Q3 2023 SES AI Corp Earnings Call
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Speaker 1: Hello everyone and thank you for standing by. The SCSAI Corporation to the Quater Erning Conference call will begin shortly. Thank you for your patience. Please stand by.
D C. S Corporation third quarter earnings Conference call will begin shortly thank you for your patience. Please standby.
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Speaker 2: The.
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Speaker 2: Thanks for watching!
Speaker 1: Hello everyone and welcome to the SCSA Corporation Third Quarter earnings conference call. My name is Bruno and I'll be operating your call today.
Hello, everyone and welcome to the S. C. S Corporation third quarter earnings Conference call. My name is we're not I'll be operating your call today.
Speaker 1: During the presentation, you can register to ask a question by pressing star followed by one on your telephone keypad. I will now hand over to your host, Eric Goldstein, based vice president of investor relations. Please go ahead.
During the presentation you can register to ask a question by pressing star followed by one on your <unk>.
Telephone keypad.
I will now hand over to your host Eric Goldstein, Vice President of Investor Relations. Please go ahead.
Thank you operator.
Speaker 3: Thank you operator. Hello everyone and welcome to our conference call covering our 3rd quarter 2023 results and financial guidance for 2023.
Hello, everyone and welcome to our conference call covering our third quarter 2023 results and financial guidance for 2023.
Speaker 3: Joining me today are Cheechow Hu, founder and chief executive officer and Jing Mealist Chief Financial Officer.
Joining me today or cheat, Yahoo, founder and Chief Executive Officer, and Jim Miele, Chief Financial Officer.
Speaker 3: We issued our shareholder letter earlier this morning, which provides a business update as well as our financial results.
We issued our shareholder letter earlier, this morning, which provides a business update as well as our financial results.
Speaker 3: You'll find a press release with a link to our shareholder letter and today's conference call webcast in the Investor Relations section of our website at ses.ai.
You'll find our press release with a link to our shareholder letter and today's conference call webcast in the Investor Relations section of our website at <unk> Dot.
AI.
Before we get started just as a reminder, that the discussion today may contain forward looking information or forward looking statements within the meaning of applicable securities legislation.
Speaker 3: Before we get started, this is a reminder that the discussion today may contain forward-looking information or forward-looking statements within the meaning of applicable securities legislation.
Speaker 3: These statements are based on our predictions and expectations as of today. Such statements involve certain risks, assumptions, and uncertainties which may cause our actual or future results and performance to be materially different from those expressed or implied in the state.
These statements are based on our predictions and expectations as of today.
Such statements involve certain risks assumptions and uncertainties, which may cause our actual or future results and performance to be materially different from those expressed or implied in these statements.
The risks and uncertainties that could cause our results to differ materially from our current expectations include but are not limited to those detailed in our latest earnings release and our SEC filings.
Speaker 3: The risks and uncertainties that could cause our results to differ materially from our current expectations include, but are not limited to, those detailed in our latest earnings release and in our SEC filing.
Speaker 3: This morning, we will review our business as well as results for the quarter. With that, I will pass the...
This morning, we will review our business as well as the results for the quarter.
With that I will pass it over to Chi Chow.
Thanks, Eric earlier this year, we laid out the goal to transition to be simple.
Speaker 4: Thanks Eric. Earlier this year, we laid out the goal to transition to B-sample.
Speaker 4: And I'm happy to report we're almost there.
And I'm happy to report we're on.
Almost there.
Speaker 4: We expect to sign a B-Semple Joint Development Agreement, JDA, with one of our OEM customers in the next three weeks.
We expect to sign a sample joint development agreement.
With one of our OEM customers in the next few weeks.
Speaker 4: This will be the world's first automotive bee sample for lithium metal. This will be a historic milestone for SES for the battery industry and for the future of transportation.
This will be the world's first although model call for looking at metal.
This will be a historic milestone for SCS.
The battery industry and for the future of transportation.
Speaker 4: We've had to overcome monumental challenges that to this point. One of the most important challenges was We are really in love.
We had to overcome monumental challenges that's at this point.
One of the most important challenges with safety.
Speaker 4: And we're not talking about lab scale safety. We are talking about practical, real world safety.
And we're not talking about large scale safety, we're talking about practical real world safety.
Speaker 4: In the battery industry, there's an inherent trade-offs between energy density and safety.
In the battery industry.
Parents tradeoffs between energy density and safety.
Speaker 4: Many companies in cruel safety are using safer chemistries such as lithium iron phosphate, LFP catholes, or solar state electrolyte.
Many companies improve safety using safer chemistries, such as lithium iron phosphate FTE capitals or solid state electrical lights.
Speaker 4: LFP is indeed safer than high nickel cathals. And in theory, cellosate appears to be less volatile than liquid, liquid, nettle. So why don't we switch to-
FTE safer than high nickel cathodes and theory celestite appears to be less volatile.
With the metal.
So why don't we switch to the safer temperatures.
Speaker 4: while these safer chemistries appear to improve safety.
While these safeway chemistries appear to improve safety.
Speaker 4: We believe they make unacceptable compromises to energy density, manufacturability, and other important parameters.
We believe they make all the acceptable compromise those two energy density manufacture ability and other important parameters.
Speaker 4: For example, an LFP capital has about half the energy density of a high-neutral capital.
For example in LSP Castle has about half the energy density of a high nickel capital.
Speaker 4: and solar state has yet to prove its manufacturability and performance in the cell that can actually be used in the real world application.
And solid state has yet to prove manufacture ability and performance and the cell. It can actually be used in the real world applications.
So what's the point.
We don't want ourselves to be impractical or sites.
Speaker 3: We don't want ourselves to be in practical but safe. We want ourselves to be alive, powerful and safe.
Want ourselves to be alive powerful insights.
Speaker 4: Our goal all along has been to improve safety without any compromises to other premises.
Our goal all along has been changing crews safety without any compromises to other parameters.
Speaker 4: We start with a high energy density approach that has internally higher safety risk than a lower energy density solution. And we make it safe.
We start with a high energy density approach that has inherently high safety.
Then a lower energy density.
<unk> solution.
And we make it today.
It's extremely difficult, but we have always chosen to do things the hard way.
