GreenPower Motor Company Inc.

Good morning and welcome to the Green Power Motor Company first quarter earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded I would now like to turn the conference over to Michael Seifert, Chief Financial Officer. Please go ahead.

Thank you. This is Michael Seifert, the Chief Financial Officer of Green Power Motor Company. I'd like to welcome everyone to our call to discuss Green Power's financial results for the period ended June 30, 2022. I'm here today with our Chief Executive Officer, Fraser Atkinson, and our President, Brendan Reilly. During today's call, we may make comments or statements about our future expectations, plans, and prospects, which may constitute forward-looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, included those discussed in our quarterly interim results in MD&A filed on CDAR and on EDGAR. In addition, these forward-looking statements relate to the date on which they are made. We anticipate that subsequent events and developments may cause the company's views to change. Green Power disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Also, during the course of today's call, we may refer to certain non-IFRS financial measures. Reconciliation of these non-IFRS measures can be found in our MD&A filed on CDAR and on EDGAR, and is also located on our website at www.greenpowermotor.com. I will now pass the call over to Green Power's CEO, Fraser Atkinson.

Thank you. Thank you, Michael. I want to start off by talking about the challenges facing our business and what we're doing to address these. First, we've encountered unstable shipping where some sailings or routes have been canceled as well as a reduction of available slots. We've started to split shipments, utilize ports on the east coast for sales in that region, and are exploring other means of reducing shipping times. Second, we are also encountering delays with the delivery of certain parts and components. For example, one of our suppliers for our onboard charging systems has been taking longer to ship as we ramp up production. With a robust supply chain with multiple suppliers, we are able to adapt where we see these trends that are going to lead to delays. This is not as simple as changing a vendor as we go through a rigorous testing and amoligation process in order to incorporate alternatives. Third, increased funding for voucher and incentive programs has led to longer approval periods. We've prioritized our processes to optimize the timing of voucher approvals in terms of our delivery opportunities. Our team is doing a great job of meeting these challenges head on and adapting to the changing environment that we operate in. I believe that the steps we've been taking will be seen in the ramp up of deliveries to customers this and the next couple of quarters. Let's shift the discussion to our current strategy. As we outlined on our update call in early July, we've moved to a go-to-market strategy with the school bus group, commercial trucks and vans group, and passenger vehicles and buses. We see multiple growth drivers for each of these. For our all electric commercial vehicles, there are recent federal programs with funding that will help accelerate adoption of these vehicles. This is really a first for the commercial side of the business as many of the programs to date have focused more on school buses and transit buses. For example, the recently passed Inflation Reduction Act features numerous programs that will benefit Green Power. To highlight one of these, commencing after December 31st, 2022, there will be a $40,000 tax credit for Class 4 vehicles or higher. The EV Star platform and models are all Class 4 vehicles. On July 11th, 2022, Canada introduced over $500 million of incentives for medium heavy duty zero emission vehicles. We have 13 of our commercial EV stars with shuttle buses listed as eligible vehicles by Transport Canada for this program with point of sale incentives ranging from 75,000 to $150,000 per vehicle. They are also permitting that these can be stacked with other funding programs up to 75% of the purchase price of the vehicle, providing for a very compelling net sales price for the 13 vehicles listed under this program. Next, the school bus group is able to draw on numerous funding programs, which we have talked about in the past. But to quickly highlight a few of these, Previously announced EPA school program with $500 million for the purchase of all electric school buses kicked off this year for the first of five years from 2022 to 2026. California's $130 million school bus set aside program for this year with the next funding already allocated for the next two years. California Energy Commission or CEC funding for qualified air quality management districts, as well as the ongoing voucher programs with New Jersey, California, BC, to name a few. I'll now turn it over to Brendan Riley, President of GreenPower, to talk about the many highlights and current activities of the company.

