content of our forward looking statements for the reasons that we cite in our shareholder letter Form 10-K, and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes.
Joining us today will be Cogs Gibbs co founder CEO and chairman Jackie Chang, our CFO , Kevin Patrick Chen.
People will provide a strategic update on the business and then Kevin will cover the financial results and our outlook in more detail with that I'd like to turn the call over to Jacky.
Thank you John and.
In 2022, we made significant advances in our technology and calendar and overcame obstacles and ultimately achieved a major goal for the year.
I'd like to briefly recap our key results in 2022 and provide an overview of our plans for 2023.
Our most important goal for 2022 was to ship our first 20 480 prototypes battery cells for customers to.
To achieve this we needed to incorporate several improvements into our system from separately or fill in capital production. The cell assembly focus on the quality consistency and throughput of our designs and processes.
Pleased that the team successfully incorporated these improvements and rallied to meet our target of shipping 20 format Asia ourselves to customers by year end we.
We see this as a demonstration of the team's ability to overcome adversity and deliver on our goals.
While specific customer testing protocols and results can't be disclosed.
Can report that generally most cells had performed well on initial testing, including fast charge, an early cycle capacity retention. However, we need to continue to improve that reliability as we move from prototype to product.
This is a key focus area for 2023, and we expect that as we make progress on the quality and consistency of our materials and processes reliability will continue its upward trajectory.
We believe this 24 layer easier a milestone represents a significant step forward, but more work remains to turn our technology into a commercial product.
I will discuss some of these remaining steps when I lay out our 2023 calls.
The ACR prototypes also incorporate our proprietary cell architecture, a hybrid between pouch prismatic sell formats designed to accommodate the volume expansion and contraction that occurred during the charge and discharge of lithium metal cells.
We shared the first images of this new architecture in our shareholder letter and intend to share more details on this architecture later in the year.
<unk>.
In addition to our cell development progress in 2022, we're also focused on scaling up cell production.
One goal was to continue the build out of our <unk> zero pre pilot production line by taking delivery of a majority of the necessary equipment.
We've merged our phase two engineering line with <unk> and have now received the majority of the tools necessary for initial lower volume production with consolidated U S airline.
Our final key goal for the year was to scale up production of our ceramic solid electrolyte step later to a peak level of 8000 weekly sales and starts.
We achieved this goal, which demonstrates progress and practice development equipment qualification and manufacturing capability.
Next I'd like to briefly discuss our customer engagement.
Over 2022, we continue to see strong interest in next generation batteries for Evs from a variety of automotive Oems and as we previously reported this culminated in sampling agreements with three more automakers.
<unk>, a top 10 automotive OEM by global revenue and a pure play <unk> OEM.
With the consumer electronics industry, we shipped dozens of single cells for customer testing with zero external to apply pressure.
We're pleased to report that the cyst ourselves from the sampling campaign, we reported on last quarter.
Now surpassed 800 cycle.
We believe the 16th the requirements for many consumer electronics applications.
Now I'd like to lay out our goals for 2023.
All of Asia, or a prototype shipments.
To focus on subsequent generations of prototype sample incorporating advances in cell functionality process and reliability as well as bringing online the manufacturing capability of our consolidated <unk> zero line.
Our goals for the year, our focus on these four items.
First goal is to increase capital capacity loading to approximately 5 million half hours per centimeter squared.
As in conventional lithium ion batteries, a cabinet can be optimized either for better energy density or higher rates of power.
We believe our current loading of approximately $3 million hours per centimeter squared.
We'd be in the range required for a power cell.
Optimizing our energy density.
We're targeting a capacity loading in the range of approximately $5 million per centimeter squared.
This call requires addressing several technical challenges.
<unk> coding thicker catheter electrodes, while maintaining quality.
<unk>, the cathodes to the necessary thickness.
Optimizing capital microstructure, and ensuring good capitalized interface with active material.
Our second goal is to improve the efficiency of our sell packaging.
While the active materials of the battery set a feeling on how energy density batteries can be the ratio between active materials and they might get materials. The packaging efficiency determines the final energy density.
So we're targeting improvements on that front this year on our path to commercialization.
Our third goal for 2023, as we move from prototypes to commercial products is to improve the quality and consistency of materials and processes.
