Q3 2023 Hyzon Motors Inc Earnings Call
Thank you for holding and welcome everyone to the eyes on Motors third quarter 2023 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on.
Your telephone keypad to withdraw your question again press Star one.
I will now turn the call over to Henry Clark.
[noise] of Investor Relations Mr. Kwon. Please go ahead.
Thank you operator, and good morning, everyone. Welcome to <unk> Q3, 2023 earnings call with me on the call today are Parker Meeks, Chief Executive Officer, Steven Weiland, Chief Financial Officer, and Josh <unk> Senior Vice President of Finance and accounting.
As a reminder, you can find the press release detailing our financial results and the presentation accompanying today's call in the Investor Relations section of our website.
Today's discussions include references to non-GAAP measures.
These measures are reconciled to the most comparable U S. GAAP measures can be found at the end of the Q3 earnings press release.
This morning's discussions.
<unk> forward looking statements regarding future plans and expectations.
Actual results might differ materially from those stated in <unk>.
Factors that could cause actual results to differ.
Our explained.
In the forward looking statements at the end of the press release and page two of our earnings presentation.
Forward looking statements speak only as of the date on which they are made.
You are cautioned not to put undue reliance on forward looking statements.
With that I will turn the call over to Parker.
Henry Good morning.
Everyone and thank you for joining today's call.
This was a remarkable quarter high.
<unk> continues to accelerate the global transition to clean energy by developing and commercializing our proprietary leading zero emission fuel cell technology.
Our company is at an inflection point as we made our first commercial delivery in the U S. This month.
We expect to have less than 5 million of capital spend left to restart of production in 2024 and with that we'll start the transition to ramping production.
The hydrogen economy also gained significant tailwind from a recently progressed government programs and policies further supporting higher zones technology and business model advantages.
Those advantages are leading 200 kilowatt fuel cell technology, our state of the art fuel cell production facility.
And our asset light business model are being sharpened and deployed by a strengthened leadership team and supported by industry leading partners.
Hi zones fuel cell technology is the foundation of our company and is being monetized over two investment horizons.
Our core commercialization in heavy duty fuel cell trucks today.
And substantial option value overtime, and deploying the same technology and additional fuel cell advantaged in markets.
We have an early mover advantage and a scalable business model that we expect to generate a positive cash contribution margin at the truck level on the trucks, we deliver to large fleets in the fourth quarter of 2023.
So this is made possible by five key advantages.
Our in house skill set technology, and manufacturing leadership, driving expected lower cost and higher fuel efficiency fuel cell power.
And asset light business model with relatively low cost third party truck Assembly.
And accelerating hydrogen market powered by customer and government tailwind.
A series of additional fuel cell advantaged end markets with substantial option value.
And a proven and driven leadership team that continues to strengthen.
Bolstered by a powerful combination of near term government supported subsidies and government mandated emissions reduction regulations, we believe highs on us on a pathway to corporate cash flow breakeven focusing on those most attractive zero mission truck markets first.
To put that into perspective, California's current mandates and funding structures estimate the conversion of 24000 heavy duty port drayage trucks to zero emission alone by 2030, along with 10% to 25% of the higher emission portion of the California heavy duty truck fleet.
How's the unbelievers, 50% of those conversions will be the fuel cell trucks.
It was one of only two companies with fuel cell trucks and commercial delivery to customers in the U S. A python achieved 25% share of those projected fuel cell truck deployments, we anticipate highs on would be on track to our corporate cash breakeven goals by 2030 with California deliveries alone.
That breakeven moves forward of course, when adding the potential for the rest of the U S Europe, and Australia and New Zealand.
Our single stock 200 kilowatt fuel cell technology is a key differentiator, which we expect will be in operation ahead of the competition demonstrating its durability performance weight and cost advantages.
This early mover advantage, we believe we will secure our place with large fleets, who are acting on the available subsidy programs and approaching mandates now and who desire to scale assuming successful initial fuel cell truck deployments.
Beyond trucks, we see significant opportunity for deploying our fuel cell technology and other use cases with high power density requirements, such as rail aviation mining and stationary power.
Several of which we are already shaping with leading partners.
And each of these ecosystems, we see fuel cell products that are well positioned to decarbonize, which we plan to action once the fuel cell truck platforms are commercially stable continue.