Speaker 4: It's extremely difficult, but we have always chosen to do things the hard way.
That is what we will have achieved.
Speaker 4: achieved to qualify for automotive de-sample for lithium metal.
To qualify for automotive be simple for lithium metal.
No one saw lithium metal with a high nickel cathode would achieve the level of practical safety risks.
Speaker 4: No one thought Luther Medall with a high nickel castle would achieve the level of practical safety that we recently demonstrated in our internal task.
Recently demonstrated in our internal testing.
Speaker 4: This was a combination of very exciting fundamental breakthroughs in materials and engineering.
This was a combination of very exciting fundamental breakthroughs in materials engineering.
Speaker 4: Even advanced lithium ion with a high nickel cathode can have severe safety risks. And we believe our advancements address the safety issues in both lithium ion and lithium metal.
And the dance with <unk> with a high nickel cathodes.
Severe safety risks and we believe our advancements address the safety issues in both lithium ion and lithium metal.
Speaker 4: For example, our new high nickel cathode active materials have the same capacity as equivalent traditional high nickel cathodes, but are much more stable.
For example, our new high nickel cathode active materials at the same capacity equivalent traditional high nickel cathodes, but a much more stable.
Our new cathode electrode cogent and treatment process allows the same cathode.
Speaker 4: A lanye cathode electrode coating and treatment process allows the same cathode to pass rigorous safety tests, including nail penetration and duty.
Rigorous safety tests, including mail penetration and Keith.
Speaker 4: has new power cell engineering with a self-venting mechanism that allows gradual safe release of energy during thermal runaway. A new electrolyte that is safer with no compromise on performance.
As new pouch cell engineering with our selves density mechanism allows crown jewel staged release of energy thermal runaway.
Electrical light, but a safer with no compromise on performance and.
Speaker 4: a new protected lithium metal anode and a new charging protocol that improves overall safety.
<unk> protected lithium anodes and the new charging protocol improves overall safety.
Speaker 4: These are fundamental breakthroughs in both engineering and materials. Not just for lithium metal, but also for lithium ion, especially our developments in the
These are fundamental breakthroughs in both engineering and materials now just for lithium metal, but also for lithium ion, especially our developments in the capital.
Speaker 4: We are now able to delay the thermal runner rate on that temperature and reduce peak temperature and pressure during the thermal runner rate. So, exactly.
We are now able to delay with thermal runaway onsat temperature.
Reduced peak temperature and pressure during somewhere around the rate significantly.
Some companies that are in earlier stage of lithium metal development talk about dreams, so perfectly safe batteries.
Speaker 4: Some companies that are in earlier stage of lithium metal development talk about dreams of perfectly safe batteries.
Speaker 4: In most cases, the battery capacity or any is not a ru insecurities,
Pesos battery capacity and as density is so low that it's useless.
Speaker 4: To be in other mode of B-Central, which we believe is the most advanced in the tunnel development, anywhere in the world.
To be in automotive be sample, which we believe is the most advanced nodes.
Hello development anywhere in the world.
Speaker 4: We deal with practical safety concerns, not dreams on paper.
We deal with practical safety concerns not being some paper.
Speaker 4: It's exhilarating to see our batteries during safety tests going from big explosions to small explosions to big fires to small fires to just smokes. It feels like witnessing a successful rocket launch after many failures.
It's exhilarating to see our batteries during safety tests going from big explosions, two small explosions to big fires two small fires just smokes it feels like witnessing a successful rockville launch after many failures.
Speaker 4: We recently completed our second testing bunker. Now we have even greater resource to test new things.
<unk> recently completed our second testing bunker.
Now, we have even greater resource to test new things.
Speaker 4: For many people, risk means danger and should be avoided. For us, risk means innovation and we embrace risk by creating a safe environment to test unsafe things.
So many people risked mean stingier and should be avoided for us risk means innovation and we embrace list by creating a safe environment to test unsafe things.
Speaker 4: Without these bunkers, without this safe environment to test unsafe things, we will not be able to understand the mechanism. We will not be able to make unsafe things safe. And next generation batteries and transportation will not be able to move forward.
Without these bunkers with all of the safety environment to test unsafe things, we will now be able to understand the mechanism, we will not be able to make unsafe things safe and next generation batteries and transportation will not be able to move forward.
At our upcoming better World 2023 in December we will demonstrate some exciting videos of high energy density of lithium batteries testing January rigorous safety tests.
Speaker 4: At our upcoming Better World 2023 in December , we will demonstrate some exciting videos of high energy density liquid metal batteries passing very rigorous safety tests. We never thought we could achieve such safety while maintaining high energy density. This is a big milestone towards our goal of commercializing large capacity, high energy density looking at ourselves for automotive applications.
We never thought we could achieve such safety, while maintaining high end niche density.
This is a big milestone towards our goal of commercializing large capacity high energy density of lithium cells for automotive applications.
Speaker 4: In terms of manufacturability, last quarter we indicated we will increase our A sample lines to 1000 large capacity 100 MPa cells per line per month from approximately 500 per month.
In terms of manufacture ability last quarter, we indicated we will increase our <unk> lines to 1000 launch capacity 100 and ourselves prolonged per month from approximately 500 per month.
November will be the first month that we will attempt to build 1000 example, 100 wholesales and our June July Korea.
Speaker 4: November will be the first month that we will attend to build 1,000, example 100 N-cal cells at our Chengdu line in Korea. These cells will be used for both internal testing and OEM sample classification and avatar safety prediction algorithm training.
These sales will be used for both internal testing and OEM simple qualification and avatar 50 prediction algorithm training.
Speaker 4: We currently have three A-Sample lines in operation and two B-Sample lines under preparation. One line for an EV application and one for a UAM application.
We currently have three a simple lines operation and to be simple lines on some preparation one line four on TV application and one for a Joanne application.
Speaker 4: For the two D-Central lines, we are in the final stages of completing our vendor classification review. We expect to continue to use the A-Central lines for D-Central self-development until the new D-Central lines become operational, which we expect to occur in...
So the two <unk> lines, we are in the final stages of completing our vendor qualification group.
We expect to continue to use a simple lines towards the simple sell development until the need be simple lines become operational.