Some core drivers of quality and consistency in our manufacturing process.
<unk> increased precision through automation and control.
Quality of input materials and particle reduction across our process flow.
We plan to implement such a process improvements and controls, which we believe will ultimately lead to higher reliability.
Finally, and most exciting our fourth goal is to deploy a new fast separate our production process and significantly faster than our current baseline and then its initial implementation. We expect that can support up to three times more throughput using similar equivalent to our current process.
When this new process comes online we expect our consolidated <unk> zero line will be ready to begin initial lower volume production. We believe that deploying this fast process. In 2023 is an important step on our path to mass production in the coming years.
With the focus on these four key goals, we aim to make substantial progress in 2023 towards our ultimate target of product commercialization.
On that note I'd like to say a word about our strategic outlook.
In our letter to shareholders last year, we laid out four key premises that underlie our commercial opportunity.
First.
Battery electric powertrains represent the future of transportation.
Second and obviously lithium metal batteries have the potential to deliver compelling improvements over current lithium ion batteries third.
We can scale up ourselves many layers.
We can manufacture ourselves.
We continue to believe that the first two points are well established.
Our work in 2022.
This is Lucas on the latter two points.
Beginning shipments of 24 and air Asia ourselves demonstrated that it's possible to scale up our cell layer count to the multi app our scale.
A range, we believe is relevant for a variety of applications.
By hitting a weekly film start school and taking delivery of equipment for a consolidated <unk> zero line, we made progress towards our goals of course as I mentioned earlier much work remains to be done. However, our results over the past two years have demonstrated that were difficult problems need solving our team consistently advisers to leakage.
Sure.
In the months and years ahead, new and difficult problems a shorter horizon when that happens we're confident that we will tackle these new challenges in the same way, we solve the previous ones with two more stubborn determination enbridge.
Thank you for your continued support and we look forward to sharing more on our progress over the year ahead.
I'll hand things over to Kevin.
Thank you Jamie.
In the fourth quarter, our GAAP operating expenses were $113 million and for full year 2022 or $421 million.
Our GAAP net loss for the quarter was $109 million and for full year 2022 was $412 million.
This level of spend was in line with our expectations entering the quarter.
Cash operating expenses defined as operating expenses less stock based compensation and depreciation for.
For <unk> 79 for the quarter and $266 million for the year in line with previous guidance of $225 million to $275 million.
Capex in the fourth quarter was approximately $38 million and for full year 2022 was $159 million below the guidance range of $175 million to $225 million.
Drivers of the variance to guidance include deliberate postpone it to further develop processing hardware specification.
Cancellation of certain intermediate stage separator production equipment and focus on our new fast separate our production process.
Savings captured through the incorporation of phase two engineering line equipment into our consolidated preproduction <unk> Caroline.
Q4, Capex was primarily directed towards.
So the investment or medium scale continuous gum and selling imaging equipment.
As we enter 2023, we continue to try to maximize capital efficiency and our ongoing build out of the consolidated Q at the airlines as well as to reduce our operating expenses.
For full year 2023, we see capital expenditures of between $100 million and $150 million the.
The majority of which will be spent on our consolidated <unk> zero line.
On the operating expenses side, we've reduced spend where possible across the organization.
Production came primarily through optimizing non personnel resources, such as services materials and utility spend as well as rebalancing personnel.
For 2023, we see cash operating expenses between $225 million and $275 million the midpoint of which is approximately 10% below our Q4 2022 cash opex run rate.
As a result of these cost savings initiatives, we believe our cash runway now extends into the second half of 2025.
An increase from prior guidance through the end of 2024.
Historically, we focused on maintaining a strong balance sheet and we intend to continue that.
<unk>, new opportunities to reduce spending and by being strategic about opportunities to raise capital to further extend our cash runway.
With respect to cash we spent $101 million on operations and Capex in the fourth quarter and ended 2022 with 1.08 billion in liquidity above previous guidance of over $1 billion.
With that I'll pass it over to you John .
Thanks, Kevin who will begin today's Q&A portion of the few questions. We've received from investors and I would say that I believe investors otherwise be interested at.
Our first two questions are trajectory.
Summarizing several similar questions from investors here, but can you give more context on the eighth year of delivery, primarily what's the significance of that milestone and what additional work needs to be done from here.