Thank you, Frasier. Recently, we announced the acquisition of Lion Truck Body, a regional truck body company located in Torrance, California. This combination of GreenPower's EV expertise and the advanced body building experience of Lion Truck Body is giving GreenPower a competitive advantage. This not only results in shortened lead time, but also truck bodies that are optimized for EV trucks. Here's an example. Our soon-to-be-delivered EV star cargo plus refrigerated truck has more payload, longer range, lower cost factor, and lower overall price of any competitive EV refrigerated truck on the market as a result of this combination. This is just one example of what we can expect with a close relationship and collaboration between Lion Truck Body and Green Power Motor Company. Our commercial truck strategy of selling our truck products through dealerships is being executed by bringing dealerships online. We have dealerships in California and are working on additional dealerships throughout the USA, and we are very close to making those dealerships active. As we have already demonstrated with our workhorse deal, we are also pursuing a wholesale approach in that we are selling our EVStar CCs to companies that need efficient, ready-to-go platforms upon which they can add their bodies and then market the completed vehicle themselves. Also, our EVStar cargo, 22-foot delivery van, practically jumping off the shelves. We have just started deliveries and are already getting follow-on orders from these customers that have received at least one unit. We have 40 units already committed to customers with POs, and that claims the first tranche of vehicles that we built, and we are getting ready to start our next tranche of vehicles any day now. Our beast and our newly introduced nano beast, our school buses, which are being received with amazing fanfare, as we demonstrate these vehicles across the country in person. We have multiple state contracts for both models, and our NanoBeast has recently received Best New Green Technology Award at the Student Transportation Network Expo in Reno just last July. Our dealer deliveries have started for both units, and the green power factory in West Virginia has been vacated by the previous occupant and we have taken possession of the building. We are currently busy outfitting it to produce school buses. And finally, Green Power began manufacturing its first new tranches of EV Star CCs for the 1,500-unit purchase and sale contract with Workhorse. During the quarter, Green Power coordinated with our suppliers for delivery of key components and initiated production of 100 vehicle tranches of EV Star CCs. By the end of the quarter, the first 100 EV Star CCs were near completion and the next tranche had already entered production and key components for additional tranches had been ordered. The first deliveries to Workhorse began in July with follow-on deliveries made in August. Green Power's team is working closely with Workhorse to assist with the integration of the EV Star CCs. Now I'd like to turn it over to Michael Seifer, CFO of GreenPower, to talk about our first quarter financial results. Over to you, Michael.

Thank you, Brendan. For the first quarter ended June 30, 2022, GreenPower recorded revenues of 3.9 million, which was an increase of 29% over the revenue of 3 million for the comparable quarter in the previous fiscal year. Revenue for the first quarter included the delivery of three Beast Type D all-electric school buses, two EV star plus, one EV star cargo plus, five EV star 22-foot cargoes, six EV stars, and four EV star cabin chassis. Gross profit for the quarter was $1.1 million, or 28.8% of revenue, which compares to $850,000, or 28.5% of revenue in the first quarter of the last year. We anticipate that our gross profit margin will be lower than this level for the remainder of the year, as we expect that the majority of our sales for the rest of the year will be under higher volume contracts, and that we will have increased sales of school buses, both of which will be at lower gross profit margins in the current quarter. Our cash expenses during the quarter were approximately $3.4 million, which was lower than our prior quarter cash expenses of $3.85 million. This was largely due to several one-time costs during the prior quarter. We anticipate that our cash costs will increase throughout the year due to an anticipated increase in salaries, rental expense, and lease payments, interest expense, and other costs related primarily to our business expansion. We finished the quarter with $28.3 million in working capital, including $5.4 million in cash and restricted cash, approximately $3.9 million in accounts receivable, and approximately $0.8 million in land held for sale. As well, we had approximately $24.6 million in finished goods inventory at the end of the quarter, which was comprised of Type A and Type B school buses, a full range of EVSTARS, and several Class 8 vehicles. Our increase in inventory during the quarter was primarily due to investments in EVSTAR CCs, that will be fulfilling our contract with Workforce. As discussed previously, management remains focused on working towards securing a solution to our near and mid-term capital needs while managing current production requirements. We've been prioritizing our working capital towards strategic projects that we expect to generate near-term cash flows and have been successful in improving terms with certain vendors to limit our working capital investments. With that, operator, please open up the call for questions.