Which we expect to occur in 2024.
Speaker 4: Running our lines up to 1000 large 100 MPL sales per month, we will also gain valuable experience to advertise sell, treasurability and quality system development. We have even hired a dedicated CO data collection team to help ensure that the data are correct and collected through the correct process.
By running our lines up to 1000 large 100 empower sales per month, we will also gain valuable experience avatar sell traceability and policy system development.
<unk> hired a dedicated field data collection team to help ensure that the data are correct and collected through the collect process.
Speaker 4: This team helps our avatar algorithm safety prediction tremendously by providing verifiable and complete data.
This team helps avatar algorithms safety prediction tremendously by providing verifiable incomplete data.
Speaker 4: In summary, earlier this year, we established a milestone to transition to B sample, and we are almost there. This is a major milestone for us and for the battery and transportation industry. And it's a result of solid, fundamental, hardcore material chemistry and cell engineering breakthroughs in safety for high energy density lithium metal batteries with a high nickel cap.
In summary earlier this year, we established a milestone to transition to be simple.
Almost there this is a major milestone for us and for the battery and transportation industry and it's a result of solid fundamental hardcore material chemistry, and cell engineering breakthroughs and safety for high energy density of lithium metal batteries with a high nickel cathodes.
From a sample to be sample <unk> with EV Oems. The most important value obese <unk> is helping us build a solid foundation and technology development process development Engineering development policy development and manufacturing development.
Speaker 4: From ASAN core to B-SAN core, JDA is with EVOEM. The most important value of these JDAs is helping us build a solid foundation in technology development, process development, engineering development, quality development, and manufacturing development.
Speaker 4: With this solid foundation, we are now able to expand into other applications that are ideal for our unique high energy density and high power density lithium metal batteries, such as drones and urban air mobility QAM. These applications also represent early stage commercialization opportunities for us.
With this solid foundation, we are now able to expand into other applications that are ideal for our unique high energy density and high power density lithium metal batteries, such as drones and urban air mobility Joanne.
These applications also represents early stage commercialization opportunities for us.
Speaker 4: We are very excited about the UAM opportunity and believe that Lithium metal will enable UAM in the 2020s the same way that Lithium ion enabled portable consumable electronics 30 years ago in the 1990s.
We are very excited about the UAS opportunities and believes that lithium metal will enable you in in the 2000 twenty's the.
The same way that lithium ion enabled affordable consumer electronics 30 years ago.
The 19 nineties.
Speaker 4: The world's first little metal B sample will be a small step for SES, but has the potential to be a giant milestone for the future of sustainable transportation, both online and in air. Now I'll hand the call.
The world's first lithium that'll be sample will be a small step for FCS, but has the potential to be a giant milestone for the future of sustainable transportation, both on land and air.
Now I'll hand, the call over to Jim.
Speaker 5: Thank you, Chi Chow. Good afternoon, everyone. Today, I will cover our third quarter financial results and discuss our operating and capital budgets for four year 2023.
Thank you Michelle good afternoon, everyone today I'll cover our third quarter financial results and discuss our operating and capital budget for full year 2023.
Speaker 5: In the third quarter, our operating expenses were $19.4 million, down slightly from the same period last year. Stock-based compensation expense was $2.4 million in the quarter.
The third quarter.
<unk> expenses were $19 4 million down slightly from the same period last year stock.
Stock based compensation expense was $2 4 million in the quarter.
Speaker 5: We reported research and development expenses of $8.5 million, up $0.1 million from the same period last year. Our gross R&D spending in the third quarter was $11.4 million, which includes $2.9 million that was billed to our OEM customers and is treated as contour R&D expense.
We reported research and development expenses of $8 5 million up 1 million from the same period last year, our gross R&D spending in the third quarter.
$11 4 million, which includes $2 9 million that was billed to our OEM customers and its treated as contra R&D expense.
Our G&A expenses were $10 9 million down $2 4 million from the same period last year. This decline was primarily driven by lower insurance premiums and lower marketing accounting and audit related expenses.
Speaker 5: Our GNA expenses were 10.9 million, down 2.4 million from the same period last year. This decline was primarily driven by lower insurance premiums and lower marketing accounting and audit-related expenses.
Through the first nine months of 2023 cash used in operations was $23 9 million and capital expenditures were $12 3 million importantly, our balance sheet remains very strong we ended the third quarter with combined cash cash equivalents.
Speaker 5: Through the first nine months of 2023, cash used in operations was $43.9 million and capital expenditures were $12.3 million. Importantly, our balance sheet remains very strong. We ended the third quarter with combined cash, cash equivalents, and marketable securities of $342 million. We continue to believe our liquidity is sufficient to reach commercialization.
And marketable securities of 342 million, we continue to believe our liquidity is sufficient to reach commercialization.
Speaker 5: Our updated guidance for cash usage in 2023 is now 85 to 105 million. This is comprised of cash usage from operations of 65 to 75 million and for capital expenditures in the range of 20 to 30 million.
Our updated guidance for cash usage in 2023 is now $85 million to $105 million. This is comprised of cash usage from operations of 55 to 75 million and for capital expenditures in the range of $20 million to $30 million.
We continue to be very prudent with our cash.
Speaker 5: We continue to be very prudent with our cash. We have a very practical process to evaluate where we should spend our cash in order to execute on our business plan and drive our commercialization roadmap forward while we keep investing in core material innovation with the goal to always stay ahead of a competition.
Have a very practical process to evaluate where we should spend our cash in order to execute on our business plan.
Drive our commercialization roadmap forward.
We keep investing in core material innovation with the goal to always stay ahead of our competition.
Speaker 5: As Xichang mentioned, we're in the final stages of completing our vendor qualification review for line four and line five in preparation for B-sample. We expect the bulk of our capital expenditures for line four and line five to fall in the first half of calendar year 2024.
As Chuck mentioned, we're in the final stages of completing our vendor qualification with deal for lines for Mifi and preparation for beef and Paul.
We expect the bulk of our capital expenditure for lines for on line five to fall in the first half of calendar year 2024.
We're making significant progress and remain on track for transition to be samples by the end of this year.
Speaker 5: We're making significant progress and remain on track for transition to be samples by the end of the season.