Sure John So the significance of these first easier deliveries as they demonstrate the core functionality of our technology and our ability to make multi empower ourselves.
We've previously shared some compelling data on the performance of our technology at a smaller scale, but we think the multi empower scale is a significant milestone because capacity in this range is commercially relevant for a variety of applications, including both automotive and consumer electronics.
In terms of what's left to do.
As we reported in our letter.
And I'll focus on two important areas. One is a set of activities relating to increasing energy density, including piglet cathodes and improve back of the efficiency and the other was continued work on production quality consistency leading to improved reliability.
Finally, we are also excited about and plan to work on deploying a new fast separately or production process, but which we plan on sharing more information at a later date.
Okay great.
Hunter for delivery of the eight zero affect your timeline to commercialization.
And regarding the commercialization timeline, we haven't provided any updated communications on this front since our last earnings call.
The main point I'd like to emphasize here that the path to all subsequent samples, including D&C example runs through our 2023 vehicles.
Those samples all require we increased capital metro thickness improved packaging efficiency incorporate the faster film production process and improved quality consistency leading to improved reliability.
Okay. Our next question is for Kevin turning our attention to the finances for a moment now you.
You mentioned the expansion of your cash runway into the second half of 2020, but can you help explain in more detail what the drivers of these cost savings right.
We found savings in a number of areas optimization of non personnel opex savings areas, including services materials and utility spend.
Capex savings resulted predominantly from the merger of the Phase two engineering line into a consolidated <unk> pre production line as well as savings associated with the new fast separated process described in the letter.
As an organization, we have and always are going to want to be as lean and efficient as possible.
Keeping in mind, our development timeline, which is of course, our highest priority.
This lean and efficient focus by the team contributed to our year end liquidity of about 1.08 billion, which was in excess of the 1 billion guidance.
So as you mentioned forecasting runway now into the second half of 2025, an improvement from the end of 2024, that's something that we're pretty encouraged with.
Okay. Thanks, Kevin turning this back to EBIT can you talk more about the new separate process that you disclosed in the shareholder letter.
Sure John So we've been working on this for some time now has an advanced development projects when we sell it's high risk, but high return it to work.
We've seen some very encouraging data from this process on small scale equipment and <unk>.
Believe this will allow us to produce significantly faster and with a high level of quality and consistency.
So based on this data we've chosen to focus on this faster process as our primary scale a pathway.
In the fullness of time.
For commercial production.
We think this process can allow us to scale over an order of magnitude greater throughput.
Current prices.
But we also believe that we can use this new process with a modified version of our current field production equipment and get about a <unk> <unk> improvement in throughput in the near term as well.
Deployment of this near term version of the process is one of our key 'twenty three goals and of course, we look forward to sharing our progress on future calls.
Okay. Great. We also got a couple of questions in from Jose <unk> of Jpmorgan.
First question is a little bit longer term in nature, yes, with a three to five year view can you remind us of the different gates in stages that you plan to go through from the current 24. They are zero prototypes to final prototypes with the Oems.
Sure.
As we've said before the typical automotive stage gates include a samples which are typically demonstrations of the core capabilities of the product followed by BMC samples, which typically focus on increasing manufacturing maturity.
As I said earlier the important point to emphasize is that the road all the subsequent milestones leads through our 2023 goals.
<unk> functionality that improves our level of energy density could just stipulate cathodes more efficient packaging as well as improved reliability through better quality and consistency.
As well as a new fast separate process that I mentioned earlier.
Those things form the foundation.
For both more advanced samples as well as subsequent B C samples and of course commercial.
Products.
Okay, who is the the second question is for you Kevin can you elaborate around the topic of protecting the balance sheet remaining cash focused and protecting the balance sheet until 2025.
As I mentioned earlier, we want to be as lean and efficient as possible, while keeping in mind, our development timeline, which is of course, our highest priority.
I believe we struck the right balance in our 'twenty three plan shared today, we're able to resource the 'twenty three goals laid out in the letter while also forecasting an extension and cash runway are prior guidance was through the end of 2024, and we're now forecasting cash runway into the second half of 2025.
And regarding the question on the protection of our balance sheet. We intend to continue this by identifying new opportunities to reduce spending and by being strategic about opportunities to raise capital to further extend our cash runway.