Continuing to expand our addressable markets and unlocking option value for our technology.
As a whole the market for zero emission heavy duty power continues to grow as governments incentivize the transition to hydrogen.
Benefiting both our core fuel cell truck commercialization and additional end market applications.
For example, the Biden administration recently allocated $7 billion to seven hydrogen hubs several of which highs on directly supported.
The inflation reduction act earmarks $2.6 billion to Decarbonize coastal and inland ports nationwide, including drayage trucks and fueling infrastructure.
And California's H fit program has over $250 million for heavy duty zero emission trucks and another $147 million.
That aside for a drayage trucks specifically.
Totaling close to $400 million available to heavy duty trucks today.
These are all major long term investments in the hydrogen economy at both the federal and state level, which.
Which we estimate could stimulate thousands of fuel cell trucks in the U S. This decade and as these funding programs scale high is on and our customers will also have the opportunity to scale with it.
Beyond the increase in government support customer interest in fuel cell trucks is expanding as our large fleet customers are seeing the limitations of heavy duty battery electric trucks through in many cases months of attempting to utilize them in their operations or customers are confirming to us their reality in many cases shows even shorter than.
Expected usable range long charging times and the need for substantial charging infrastructure, which in many cases is years away at any real scale.
Our largely customers have described the need in some cases to deploy to battery electric trucks to complete the work of one of their regular diesel trucks, primarily due to weight in charge time.
Our fuel cell trucks are much closer to diesel and their expected operating performance.
Fuel cell trucks offer a potential solution. Thanks to their range quick refueling time, and payload performance and customers are recognizing that increasing the addressable market for fuel cell trucks.
The market support for fuel cell trucks continues to increase as we have made significant strides this quarter in parallel.
We are seeing continued commercial deployments of our fuel cell technology to truck customers open additional future markets for our fuel cell technology and hydrogen it investment rights and then all of this while managing our cash and capital in line with prior guidance.
Our commercial progress reflects this momentum and we believe we are approaching an inflection point and customer pipeline conversion with our large fleet trial customers.
We also continued to drive our commercial deployments, including a significant recent milestone moment for the company can putting our first revenue delivery in the U S.
Earlier. This month, we saw our first delivery of a fuel cell truck in the U S to a customer through a sale.
For which we expect to record revenue in the fourth quarter of 2023.
We believe this is the industry's first publicly announced commercial delivery of a heavy duty fuel cell truck to a customer in North America.
What's more we delivered it in two operations at the Port of L. A and long beach or 20000, Drayage trucks operates and where the advanced clean fleet rule requires drayage trucks to begin decarbonising their operations in January 2024.
This is a major market, which highs on is now commercially entered which.
Which we believe provides significant opportunity due to its concentrated back to base operations conversion mandates subsidy availability and multiple layers of funding opportunities via the previously mentioned existing carb H Bip drayage set aside funding.
Our E N D O E hydrogen hub awards.
At the end of the third quarter, we had deployed 13 vehicles under commercial agreements to customers in 2023.
Since quarter end, we deployed an additional truck under commercial agreements.
With that we are raising the low end of our 2023 the vehicle guidance to 15 to 20 vehicles deployed by year end up from 10 to 20.
Our motto for commercial agreements envisions that potential for up to 50 trucks over multiple years with defined contingencies indoor customer options.
Payments typically start with a few trucks, which allows the fleets to validate performance secure additional subsidies.
Ended up fueling as a precedent to confirming the next tranche is the.
The company's North American trial program continued to expand with 18 trials completed since March 2022 of which 10 trials were completed in 2023.
Getting experience with and learnings from real World operations for future fuel cell truck deployments.
In Australia last month, we announced the global launch of highs on heavy rigid refuse truck platform.
Partnering with remind us when the world's largest waste service and recycling companies, we rolled out Australia's first zero emission hydrogen powered garbage truck and a commercial trial.
The commercial trial is expected to convert to a full vehicle purchase if certain trial performance targets are met.
After quarter end, we also announced a vehicle agreement for up to 20 vehicles powered by our tour Nikola fuel cell system.
The agreement with TR group, New Zealand's largest heavy duty truck fleet owner is expected to start with a trial or two vehicles in March 'twenty 'twenty four.
Any vehicle purchases under the agreement our tier groups option. Following this initial commercial trial.
And finally in Europe.