Speaker 5: Our strongly quitted position allows us to continue investing in our next generation manufacturing lines to support our OEM customers, while continuing to innovate at the forefront of battery material science and to attract and retain top talent.
Our strong liquidity position allows us to continue investing in our next generation manufacturing lines to support our OEM customers, while continuing to innovate at the forefront of battery materials science and to attract and retain top talent.
Speaker 5: We are very thankful for all the support we have received from our OEM customers and shareholders. With that, I'll hand the call back to Eric.
We're very thankful for all the support we have received from our OEM customers and shareholders.
With that I'll hand, the call back to Eric.
Thanks, Jim.
Bruno let's open the line for questions.
Perfect. Thank you.
Speaker 1: Perfect, thank you. Ladies and gentlemen, if you'd like to ask a question, please press star 1 on the telephone keypad.
Ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad.
That's one point.
Speaker 1: that's Gar1 on your telephone keypad.
Your telephone keypad.
Speaker 1: To withdraw the question, start followed by two, and please also remember to unmute your microphone when it's your turn.
To withdraw your question Star followed by two and please also remember to endometrial microphone when it's your turn to.
Our first question comes from Winnie Dong from DB your.
Speaker 1: Our first question comes from Winnie Dong from DB. Winnie, your line is now open. Please go ahead.
Your line is now open. Please go ahead.
Speaker 6: Yes, thank you so much for taking my question. I was wondering if you can describe how the next month of work will look like in the context of transitioning to B-SAMPTL. What are some of the key data points or transitions to look forward to the next few months, heading into 2024 as you're preparing line 4 and 5.
Yes. Thank you so much for taking my question.
I really can't.
Good quarter.
Clinic Harbour next month.
Our growth in the tank and the contract.
Listening to the cycle.
What are some of our key.
Okay.
Data points or 10% within the next few months.
Heading into 2024 as you're preparing one point in time.
Speaker 4: Yes, good question. So from a contractual perspective, basically we're going through the standard legal and the financial process to getting the document signed. And then from a practical work perspective,
Yes, good question so.
From a contractual perspective.
Basically were going through the <unk>.
Legal and the financial process to get the documents signed and then from a practical work perspective.
Speaker 7: So one key thing that we have to demonstrate is safety, hazard level 5. And then we've already demonstrated hazard level 5 at a small cell level.
So one key thing that we have demonstrated safety has the level of five <unk>.
Already demonstrated has a level of five small cell level.
Speaker 7: And then in the next few months, we need to further verify has level five at larger cell level.
In the next few months, we need to further verify has level five.
Larger cell level. So the safety is the key thing in <unk>.
Speaker 7: So the safety is a key thing. And then A sample was really about demonstrating the chemistry and the cell design. And then now B sample. In B sample, we are going to build about 5 to 10 cars worth of battery.
Simple was really about demonstrating the chemistry of the cell design and then there'll be simple and be simple we are going to build about five to 10 cars worth of batteries.
Speaker 7: So now safety and then practical safety actually becomes really important. So they want to see very detailed testing under very detailed testing parameters. And then both at the small cell level and also the large cell capacity level.
Now safety and practical safety actually becomes really important so they wanted to see.
Hum.
Very detailed testing onto a very detailed testing parameters.
Both the small cell level.
And also the large scale capacity level.
Speaker 7: And also we are also in the process of completing vendor qualification so that we can start building the line for B-Sample.
And then also we are also in the process of completing qualification so there'll be can start building the.
The line for example.
Speaker 7: So this sample will likely take about a year to a year and a half. So complete by end of 2024 to mid 2025.
So it would be simple will likely.
Take about a year or two a year and a half so a complete by by end of 'twenty 'twenty four to 'twenty 'twenty five.
Speaker 6: Got it. Um, and then earlier on this year, I think you guys have spoken about, um, you know, talent acquisition of 1 of the key initiatives this year. I was wondering the year almost ending. Are you where you hope to be, or need to be with your sort of, like, talent composition.
Got it.
<unk>.
And then earlier on this year I think you guys have spoken about.
Talent acquisition is one of the key initiatives. This year I was wondering so the year almost ending.
Are you, where do you hope to be or need to be with your Tam.
Talent competition.
Speaker 7: Yeah, it's a talent. I mean, we always want more and better. And we're never satisfied with talent acquisition. And, and the market is very competitive, which is a good thing. I mean, it's a, it's a really exciting market. And then, and you can probably tell that the kind of people that we're trying to hire, battery engineers, material scientists, AI scientists, these are very much in demand, almost around the world. So
Yes.
Yes.
We always want more and better and we're never satisfied with talent acquisition.
And the market is very competitive which is a good thing.
Does it really extend your market and then and.
You can probably tell but the kind of people that we're trying to hire battery.
Battery engineers.
Material scientists AI scientists these are very much in demand.
Of those around the world so.
Speaker 7: I'm sure we can always do better. But actually, recently, we actually made some pretty impressive hires. For example, on the material science side, we hired our chief scientist, Kong Shui. He's one of the world's most renowned experts in battery electrolyte. And also, on the cell engineering side,
I'm sure we can always do better, but actually recently, we actually made some pretty.
<unk> of hires for example on the material science it can be higher.
<unk> scientists country.
One of the world's most renowned expert in.
Our bedroom intellectually and also with <unk>.
On the cell engineering side.
Speaker 7: We also made a few higher recently, and then I have extensive experience from the big Korean battery companies. Especially recently, we made quite a bit of progress. And then that allows us to be our team for the B-FAM poll and also to expand to EV-TOP.
We also hired.
We also made a few hires recently and these guys have extensive experience from the.
The Big Korean battery companies. So as you originally.
Quite a bit of progress in that.
Allows us to beef up our team for the B sample and also to extend to EBITA. So was once you have in the past we have three teams for the three samples and now we're going to keep.
Speaker 7: So, we're going to have so in the past, we have three teams for the three samples and now we're going to keep beefing up our team to go from a to B and also expand into. So, we're making.
Beefing up our team to go from <unk> and also expand into digital.
I was wondering if you good progress but.
Never enough.