Okay. Thanks, so much guys. We're now ready to begin the Q&A portion of today's call. So operator, please open the lineup for questions.
If you would like to ask a question. Please press star followed by one or your telephone keypad. If for any reason you'd like to remove that question. Please press star followed by two again to ask a question. It is star one.
Our first question is from Jordan Levy with <unk> Securities. Your line is now.
Afternoon, Thanks for taking my questions I appreciate the update.
I wanted to just see if I could start asking.
To the extent that you can talk about your thoughts in the consumer electronics space and process.
It's probably sort of a shorter cycle sector the auto sector.
Think about approaching that space.
Yes, we think that's a very interesting space for US obviously, we've been very focused on automotive.
As a longer.
The cycle with automotive block development. So it was important for us to engage early we feel good about our engagements in that space and as we've mentioned on previous calls we are seeing a fair bit of interest from the consumer sector.
We also mentioned in this letter as well as previous letters that we've provided.
Single, there sells to the consumer electronics sector to.
To be tested under zero applied pressure, we mentioned with letter that those cells are performing well and we've seen that we published data from the sister cells.
That show they've exceeded 800 cycles now.
Zero applied pressure, which we're really excited about we keep talking about zero blood pressure because.
That is really important in the consumer sector. If you have a battery that requires pressure application apparatus, that's going to take up volume space and the phone or even the consumer device.
There isn't that much hub.
So just having a high energy density cell is not enough you really want to have that sell operate without a lot of external pressure.
The law, especially you can get to us of course.
No apply pressure so you only have the one ambiance.
Peer pressure on yourself.
To our knowledge we are the only.
Non <unk> based non micro battery style lift.
Lithium metal.
<unk>.
That has been shown to operate with zero apply pressure. So we're excited about those results our.
The consumer partners that were engaged with.
Im sure that excitement.
And as you pointed out it's a shorter cycle to get to market.
We expect to continue to.
Move those engagements forward and we will report progress.
As we have progress to report.
Great. Thanks for that and then just a quick follow up any commentary you could give as it relates to the stationary storage side of things. It seems like you are kind of on the power side of it but that sort of goes to the other side.
Yes, I think we mentioned last year that we.
Have seen interest from stationary storage, we announced one early.
In that space.
Yes.
The feedback we're hearing from that basis.
Sure.
Performance in specifications for cells that meet the requirements of the automotive sector are good for that sector as well as the stationary storage as well.
So as we get further along in terms of our.
Production capacities.
We fully intend to explore that market opportunity as well I think the main point that I think comes out of your questions, which is a really good one is that if you have a better battery that has better characteristics in terms of energy density in terms of power capability.
Perhaps safety. These are all things that resonate across the full spectrum of applications from automotive to consumer.
To stationary storage.
Question of which ones we go after.
That question is going to be more based on on what makes the most business sense for us rather than.
The fundamental applicability of our technology.
Thanks, so much.
Of course.
Our next question comes from Gabe Daoud with Cowen Your line is now open.
Okay.
Hey, good afternoon, guys. Thanks for all the prepared remarks.
Jack maybe.
Two.
You said that you could share a bit more color on the initial sample of the Acos. So is there an update on cycle life performance I think as of last quarter, you had disclosed that it achieved about 100 cycles or so and then similarly.
Similarly, your comments around your OEM partners.
Being pleased I guess with clinical early cycle capacity retention. So maybe could you could you define early cycle capacity attention and then provide an update on cycle I think there is one.
Yes, so we didn't say anything.
Sure.
On the.
Customer.
Specific testing we actually.
Obviously can't comment on that.
Customer specific test those tend to be.
Provides greater customer themselves, what we did say that.
The really the purpose of the eight zero samples is to demonstrate the core functionality of the technology.
Our ability to make multi anchor ourselves at least apples did that.
We've actually been pleased with the performance we don't expect.
These first day zero samples to have the same level of reliability as a commercial product.
But we've seen as I mentioned to you.
Mentioned in the letter.
Good performance on both fast charge and early incapacity retention. So when we say it really capacity retention. What we mean is the shape of the capacity retention curve. So.
Remember that one of the.
Waves of batteries at end of life is it.
With every charge discharge cycles.
You lose a little bit of lithium decided reactions and so the capacity that remains in the battery decreases with every charge and discharge cycle eventually when it gets to 80% of the original capacity.