We continue to successfully gain operational experience with vehicles in commercial operation with DB Schenker and M price through our channel partners, Hi, Lane and Uva respectively.
Looking ahead.
We are on track to deliver the first 110 kilowatt class eight trucks to performance food group this year.
Initial vehicles are currently well into assembly.
Our agreement has the potential for up to 50 vehicles, if all tranches conditions and options are met and executed.
We're also on track to launch the first U S trial of our refuse truck in the first half of 'twenty 'twenty four in California with.
With customer deliveries expected to begin in 2025.
We remain focused on converting the next large fleet customer contracts in the U S and Europe with several negotiations on the back of successful initial trials.
The growing commercial conversion is also a testament to how zones best in class fuel cell technology.
But we have significantly progressed since we last spoke.
Our fuel cell technology enables 200 kilowatts of power output from one stack, which we estimate is 30% smaller and lighter.
20% more fuel efficient and.
And 25% lower cost to manufacture than other fuel cell providers, who need the combined multiple smaller fuel cell units to reach 200 kilowatts of power output.
This expected lower costs and improved fuel efficiency advantage provides the core foundation for our business model and we believe is the only single stack 200 kilowatt fuel cell system in trucks with customer commercial agreements in place.
Our world class fuel cell production facility in Bolingbrook, Illinois is on track for S. O P. In the second half of 'twenty 'twenty four.
We anticipate needing to invest less than $5 million in capital to complete the S. O P F.
And meet our volume forecast at 2025.
With just the equipment installed to date once commission. The facility is expected to have the capacity to produce over 700, 200 kilowatt fuel cell systems annually across three shifts.
We believe we can increase capacity through further debottlenecking to the point that we can reach corporate cash breakeven at the fuel cell system manufacturing level from the bolingbrook facility.
Simultaneously, we have completed planning with our third party vehicle Assembly partner Fonteyn modification.
With the goal of ensuring fuel cell electric truck Assembly capacity scaling is on plan in line with those production numbers.
Through our intended corporate cash breakeven volumes.
Turning to the specific progress on the 200 kilowatt fuel cell technology.
We continue to follow the standard automotive product development process, producing and validating fuel cell system be samples before moving to see sample and then declaring S O P.
So far we have completed nine be samples in the second half of 2023.
They have completed a total of 18 be samples through factory acceptance testing so far this year.
This achievement shows growth in the Companys prototype assembly rates, because we produced three units in Q1 six units in Q2 and nine in the first four months of second half 2023.
We remain on track to complete the additional seven b samples in the fourth quarter, bringing the full year total to twenty-five tuna kilowatt be samples.
We also continue our durability testing completing approximately 20% of total durability testing with an accelerated drive cycle and.
And are on track to complete the accelerated system durability testing in line with our 'twenty 'twenty four S O P.
The successful progress of the 200 kilowatt fuel cell system be samples confirms the viability of our design equipment and procedures to date essential to eventual commercialization.
We continued strengthening our leadership in the third quarter.
At the executive team level I'm personally thrilled to welcome Steve Weiland to the team as CFO.
As capital markets experience will be particularly valuable to us at this stage in the company's evolution.
Steve previously served as CFO at an early stage technology led company and prior to that was CFO for multiple divisions at caterpillar.
He brings capital markets financial services, and corporate financial leadership experience critical to highs ons continued drive toward long term capital stability.
Additionally, the board announced the appointment of Matthew Foulston, who serves as chair of both the audit and compensation committees.
Matthew is an accomplished financial executive having served as Chief financial Officer for three publicly listed companies throughout his career.
The board also elected Erik Anderson as chairman bring years of experience as a global innovation leader and investor across various sectors.
The board also elected Andrea for Archie as Vice Chairman of Highlands Board.
Andrea is an accomplished executive with a global career spanning more than 40 years in finance and general business management.
Finally, I want to thank George Abu <unk> for serving as interim CFO.
During a pivotal time for our company.
Hudson would not be at this point without judge us critical contributions and leadership.
Over the past six months charger and her teams worked tirelessly to get our financials current and strengthen horizon's financial accounting and governance processes, which we look forward to building upon with her and Steve.
I have the utmost confidence in her as our new senior Vice President of finance and accounting.
We are excited about the continued growth and experience and depth of our board and management team could.
Bring expertise in our near term priorities of commercialization cash and capital management.