Speaker 6: Thanks for that. And then maybe a more high level question just in the context of like we scenario that if around you be adoption curves, that maybe not coming as strong as expected. So get that from suppliers and you hear that from OEMs. Understand that you guys are sort of in the product development phase. But do you hear any of this from your end of the JD-8 partners?
Thanks for that and then maybe a more high level questions just in the context.
Like many scenarios around EV adoption curve.
That may.
Not coming in as strong as expected sort of yes that bomb from.
From suppliers.
From Oems.
We're saying now you guys are sort of.
In the product development and sales.
From your JV partners.
Speaker 6: in terms of you know the adoption curve looking for not not coming in that strong or anything color any any colors inside there. Thanks.
In terms of the deal.
Option.
We're not counting on that strong.
Are you seeing color any coming through Baghdad.
Yes, I think.
Speaker 7: I mean, the production curve can always be impacted by, for example, the economy and the other factors. But the overall trend, that's
I mean, the production curve.
This would be impacted by by for example, the economy.
Other factors, but the overall.
Overall current that's that's.
Yeah.
Speaker 7: unstoppable and then especially these OEMs like GM and Honda, which I will say are behind the newcomers like the Tesla NEO. They are very much committed to EV adoption. So there might be some impacts by the economy and other factors, but in terms of the battery we must listen to even more about BELMAP. No changeably.
Non stoppable.
Especially these Oems.
Jim.
Which.
I also.
Hi.
Newcomers like.
Tesla Neil.
We are very much committed to EV adoption so.
There might be some impacts by.
The economy and other factors, but in terms of the battery roadmaps.
No change there.
Thank you so much I'll pass it off.
Speaker 2: Thank you.
Thank you.
Speaker 1: Our next question comes from Sean, Severus and from Washington, Washington, Washington. Sean, do not open. Please go ahead.
Our next question comes from Shawn Severson from Washington Research, Sean You line is now open. Please go ahead.
Great. Thanks, and good morning, everyone.
Speaker 8: Thanks, you can warn everyone. Keach, I was wondering if you could talk a little bit about the air mobility space today. And I'm trying to understand, it's a lack of a better word, the synergies between the automotive and transportation side and what you're doing in air mobility. And then extending from that a little bit of the timeline of what we'd be looking at in the urban air mobility.
Peter I was wondering if you could talk a little bit about the air mobility space today, and I'm trying to understand.
As for lack of a better word the synergies between the automotive and transportation side and what Youre doing in mobility.
Then extending from that a little bit of a timeline of what we'd be looking at.
And the urban air mobility space.
Yes, Sean that's a really interesting question. So all the work that we are doing with the EV Oems sample and then be simple building up the line improvement of quality improve the cell design the safety the performance.
Speaker 7: Yes, Sean, that's a really interesting question. So all the works that we are doing with the EV OEMs in A-Cempel and in B-Cempel, bring up the line, input inequality, input in the cell design, the safety, the performance.
Speaker 7: Almost all of that get transferred to the EV toll because EV tolls, the urban immobility, need all the parameters that the EV audience require. The safety, actually even more rigorous safety requirements, the cell design, the quality, the new all.
Almost all of that.
Transferred to the EBITA because.
<unk> the.
Open air mobility knee or all the parameters that the EV Oems.
Require the safety.
Actually even.
More rigorous safety requirements the cell design the quality they need all of that.
Speaker 7: And then what's better is that for the EV OEMs, even though the EV OEMs are very committed to lithium metal, you still have the incumbents like LG, CATL, SAMHSA, and SK, the big companies that are very much invested in the EV space. Whereas for EV toll, it's a little ocean.
And then with better is that.
For the EV Oems you have I mean, even though the EV Oems are very committed to lithium metal you still have the incumbents like LG <unk> Samsung SK. The big companies that are very much invested in the EV space.
Whereas for EV toll.
Blue Ocean and then.
Speaker 7: Some of the bigger companies are less interested in the EVTEL because the near-term market, they think the near-term market is smaller, but then for us, for next-gen batteries, it's really exciting, for example. Say, one EVTEL is about two cars in terms of batteries, so in the EVB sample, we build 10 cars worth of batteries. That's the B sample for EV. But 10 cars worth of batteries.
Some of the bigger companies are less interested in the <unk> because the near term Mark They think the near term market.
Smaller, but look for us for Nexgen batteries, that's really excited for example.
So one <unk> is about.
Two cars in terms of batteries right Bill.
EV B sample, we built 10 cars will go batteries that just to be simple for EV, but.
When cars worth of batteries.
Speaker 7: 5 EVTLs worth of batteries. If we supply 5 EVTLs worth of batteries to the likes of Joe B. Archer, the EVTL companies, then that's actually considered commercial.
<unk> five <unk> worth of batteries, if we supply five <unk> worth of batteries to the likes of Dolby Archer.
<unk> companies, then then Thats, how should we consider commercial.
Speaker 7: And the volume is smaller, but then the margin, the economics are much more favorable. And also it's a new market. So the standard.
And the volume is smaller, but then the margin mix at all.
<unk> are much more favorable and also it's a new market. So the standards have not been set yet and then we have the opportunity being the first mover in lithium metal for <unk>, we have the opportunity to set the standards and the ones. You said the standards then the FAA or Europe the yes.
Speaker 7: have not been set yet. And then we have the opportunity, being the first mover in lithium metal for eVTOL, we have the opportunity to set the standards. And then once you set the standards, then the FAA or Europe , the EASA, then they will adopt the standards. Then our lithium metal could be the first FAA-certified lithium metal battery for UIM. And then once we set the standards, then we influence the next.
They will adopt the standards.
Lithium metal could be the first.
Certified lithium metal battery for UAS and then once we set the standards then we influence the next 510 years.
Speaker 7: five, ten years of certification process in this field. So the impact is really big.
The certification process in this in this field so the impact is really big.
That's very interesting and would you be able to I assume through this process.
Speaker 8: That's very interesting. And would you be able to assume through this process, get a lot of data, right? A lot of operating data that would apply to you. Yeah. Okay. Yeah.
A lot of data right a lot of operating data that would apply absolute yes.
Transportation is that correct.