The sale is deemed to be at end of life.
What we were referring to a leather is that the shape of that capacity retention curve or capacity degradation curve.
Was quite good.
Similar to what we've seen in previous results that we published.
That's what we meant by early catastrophe retention.
Then what we tried to do it.
Mentioned in the letter as well under the call coming this coming year as add a few key bits of functionality that we think are going to be very important.
One set of.
Officials is going to be related to energy entity. So we mentioned the thick of capital as we mentioned the more efficient packaging. Those are all things that will allow the energy density of the actual prototype cell to approach.
And you're going to need that we believe the system is capable of.
And then the other kind of attractive that is a good reliability and our path to improve reliability is very simple it comes down to two basically improving the quality and consistency of our materials and processes.
Our system, we believe as we.
Yes.
Higher high quality.
In our materials and processes that directly translates to better reliability. So that's a quick summary of both the testing and.
And our plans going forward this year.
Thanks, Joe deeper Super helpful. And then I guess on that note just hitting on the cathode loading going to 5 million half hour.
And I think on one of your previous slides. It showed the QF power. So in the Q, It's energy fell both of which had pretty good or actually.
Attractive fast charge capability so.
So I guess the question is going to the energy cell and the $5 million hour to bump up energy density would you still expect to have that call. It.
15 minutes or so.
<unk> time for 10% to 80%.
For the 80% charge window that will be fair and is that the 950 or so per liter energy density target on the energy So is that still fair.
So I think the.
Long term numbers that we've shared in the slides that you're referring to are still our targets. So we expect the energy cell to be.
Somewhere in the vicinity of 900 to 1000 megawatt hours per liter as we've mentioned before and we do think that <unk> should still be able to charge.
More quickly than conventional lithium ion batteries. So, yes, we think getting something in the.
15 ish minutes range. It is not is not unrealistic for that sale for the reason that we mentioned before which is that <unk> does not even though it's an energy sale with the catheter. It it doesn't have an analyst so theres no extra distance for the lithium ion to have to traverse.
In the Adwords, so we can basically use.
<unk>.
The ion transport length of a conventional lithium ion battery, which includes both anode and cathode distance and apply that purely to the cathode. So that we can either get thicker cathodes Morris examples unconventional cells or.
Have those kept us be able to charge backs and the commission itself and then the power cell, we believe will be.
Could potentially get even faster than that.
Of course at the extensive somewhat lower energy density because.
Because as you point out to get the power capital you have.
Somewhat thinner a cathode with.
Somewhat higher.
All of those.
The electrolyte, so basically lower capital mass loading.
Which gives you both the higher power and lower lower.
And incidentally, so effectively the short answer to your question is yes, we do believe that.
Our LNG sales should still be.
Compelling on the power front.
Our power sale will also have an interesting level of energy density.
Yes.
Great. Thanks.
Absolutely.
Our next question is from Winnie Dong with Deutsche Bank. Your line is now.
Hi, Thank you so much for taking my question.
I wanted to elaborate a little bit more on the capital capacity loading improvement.
How does that change your in process a sample testing right now with customer or do you then anticipate that as the <unk>.
Susan.
B similar beyond that just want to clarify that.
My first question. Thanks.
Yes so.
As we've said before we see the Ace Apple is really being a phase there's a series of deliveries will make under the example umbrella and subsequent versions of that.
Of that sample will have this new.
Higher mass loading higher capacity loading Kathryn.
As well as the more efficient packaging.
And then that will then lead to BMC samples subsequently.
Got it and then.
Let's see.
Earnings of eight Boe per day.
Continuing to talk about next year.
How long do you anticipate.
And I think previous quota as you've alluded to <unk> each been around 18 months or so which presents into perhaps the timeframe of 2020 or so so with <unk> sort of building out the <unk> well.
Can you take a picture and you can put the team on Florida.
Ultimate commercialization.
Yes, so we haven't said anything.
We haven't provided any new communications relative to timeline other than what we've said on the last earnings call. I think the main thing that we I think are playing out in this call is it.
When you look at the B and C samples and even the commercial product.
Some of the key requirements for those subsequent samples and products are the key things we're focused on in 2023, so whether it's the video the SEIS Apple or more advanced versions of the Avon or the product.