We're also proud to show our continued track record of attracting top talent to high Sun's management team Board and staff.
Reflective of the of the technology value and opportunity people see in either.
Turning to our financial performance. This quarter. We are pleased to have delivered the lowest quarterly cash burn in the last eight quarters.
Driven by our operational focus lower head count and lower legal and professional services expenses.
We will comment further on the quarter and outlook, but these results give us confidence to keep our cash burn guidance unchanged for both the second half of 'twenty 23, and the full year of 2024.
We also demonstrated our ability to drive below $10 million per month core cash burn in the month of October 2023.
We continue to remain focused on raising capital and the resolution of the FTC investigation removed a significant obstacle.
We believe <unk> has a significant strategic value with leading technology.
The minimal remaining capital spending requirements through S O P and.
An increase in customer agreements and deliveries.
We are engaging with a further focus set of potential strategics and evaluating additional financing alternatives.
While remaining opportunistic we need a balanced alternatives against our belief that today's valuation does not reflect the intrinsic value of the company.
We continue to focus on executing our strategy with the goal of continuing to meet and possibly exceed our expected targets and guidance.
I'm confident our differentiated technology strong IP and in House U S based fuel cell production the.
The growing commercial momentum and are significantly streamlined organization all position us well in this accelerating market.
With that I will hand over the discussion to Georgia, who will go over our third quarter results and then to Steve who will cover our plans going forward.
Judge us.
Thank you Parker and good morning, everyone.
First of all I'd like to thank Parker and the board of directors for allowing me to serve as interim Chief Financial Officer for the last six months.
I'm excited to partner closely with Steve at highs all going forward.
For this call I will go over the numbers the high vol is reporting for the third quarter of 2023.
And then transition to Steve for further comments.
During this quarter, we incurred $3 3 million and cost of sales, primarily due to $2 7 million inventory net realizable value write downs in Europe.
Our loss from operations amounted to $40 1 million in Q3, 2023 compared to $64 1 million in Q2 2023.
The primary driver, but this reduction is because we included 22 million legal loss contingency accrual related to the FTC investigation in Q2 2023.
In this quarter, we reached a final resolution with the SEC subject to court approval and recorded additional 3 million accrual to increase the amount to the agreed $25 million.
Additionally, in July 2023, our board of directors approved a restructuring program to improve operational effectiveness and cost reduction, including a workforce.
As part of the restructuring program, we expect to rationalize our global footprint.
Implement a shared service model for procurement and engineering and transition to a third party Assembly model for F. C. E V I think so.
Yes.
The restructuring program is expected to be completed by the end of the third quarter of 2024.
This led to a nearly $4 6 million impairment charges in this quarter, primarily relating to Europe, which should be viewed as a now recurring item.
Net loss attributable to high <unk> for Q3 amounted to $44 1 million from $60 2 million Okay Teal.
Basic loss per share stood at negative 18 cents in Q3 2023 versus negative 25 cents in Q2 2023.
Moving to our non-GAAP measures, we believe adjusted EBITDA provides a better view of our recurring operational performance.
Our adjusted EBITDA for Q3, 2023 amounted to negative $32 3 million compared to negative 33 million in Q2 2023.
The largest add back item in this quarter related to $4 9 million in restructuring and impairment charges as discussed earlier.
Turning to cash we ended this quarter with $137 8 million in unrestricted cash cash equivalents and short term investments.
We ended October with a cash balance of approximately 129 million, bringing our monthly cash burn to below 10 million for the month of October.
This keeps us on track for the second half of 2023 cash burn guidance that we had previously provided during our last quarter's earnings call.
We're very proud of our financial discipline in this quarter.
To reiterate that those accomplishments during this quarter, our cash burn came to $34 6 million, representing three consecutive quarters of declining cash burn since Q4 2022.
And the lowest quarterly burn over the last eight quarters.
It's clearly demonstrated we can and we are able to reduce our monthly cash burn below 10 million.
I again want to thank individually employees at heights on and our board for their faith in my leadership as I.
I served as the interim Chief Financial Officer.
It was my honor to support our company through this important time.
With that.
I will now transition this call to Steve.
Thank you Joshua and to everyone at highs on for a warm welcome I am grateful to the executive team and board for this opportunity to serve highs on I also want to recognize Georgia and her team's leadership and dedication during this time the.