Speaker 7: Absolutely, absolutely. And then, I mean, we love working with the EV companies, but then those companies tend to be bigger, right? And then the EV companies are more entrepreneur, and they're more like-minded and similar size. And we work together, and we share data, and
Absolutely absolutely.
I mean, we love working with the EV companies, but then those those companies tend to be bigger right and then the EPS where companies are more entrepreneur and the more like minded and similar size and work together and we shared data.
Speaker 7: We also tune our business model to fit what the market wants. So it's actually a really exciting market. And the EVTL is actually happening much faster than we expect. I mean, next year at the Paris Summer Olympics, one EVTL company will do a demonstration flight. And then several cities around the world are beginning to have these EVTL demonstrations. So it's actually happening much faster.
We also tune our business model too.
What the market wants so.
It's actually a really exciting market in <unk>.
Actually happening much faster than we expect I mean next year at the Paris.
Olympics, one EBITDA company will do a demonstration flight in several cities around the world are beginning to have these <unk> demonstrations, so essentially happening much faster.
Thanks, and my last question is we've.
Speaker 8: You've had the supply chain shift in place for several quarters now in terms of pushing towards domestic supply and qualifying for IRA. What's the progress report there? Have you seen things materially change? I know you have some special relationships in your supply chain, but are you seeing that this move is being made and as far as your strategic outlook, you feel very comfortable that you've got everything that you need at this point going forward.
We've had the supply chain shift in place for several quarters now in terms of pushing towards domestic supply right.
And qualifying for hydro.
What's the progress report there have you seen things materially changed I know you have some special relationships in your supply chain, but are you seeing that this move is being made and as far as your strategic outlook you feel very comfortable that <unk> got everything that you need at this point.
Going forward.
Yeah, Yeah. So.
Speaker 7: Very good point. And then, for example, on the animal side, and then I'll just at a conference with applying materials. So applying materials album, oral, live and these US based looking at animal companies are building up a plant in the US.
Very good point and for example on the animal side and then I'll just at a conference with applied materials. So applying materials Albemarle live into these U S base lithium and all companies are building up our plants in the U S. Some of them are Ya <unk>.
Speaker 7: Some of them are in North Carolina, some are in other states as part of the IRA initiative. And then going forward, we definitely plan to purchase and qualify the anode from US based vendors. And then also, in terms of lithium salt.
Carolina some.
Other states as far as the IRA initiatives and going forward, we definitely plan to purchase.
<unk> quantified the anode from U S based vendors and then also in terms of lithium salt.
Speaker 7: We are working with a few partners to potentially set up facilities also in the US. So we can produce these salt for our high concentration, solvent, and salt electrolyte. And so the annals and the salt are two really key parameters to us. And then also several of our cattle vendors.
We are working with a few partners to potentially set up for.
<unk> also in the U S. So we can produce these this salt for our high concentration solvent installed intellectual light and so the animals and the salt or two really key parameters to US and then also several of our capital vendors.
Speaker 7: are already sending out plans, for example, in Canada, North America, to supply to cattle. And then once we are towards the later stage of B-sempel, then we've also down with our EV-OEMs, and potentially EV-to-OEMs to discuss where in North America to set up a plan for the better cells.
<unk> already said plants for example in Canada North America.
Two supplies of capital and then.
Once we are towards the.
Latest stage of B sample, then we will sit down with with our EV Oems and potentially Vito Oems to discuss where in North America.
<unk> set up a plant for the better yourself.
Alright, thanks for that John Congratulations on the progress.
Yes, Thank you Shaun.
Speaker 1: Our next question comes from Jeff Graham from Allianz Global Partners. Jeff, your line is now open, please go ahead.
Our next question comes from Jeff Grant from Alliance Global Partners. Your line is now open. Please go ahead.
Good morning.
Speaker 3: Good morning. The question on the transition to B samples with the auto OEMs, is there a way to assess?
Question on the transition to be samples with the auto Oems is there a way to assess how far behind it sounds like you have kind of one kind of front runner that youre very close with is there a way to assess kind of how far out. The other two are relative to the first one is having one assuming you get across the finish line getting wanted to.
Speaker 3: you know, how far behind it sounds like you have kind of one kind of front runner that you're very close with. Is there a way to assess kind of how far out the other two are relative to this first one? And is having one, you know, assuming you get across the finish line, getting one to be sampled, is that kind of give you guys an ability to nudge the others since there's some third party validation? Or is that not really relevant as you guys have as you guys see, OEM?
Sample does that kind of give you guys an ability to nudge the others. Since there is some third party validation or is that not really relevant as you guys.
Have.
Do you guys see OEM seeing it.
Speaker 7: Yeah, good question. So actually the specs to transition from ATP for all.
Yes.
Good question until actually the back.
Do you transition from ADP for all the three Oems and actually all Oems around the world are quite similar the performance and the safety so.
Speaker 7: actually all audience around the world are quite similar the performance and the safety so Working on transition to be with one of them Because the testing and the type of studies and testing that we've done is the most extensive
Whereas in the transition to be with one of them because the testing and the type of studies and testing that we've done is the most extensive.
And I would say the other two.
In terms of the <unk> can.
It can be measured in months just different Oems.
In the past.
Speaker 7: a year to two years during the ASEMPL development process.
The year to two years during the a simple development process.
Speaker 7: We had different timelines because we had different focus and then for facilities for lines.
Different timelines, because we had different focus.
Facilities for line setup.
Speaker 7: But the progress is different, but then I will say the overall platform, the core technical progress that we make for safety and performance, that's very transferable. And different OEMs may have different internal processes for getting to the next phase, but I will say they're measured in months. But that's more on the contract level. But in terms of core technical progress, we make progress with one OEM.
The progress is different but then I would say the overall platform.
Core technical progress that we make for safety and performance, that's very transferable and different Oems may have different internal process for getting get into the next.
Phase.
But I will say they are measured in months.
That's more on the contract level, but in terms of core technical progress, we make progress with one OEM and then we've got to be simple and.
Speaker 7: And then we get to B sample. And that progress can be transferable to the other OE.
And that progress can be transferable to the other Oems.
Great. That's very helpful and for my follow up more of a macro question for you guys, but obviously, there's been some some articles and industry talk about some slowing EV sales and some building of inventories I think a lot of that relates to.