All of these.
More efficient packaging, they all need the ability to have these more energy dense capital.
Our capacity loading cathodes and frankly, they're all would need this.
We think this new fab.
Fast fill.
Production process that we've also alluded to on this call. We think those are all really key things and they all need.
Obviously increasingly liabilities with working prototypes of product. So those are all things that are a key part of our goals for this year and regardless of.
Which simple we want to focus on in the future we have to get these things done this year and Thats kind of why this is an important year for us, but we just want to make sure that we.
We execute on these key goals because they will form the foundation for all those subsequent milestones.
Yes.
Got it thank you so much.
And I need just squeezing one more.
On the topic.
Improving quality and consistency.
Could you maybe elaborate sort of like the steps youre taking to achieve that goal. This year is it isn't more.
Material vertical integration and automation of the equipment.
<unk>.
Any details on that thank you.
Absolutely so.
There's a lot of things that can lead to.
To quality that we want to we want to improve so things like clinical for example.
If you have any kind of.
Thank you for that.
Large particle sitting between the layers of yourselves.
I could eventually lead to issues.
If you have for example.
Tabs that are not welded properly.
You bring together all the different layers in there so that could lead to issues Theres just a lot of things.
All round incoming materials quality.
Materials getting it had the FX or process control as if things are not the process itself is not operating within your.
Statistical process control limits for example, the automation, which.
We have more precision than how you assemble the aligned with various players. So those are all areas that are potentially contributors to.
Quality consistency and those are the kinds of things that incentive to tighten up this year to ensure better better quality I think the key point I would emphasize is that other industries, including some of the ones you referenced in the letter like the.
The multilayer ceramic capacitor industry as well as the.
The.
You Might've battery industry.
Have already shown the ability to control those parameters quite well and so.
So we don't need to reinvent the wheel there we just plan on having a disciplined execution projects a disciplined manufacturing team that.
Puts in place those controls those processes that level of automated precision that ensures that we don't have extraneous particles floating around.
Or if we don't have precise placement of yours has.
Tad wells and those kinds of things. So those are all things that are doable, we usually to implement an organization.
That has a disciplined too.
Repeatedly execute on that front.
Great. Thank you I appreciate all the response.
Absolutely.
Our next question comes from Chris Snyder with UBS. Your line is now open.
Thank you.
And I understand you cannot share.
Bank customer testing protocols in our results, but could you provide some general feedback.
That you got from customers post delivery of the eight zero sample.
I can I can reiterate what we said earlier, which is that.
We feel that.
Of the samples we provided has performed well.
You mentioned some of the specific tests that were done including fast charge some of the early and capacity retention curves and so on.
And I should also point out that one of the areas that we want to keep recruiting isn't reliability of yourselves and so that's why we spent a lot of time talking about things we try to do this year to improve quality and consistency of the bus.
This automation and new particle reduction and so on.
Other than that there's not a lot we can say about the specifics.
These are customer specific protocols and results.
I think.
From.
Our standpoint, we can say we're actually.
We're pleased with where we are and we think we're well positioned to us.
Two.
Compared to the next phase, which involves adding this additional functionality.
We talked about earlier today.
Thank you I appreciate that and then I guess, maybe just following up on the prior.
Questioning on the pathway from the eight zero sample to the <unk> sample.
I guess, how many generations of the <unk> samples should we expect.
And will we get updates on these as the samples progressed and then.
Another one on that same line.
Subsequent generations of <unk> samples customer specific in that like an example.
The customer actually be different than the example of the customer why or is it uniform across all customers yes.
Yes, that's a good question so first of all.
Let me work backwards from the sea sample obviously the C sample is going to be very customer specific because.
The definition of this example is that.
It's a product that is simple.
That would be made up in actual production line, that's going to go into serious production.
You can't do that until you've got a customer Thats told you they're planning on using that sample.
Pat.
Type of example international product right. So that will be compensating. The sample is likely also to be customer specific maybe.
Maybe less so in this example, but but because the sample is used to make test vehicles.
That's also going to have a customer specific element to it.
Example is typically.
The most technology oriented samples because it's a demonstration of the core capabilities of the product.
But even there different customers have different things that are most interested in so yes, even with the samples see.
One customer.