The critical accomplishments of getting our financials current and strengthening our processes reflect their tireless work and dedication as I approached this opportunity I discovered that hides on differentiated technology and intellectual property as strongly position us in one of the most promising energy transition markets hydrogen.
I joined highs on convinced that our strategy is the right one to seize upon this large and growing commercial opportunity.
Before I joined Hyzone had disclosed that it was actively pursuing strategic investment opportunities as Parker mentioned with dynamic market conditions Highland is assessing multiple options to raise capital.
Given what I know about the organization's leadership technology business model and the important work that we're doing I'm confident on our fund raising prospects I believe that our differentiated capital efficient strategy to become an OEM supplier is the right path.
Transitioning now to some guidance for the rest of the year. We are happy to report that against the previously stated second half 2023 cash burn target range of $65 million to $73 million or cash burn in Q3 was approximately $35 million. The company has done a tremendous job to stay on track against this goal.
In Q2, we accrued $22 million for the SEC investigation settlement that was ultimately reached in September for $25 million.
The $25 million settlement has to be paid in three installments $8 $5 million within 30 days of quarter approval $8 $5 million at the end of 2024.
And the remaining $8 million within 730 days or two years after our board approval we.
We originally assumed that initial payment in 2023.
With the final court approval still pending this could potentially be pushed to 2020 for moving the cash flow impacts from 2023 to 2024.
Subject to that potential timing impact our guidance is unchanged for both the second half 2023 cash burn range of $65 million to $73 million in the 2024 range of $110 million to $120 million.
While the original 2024 range that we gave during our Q2 earnings call did not include potential as they see payments. We now feel that we can achieve that range, including the SEC payments given.
Given our October cash balance as well as our current and forecast cash burn rate. We believe that we have sufficient cash to sustain us well into 2024 and support of our continued execution in fundraising efforts.
Again, thank you to everyone at highs on for the welcome and thank you for listening with that I will pass the call back to Parker Parker.
Thank you, Steve and thank you judge out.
As we sit here today, we are working toward important milestones in the fourth quarter.
Driving highs on single stack Torne kilowatt fuel cell system technology to commercialization, including.
Producing and validating twenty-five 200 kilowatt fuel cell be samples.
Declaring see sample of the 200 kilowatt fuel cell system.
Meeting our revised guidance of 15 to 20 vehicles deployed commercially this year, including delivering highs ons first commercial class eight fuel cell trucks to performance food group.
And converting additional major fleet customers to multi stage commercial agreements.
In closing Python is in a much different and stronger position today Bill.
Building that strength quarter on quarter.
Which we look forward to continuing in Q4.
Our company is at an inflection point as we transitioned from development to production and delivery.
We have and continued to make significant strides in advancing our proprietary fuel cell technology and remain on track for S. O P and commercialization of our single stack 200 kilowatt fuel cell system in the second half of 'twenty 'twenty four.
We continue to show progress in the commercialization of our heavy duty trucks.
Including the recent first commercial delivery on revenue in the U S.
An additional major fleet contract conversions and are confident in our strong customer pipeline continuing to convert going forward.
With the appointment of Steve as permanent CFO in additional board appointments, we have a management bench and board with deep experience.
Allowing us to entirely focus our efforts on our streamlined refocused and centralized company with a clear vision for the future.
We believe our technology and business model lead.
Commercial progress.
And low required capital spending needs the recipe.
Position us well as we engage with potential strategic partners.
The resolution of the FCC investigation removed a significant obstacle.
All with a supportive backdrop of increasing government support and customer interest.
We thank you for your continued engagement with us as we drive with our customers and partners to commercialize highs on bleeding hydrogen fuel cell technology and trucking today and.
There are many other use cases in the future.
With that I will turn it back over to the operator for questions operator.
Certainly at this time, if you'd like to ask a question. Please press star one on your telephone keypad again that is star one on your telephone keypad.
Steven Fox with Fox Advisors. Your line is open.
Hi, Good morning can you hear me okay.
Yes.
Hello can you hear me okay.
We can Steve.
Good morning.
Good morning.
First question I had two but just market can you sort of dig into the concept of why this is such an important inflection point for the company in terms of the pipeline conversion.
Yeah. It's the first hopefully binnie in terms of your U S delivery, but like what else does it say to the.