Speaker 3: Great, that's very helpful. And for my follow up, more of a macro question for you guys, but obviously there's been some...
Speaker 3: some articles in industry talk about some slowing eb sales and some building of infantories. I think a lot of that relates to cost as well as maybe some ranging anxiety, which are obviously things you guys can address pretty impactfully. So I'm wondering if you guys are maybe seeing any different level of urgency from your JD-A partners to move a solution like yours forward, or is it pretty similar from what you guys have seen historically?
Cost as well as maybe some range anxiety, which are which are obviously things you guys can can address pretty impactful way. So I'm wondering if you guys are maybe seeing any any different level of urgency from your JV partners to move a solution like yours forward or is it pretty.
Pretty similar from what you guys have seen historically.
Yes, so so the Oems have sort of.
Speaker 7: Yeah, so the OEMs have sort of modified their focus, for example, from range anxiety to maybe safety, to maybe cost, but then in terms of technology platform, the OEMs have not really changed their commitment, because for example, lithium metal, it can mean longer range.
Our modified your focus for example from range anxiety, maybe safety to maybe cost.
But then in terms of technology platform, the Oems have not really changed their commitment because for example, lithium metal.
It can mean longer range.
Speaker 7: But then it can also mean lower cost because a longer range battery, if you keep the range the same, then the battery is actually smaller. So your packaging can be actually cheaper. So lithium metal can actually be designed so that it can mean longer range or lower cost to fit the OEM's target.
But then it can also mean.
Lower cost because a longer range battery if you keep the range the same than the battery is actually smaller so you pack the packaging can be actually a cheaper so.
Lithium metal.
Can actually be designed so that it can mean longer range or lower cost.
To the.
The Oems target.
Understood great. Thank you for the time.
Thank you.
Speaker 1: As a reminder, if you like to ask a question, please press star one on the telephone keypad. That's star one, minus telephone keypad.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.
Star one.
And your telephone Piedmont.
Our next question comes from Timothy Johnson. Timothy, please go ahead.
Our next question comes from Timothy Jonson Timothy go ahead.
Yes, good morning and thank you for taking my question. My question concerns the lithium metal anode.
Yes, good morning, and thank you for taking my question.
My question concerns.
Lithium metal anode.
There are many processes for making such an anode. They're all problematic to one extent or another.
There are many processes for.
Making such an anode.
All problematic to one extent or another.
Can you please elaborate a little bit more on
Can you please elaborate a little bit more on the.
process that you use to lay down your lithium metal anode.
The process that you use to lay down your lithium metal anode.
And whether or not you have any major problems with this going forward.
and whether or not you have any major problems with this going forward. I'm also interested in the...
Also interested in the composite coating.
that you're putting on the lithium metal anode. You mentioned today that you've got a new coating material. And I'm wondering if you can elaborate on that. Thank you very much.
You're putting on the lithium metal anode.
You mentioned today that you've got a new coating material.
And I'm wondering if you can elaborate on that thank you very much.
Yes.
Sure.
Also, it covered the landscape. The first one in terms of how they put lithium foil down as the anode, it's built.
I'll try to cover the.
The landscape.
The first one in terms of how they put lithium foil down SDN node.
The three main.
techniques for putting down lithium foil. And then one is the solution is you take the secure lithium foil and then extrude it, like a pasta maker, extrude it to your thinned foil and then you laminate onto your current collector. And then another is physical deposition. Basically inside the chamber you evaporate lithium and then that falls onto your substrate.
Techniques hope putting down lithium foil and then one is execution.
The six.
Victor lithium oil and then extruded.
Past that make the two that you think of oil and then you eliminate onto onto your current collector and then another is physical deposition busy inside the chamber.
Battery lithium and then so then that falls onto a substrate.
And then third is the slurry coating. You can take the lithium powder, you make a slurry, and then you coat it, and then you dry it off the solvent.
And the third is.
Literally closing you can take the lithium Palo Verde.
Larry I know your quota and then you drive off the solvent.
and it's pros and cons to each of the
There's pros and cons to each of the technique.
I would say the most mature currently is the extrusion and the lamination. That's by far the most mature process for putting down a thin lifting foil. And there are disadvantages to that. For example, it's hard to make the foil wide, but we have an internal process for making the foil wide. And then that's why we're able to make the large format 100M power working metal cells. expansive.
I also had the most mature currently is the extrusion and the elimination.
Are the most mature process for putting down.
Tim looking foil and there are disadvantages to that for example, it's hard to make the <unk> wide.
But we have a <unk>.
Tunnel process for making the <unk> wide.
And that's why we're able to make the the large format 100, I apologize the metal sales.
And then the other.
So we're using the exclusion and the acquisition process for now. But we are actively testing the other two approaches because the other two approaches may offer
So it is in the extrusion and leasing process for now, but we are actively testing the other two approaches because the other two approaches may offer.
long-term advantages over the extrusion and lamination process. And for example, maybe in a year to 18 months, we might switch to the other processes and we'll keep the industry updated.
A long term advantages over the extrusion and elimination process and for example, maybe in a year to 18 months, we buy switched to the other processes and we'll keep the industry updated.
So, and for us, the different process basically comes down to which one gives the best
So so.
For us the different process basically it comes down to which one gives the best.
metrics in terms of cause, manufacturing, efficiency, and performance. And make your second question about come.
Metrics in terms of cost manufacturing efficiency and performance.
And then your second question about composite coding.
So the composite coating serves two purposes. One is to improve safety, a second is to improve the cycle light.
The composite coating.
Serves two purposes, one is to improve safety secondly to improve the cycle of life and we can't really get into the details.
And we can't really get into the details of exactly what material we use. And the industry has different types of coatings. And there's different ways and different places in the cell that you can put on the coatings.
Exactly what material we use.
And the industry has different types of coatings and us.
Different ways in different places and to sell that you can put some of those holdings.
So I can't really get into the details, but it's basically used to improve safety and then prevent internal short and also to improve cycle line.
So so.
Get into details.
It's basically used to improve safety and then prevent internal shorts and.
Also to improve cycle.
Yeah.
Our next question comes from Amy <unk> from.