Have a certain set of functionality they care more about them than then.
Other functionality for the customers and so there will be some.
Customer by customer.
Variance of all of those samples relative to where we share progress with you.
With you on all those samples.
To the extent those are meaningful milestones, we absolutely will.
To the extent that they are not meaningful.
We would need to be.
But we try to be.
More transparency.
So.
I would I would expect that we will balance sharing.
No.
Updates on any meaningful customer milestones.
I appreciate that if I could just squeeze a final quick one in on that.
Sample in the past when you guys have kind of said roughly 18 months, what kind of timeline between a sample and b sample does that clock starts with a zero delivery or does that clock start when you delivered the last generation.
Thank you.
I think that.
The 18 month Windows that we provided or there were kind of approximations and so I think.
If you look at it as an approximation then.
I think whether you start with a zero or some subsequent version of it you're still roughly in the same timeframe.
I think we want to be overly precise I think it's hard to be overly precise about.
Milestones that are years away. The main point, we wanted to provide was made on that front is it there is a series of.
Progressive be more mature samples that we need to provide to the automotive sector. The first of those milestones, which is the a sample phase is really focus on some core functionality and demonstration of capability.
The next version, which is the <unk> sample phase is focused on.
Production processes, although it could be on smaller lower volume versions of the tools.
It will phase in this example, which is focused on.
The functionality and the right process, but on the actual production tooling.
And we wanted to provide that rough range. So people have a sense.
Really what we're talking about it's not.
A two month Delta, it's not a 10 year Delta.
But it's something in the range.
You mentioned.
<unk>.
I think.
Yes.
Debt.
Pretty much remains the case.
Yes.
I appreciate all of that thank you Tobey.
Absolutely.
Alright next question is from Mark Delaney with Goldman Sachs. Your line is now open.
Yes, good afternoon, and thank you very much for taking the questions and thank you for all the details in the shareholder letter.
My first question was it was a follow up on that same topic and I'm just trying to better understand.
And in more depth, if I could please.
What's the difference between a zero sample and any sample.
And any sort of idea of how many samples we should be expecting.
Well I think that.
The.
We have laid out in the letter some of the key things we're working on this year right. So we said that.
So what the ACO has us as well.
Multi amp hour capability, so 24 layers.
And demonstrates the capability of the product so it's lithium metal anode solid state separate or zero.
To start with cell.
All of that can be tested by the customer.
Customers.
Customers, who have been tested and I mentioned earlier.
Charging in catastrophe retention and so on the.
The things we're working on this year, which include.
Figure cathodes more energy dense packaging.
Maybe in the year.
Fast.
Film production process those are all.
Features that will make their way into <unk>.
Subsequent releases.
You might imagine those going into a second.
The generation of a simple and they will also make their way into the B sample.
This example, but I think.
The key for example, really is is there a new functionality.
That's going into the into the cell and the goals we laid out this year.
Indicate a number of areas, where there's key functionality, we kind of roll in so you can imagine.
At least one.
Further generation of example.
And then subsequent to that we think we will have a lot of the core functionality in and we will focus more on getting.
Some of the manufacturing majority.
The BMC samples.
That's helpful. Thank you for the clarification there and then my other question was on some of the optimization efforts. The company spoke about in the shareholder letter on the prepared remarks.
One of the things that was mentioned was rebalancing personnel, perhaps you can elaborate specifically on that end.
And any more color you can share there. Thank you.
Yes, Mark that was predominantly in the consolidation and transfer of teams within the organization to better focus on the 'twenty three goals.
This did include a small approximately three 3% reduction in the team as part of our annual planning effort, we did eliminate positions not aligns near term goals.
There wasn't any in aggregate.
And that reduction in manufacturing operations. In fact, we had a small increased personnel assigned to manufacturing operation.
Understood. Thank you.
There are no further questions. So I'll pass the call back over to the management team for closing remarks.
Yes.
I want to just.
Thank you all for joining today's call.
I'd like to thank our investors for their ongoing support of our mission.
Customers for their commitment to helping us get this technology to market.
Of course, our amazing team for their incredibly dedicated efforts to overcome heart problems associated with bringing the ground breaking new technology to market.
We look forward to reporting on further progress in the coming quarters.
That concludes the conference call. Thank you for your participation you may now disconnect your lines.