Market place of the customers that we maybe should appreciate further and then I had a follow up.
That's great well Oh.
Love to dig into that stage, we truly do believe as a company. We are at a critical inflection point moving from development, which we've been in for the company's history.
To our production and starting to deliver vehicles. This milestone of our first revenue delivery in the U S.
Shows a few things I think first it shows the breadth of the market application that we have in front of us. So the drayage market specifically in portabella L. A and long beach is a substantial 20000 drayage trucks operating at a very nice circular ecosystem with the back to base operations and fueling stations already in place.
And now multiple layers of funding opportunity as the eye or raise your mission port equipment grants are expected to be awarded December of 2024.
And potential as well from the D O a hydrogen hub there was awarded to the state stacking on top of $147 million that carb has set aside for drayage.
That is in addition of course to our large fleet customer focus where we are really excited to build on this momentum with deliveries later this year to performance.
Group with their first vehicles well into <unk>.
Assembly and you combine that transition that inflection point and delivery. That's finally come to the U S. After deploying customers already commercially in Europe for some time and even in Australia.
With the customer progression in the pipeline right. So we talked about the trial program continuing to continuing to advance North America, where we went from seven trials. This year at our last call to tens of three more large fleet trials conducted in North America. Additionally, we are progressing quite well with several large customers who have complete.
Their trials and framing.
Framing the contracts that we hope to finalize with them.
Soon.
So all of this combined with the progress we have on our leading 200 kilowatt fuel cell system.
System S O P, which we're still on track for S O P in <unk> and.
In 2024 and.
And the fact that we have less than $5 million of Capex level does that S. O P to achieve is starting production that we're estimating it 700 units per year on three shifts.
We truly believe that this marks a very important symbolic milestone with this first struck with all of that.
Momentum behind us.
Great. That's helpful. And then just on the free cash flow burn it actually sounds like.
On an organic basis, if we take out the FCC payment, you're making more progress.
S headline that give them credit for the 24 guidance staying the same can you talk about that progress a little bit more into next year and maybe the flexibility in the plan, whether it's for faster deliveries or more.
Trials et cetera, how much sort of wiggle room do you have that in front on that number absolutely.
Absolutely Stephen I'll take that yeah sure. Thanks happy to address that question.
Thank you you make a good observation the prior cash burn guidance for 'twenty, four was $110 million to $120 million, but did not include the FCC payment now that does so that's an $8 5 million Delta right, there, which which highlights our confidence in taking our cash burn down.
Current cash burn down even below what we thought it was when that guidance was premium previously made I think there's other opportunities there are other level levers to pull and we're not ready to discuss those yet I think we come back early next year, we'll have we'll have a better view, but it does give us flexibility to make continued strategic investments and things that move the needle over the course of next year.
So we remain very focused on it and we think that that gives us the flexibility we need to move to the next.
Next year.
Great. Thank you very much.
Thanks, Steve.
Yeah.
Bill Peterson with Jpmorgan Your line is open.
Yeah.
Hi, good morning, this isn't here.
Uh huh.
Hi, Thanks, so much for taking my question.
Alright, I think thats.
And we've seen a couple of peers in our space starting to pivot away from E. D. D. D. He is just development plans.
Conditions.
So can you maybe elaborate on what you're seeing in terms of customer interest in converting nonbinding orders to frame okay.
Free childcare.
Thanks, so much for Hema and we're really excited to dig into that because when we look at the market and we see only increasing interest in specifically fuel cell technology and fuel cell trucks.
You'll get the application that we are focused on today. It is commercializing our leading filter technology and the trucking application that has tremendous government support only increasing reserve mission broadly in hydrogen specifically and for instance, the D. O V hydron hubs that were just.
Awarded and Additionally, customers are seeing the expanding addressable part of their fleet that only fuel cells can deliver in a true zero emission.
Solution, so what I mean by that is a.
Many large fleet customers of ours have had battery electric trucks in their hands for months and the feedback we're getting is very consistent across most of them, particularly those that haul heavier things longer distances, even in our back to base call. It 200 to 250 mile Route route structure. The battery electric truck experience for many is one where the usual ray.
Is not what they thought it would be particularly been hills are involved which even in the L. A basin. If you know that area or cooling anywhere with any material this central probably climbing the hill.