Our next question comes from BIMI's Hugh from It's a private investor, BIMI's Your line is not open, please go ahead
Private Investor Your line is now open. Please go ahead.
Good morning, Thanks for taking my questions.
Good morning. Thanks for taking my questions. My question is, so previously you have mentioned that a sample JDA includes different cathode chemistry in addition to high nickel. Has any progress been made in other chemistry other than high nickel, such as LFP lithium metal?
My question is previously you have mentioned that a sample JV includes different cathode chemistry. In addition to high nickel.
Any progress has been made.
In out of chemistry other than high nickel.
Such as RFP lithium metal.
Yes, so actually in a sample.
Yes, so actually in A sample, we tested both high nickel LFP and also mixtures of those two. And then in B sample, we will continue to test these different cathodes. And the reason that we do that is
But we tested both high nickel.
And also a mixture of those two and then be simple we will continue to test these different capitals.
The reason that we do that.
Is the.
another way in B-sample and then we need to finalize the cell design. The final output of B-sample is basically we have to finalize the cell design. One of which is what cathodes we're going to use. Then these different cathodes will have different points on the spider charge in terms of safety, safety, cycle life and cost. This may be...
Another where b sample and then we need to finalize the cell design for the final output will be simple.
We have to finalize the sell to that one.
One of which is what capital we're going to use and then these different capitals will have different.
Uh huh.
Points on the Spider charge in Brazil.
Safety cycle.
Cost and and this.
This may vary for the different types of vehicles, even within the same OEM.
for the different types of vehicles, even within the same OEM.
Many OEMs will have, for example, the premium brand and the economy brand. And then, of course, they would wish to have one standard unified sale with a unified capital. But that's not likely. So we are actually testing...
Many Oems will have for example, the premium brand in the economy Brian.
And then of course, there was wish to have one standard unified cell with a unified capital.
But that's not.
Not likely so so we are actively testing.
Hi, Nicole.
and the different types of high nickel, LFT, different versions of LFT and the mixtures of those two. And of course, there are different ways of mixing those two. And we evaluate at the end of the day the performance and its density and overall.
Different types of high nickel LSP different versions of LP and mixtures of.
Of those two and of course, there are different ways of mixing those two and we evaluate at the end of the day the performance and density and the overall.
overall set of parameters.
Overall.
<unk>.
Set of parameters.
So during the battery roll, do you plan to share the data on other chemistries other than lithium metal?
So during the battery will you plan to share data on.
Other chemistries other than lithium madam.
No, so all the data will be for lithium metal. The cathode may come from a combination of high nickel and LFP, but they all lithium metal. We don't make any other cell.
Well.
So all the data will be for lithium metal the cathodes.
They come from a combination of high nickel and LSP lithium metal.
We don't make any.
Other cells.
With the metals.
Oh.
Okay.
So related to line 4 and 5. Line 4 and 5 are designed for B samples. Since EV2 has a lower volume, can line 5 be used for commercialization for EV2?
So related to line four and five.
<unk> five are designed for beef samples.
Since <unk> has a lower volume Bakken lines fiber useful commercializing commercialization for EV.
Exactly.
Exactly, very good question. And I think as shown from a World of Towers, ask the same question. So line four and five are very similar. Line four is for EV, but then it's 10 cars of batteries a year. And that's considered B-Cemple for EV.
Good question and I think Sean from Watercolor asked the same question. So on line four and five are very similar line for us for EV, but then it's 10 cars of batteries at year.
And Thats considered b sample for EV.
Line five, we can make 10 cars or five EVtols worth of batteries per year. But that's considered commercial because in EV, no OEM will give you an order for 10 cars. But in EVtol, a lot of the EVtol companies will happily give you an order for three aircrafts or five aircrafts. And these are very high margin and these help.
Line five we can make 10 cars or five <unk> worth of batteries per year. So that's commercial that's considered commercial because in EV no OEM, we will give you an order for 10 cars right.
It'll be a lot of that <unk> companies will happily give you an order for three aircrafts or five aircrafts and these are very high margin.
These help.
help us set the standards in the industry.
Help us set the standard in the industry.
Line five well before that.
<unk>.
So if thats the case of <unk> b.
So if that's the case, will there be a C sample line just for EVTOL or line five is more like the C sample and SOP for EVTOL? Yeah, yeah. So EVTOL OEMs don't really divide the phases as clearly as the EVOEMs. So BC SOP are sort of mixed together.
The sample line just for EV total.
Line five.
<unk> is more like the CS ample in Sop.
So yes.
So if it all Oems don't really divide the phases.
That's clearly as the EV Oems.
B C Sop.
Together.
Thanks, a lot.
Thank you.
Okay.
We currently have no further questions, so I would like to hand a call back to the management team for causing remarks. Over to you.
We currently have no further questions. So I would like to hand, the call back to the management team for closing remarks over to you.
Yeah. So thanks.
Yes, so thanks everyone for tuning in and also supporting us. And it's not being easy for us to get to this point. And we're very close to entering B-Central for EV applications. And then all the solid foundation that we built with EV-Oians, we plan to...
Thanks, everyone for tuning in and also supporting us and it's not been easy for us to get you to this point and we're very close to two.
Entering be simple.
For EV applications, and then all of the solid foundation that we built.
With EV Oems we plan to.
definitely continue to work with our EVOEMs. And we continue to have a very good relationship and partnership with them. At the same time, we plan to take this solid foundation that we built, modify it for...
Definitely continue to work with our Oems and we continue to have a very good relationship and partnership with them.
Same time that we plan to take this solid foundation that we built.
Modifier for <unk> applications is a totally new field, it's a field that's happening much faster than we expected and as the field.
It's a totally new field. It's a field that's happening much faster than we expected, and it's a field that, like I mentioned earlier, lithium – we really believe that in this decade, 2020, lithium metal is going to enable eVTOL the same way that lithium ion enabled consumer electronics 30 years ago in the 1990s. So, it's a really exciting field for
Like I mentioned earlier.
We really believe in this decade 2020, lithium metal is going to enable the veto the same way lithium ion <unk> enabled consumer electronics 30 years ago in the 19 nineties. So it's a really exciting field.
Sure.
The future of transportation as well as lithium metal batteries. So really appreciate everyones support thank you.