And Additionally, the charge times and the ability to get charging infrastructure, putting five to 10 megawatts in some cases behind a back to base warehouse fence is.
Is years away for many of of of those suites, along with those that need to hot seats or kit havent trucks. It for 48 hours to a charge so well others that are focused on battery electric truck technology may be pivoting we.
We are only even more excited about the market potential the customer excitement and we're seeing that both in our progression to our trial program and our anticipated near term conversion of additional fleets. The contracts have completed their trials as I said before our North America trial program. As one example did have three additional large fleets.
Trials are this this.
Quarter, we have in those 10 fleets that have completed their trials. This year, several who are fully progressed and months of work with us of where the trucks will go assuming we are able to complete the commercial contract with them and for several of them frankly, it's coming down to the lining up the fuel solution the fuel prices.
With our partners on the fuel side. So we will look at the market with the customer excitement for fuel cell with the real world experience that we're getting with other technologies and seeing that fuel cell needs to be a bigger part of what their zero emission future is along with the growing.
Multiple layers of subsidy availability that we see particularly in the U S. We actually see a market that's turning to fuel cell.
That's really great color. Thank you so much.
Maybe a second one for me just in light of some of the market opportunity is incremental.
On the call.
Maybe help us better understand the size of those opportunities.
Also what would be the easiest extension.
Yes.
And sort of expansion beyond heavy duty trucking whether that be in MTBE well are offered different ones that I mentioned.
Absolutely happy to provide additional thoughts there. So when you look at high zones core or at the core of the company is our leading fuel cell technology in the 200 kilowatt single stack fuel cell system. We believe it is.
Advantaged and is quite flexible. So we are focused today the core of the company today is commercializing that in fuel cell trucks. However, there's multiple additional ecosystems such as.
Remote and stationary power.
Aviation mining and rail, where we're already shaping with leading partners what the entry for the 200 kilowatt fuel cell system as the common building block would look like when we're ready to take that step some of those partners are under agreement of some kind some are are not yet.
And when you would take one example, like aviation right. The entry point for aviation. We believe it is not planes to start its ground support vehicles right. So things like aircraft hubs next time that you're on a plane looked out and look at what's pushing you back from the gate that application is a tremendous fit for the 200 kilowatt single stack fuel cell system.
And there's many others in the ecosystem that are ready to adopt a 200 kilowatt size single stack fuel cell technology today, where it has the same advantages we believe versus multiple systems and others will have to employ today in weight in volume and cost and fuel efficiency. So in Egypt.
System. The way, we think about it is simple what's the most efficient entry using our common building block for this.
Plant in Bolingbrook, where we're sitting today is producing one unit 200 kilowatt and that's going into as many ecosystems as possible, we see that entry point and several of these other markets, we're going to stay focused on trucks as we're commercializing that today, but as soon as the the trucks are commercialized, we will pivot and start to take on additional.
Partner led use cases entering with the same product and then the future upside for the company is that 200 kilowatt scaling and in a 300 kilowatt singles Techsystem coming into play that's important if you take a market like a stationary power or remote power 200 kilowatt would be five units to get to a megawatt of power.
Sure.
If you're using a 100 kilowatt fuel cell system. That's 10 units incredibly complex very expensive and hard to scale. The 300 kilowatt, obviously would be three to four units to serve that use case, even simpler more compact more cost.
E effective so we see the progression of the company is as quite straightforward. It's trucking today to commercialize the company. It's efficiently launching additional use cases with the same product 200 kilowatt singles that fuel cell system that we think will be as advantaged and other ecosystem as it is in the trucks and then having the 300 kilowatt.
Come in almost a 200 kilowatt is fully commercialized to take our addressable market to the next level and continue to further our.
Economic edge.
Thank you so much that's very helpful ill hop back in the queue.
Thank you.
Again, if you'd like to ask a question.
Please press star one on your telephone keypad.
There are no further questions I'll turn it back to the speakers for closing remarks.
Great well, thank you again to everyone for joining us and listening to our our journey, we remain quite excited by the progress we've made in commercializing our fuel cell technology and the inflection point that we believe we are making in transitioning from development to production and delivery and then the additional.
Customers, we look forward to giving you updates on our fuel cell technology as well and again, thank you for engaging with us as we drive forward to decarbonize through our our leading technology.
Thank you very much.
This concludes today's call. We thank you for your participation you may now disconnect.
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