Thank you. We will now begin our question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw from the question queue, please press star then 2. At this time, we will pause momentarily to assemble our roster. And the first question will come from Chris Souther from B. Riley. Please go ahead.

Hey, thanks for taking my question here, guys. Maybe just to talk a little bit about, you know, it seems like the production ramp is going quite well across the board with, you know, lots of different vehicles that you've kind of now got in inventory. Can you talk a little bit about where we have visibility on some of the, you know, near-term vehicle deployments with, you know, purchase orders? You know, you seem to stand that you have good visibility on the CC side with Workhorse. Maybe some of the B's customers are kind of waiting for, you know, some funding clarity in the back half of the year here. And also, you know, there's been kind of buildup of the EV star kind of regular. So maybe just kind of mixing, you know, matching kind of near-term visibility by product line I think would be helpful for both.

So, thanks for the question, Chris. I'll try and be brief. I probably spent half an hour going through each and every model line. But starting off with the school buses, both for the Type D and the recently introduced Type A Nano Beast, is that we have more than 40 vehicles in finished goods presently. And our priority is to ensure that our expanding dealer network, that we're in a position to sell the necessary vehicles that they require for their deployments and their demonstrations. So that's priority one, which we expect to substantially complete in the next couple months. And then on the heels of that, With that finished goods inventory, we would then be focused on customer deliveries. So we have a number of vouchers and funding mechanisms or funding programs supporting customer sales with our school buses. But as we work through those, our initial priority was around getting those – that finished goods inventory into the hands of our dealer network, because that's what is going to be the big driver of sales for us down the road in that group. So we expect that to be substantially over the next two quarters, being the quarter we're in, September 30 and the December 31st quarter. Cargo vans that Brendan referred to, we delivered five in the June 30 quarter. And we have approximately 40 of the cargoes and finished goods inventory as of today that we're working at pushing out to customers over this current quarter with the balance of that 40 or approximately 40 into the December 31st quarter. So over the next couple of quarters. And then for the cabin chassis, as you referred to, there's, you know, the Our primary focus is to ensure that we're able to deliver the EV star cabin chassis to workhorse as quickly as we can. So that's the priority for that component of our finished goods inventory. And then that leaves us with a number of regular EV stars, either as we call them blanks where the seating hasn't been installed or with specific seating for our MAC seating, our VIP seating, and our rear ADA configurations that we have in stock with many that are specifically allocated to vouchers and various programs for those. So, you know, in summary, the finished goods at that Michael had summarized in our MD&A is in each of these different groups, we have several priorities in terms of where these will be deployed, but for our go-to-market strategy in terms of our groups, the majority of these are going to be deployed in the next couple of quarters.

Got it. Okay, that's helpful. And maybe just shifting gears to West Virginia, you know, in the past you've kind of talked about, you know, having kind of low capital needs in order to kind of set up production and kind of get off to the races. Maybe just, you know, talk a little bit about where that stands as far as, you know, expectations for, you know, capital uses as you're, you know, setting up the facility and beginning to ramp production would be great for an update.

Well, the month of August is really more of a move-in. We are working with the state of West Virginia and the city in terms of related opportunities, I should say, such as ensuring that everybody gets their applications in with the APA program, which the online applications close at the end of this week. for the EPA funding, as well as ramping up a number of initiatives that we'll be talking about over the next number of weeks. But as far as production goals, we will be doing the first round of production of NanoBeast starting in September. That's fairly light in terms of the CapEx. We're not having to to spend a lot of money to get that first tranche going. And then over this fall will be where the CapEx is deployed for the various equipment requirements so we can expand into the production for the Type D later on this fall slash winter. So that's the current plan. And as I say, we're expecting to to get that production going in September for the type A nanopiece.

Got it. So when would those type A's start to kind of roll off the line then, assuming that timeline?

Well, we're being careful about setting timelines on that until that production starts. And the reason I say that is, you know, we have the cabin chassis there for that initial production, but we're still waiting to get all of the you know, the components and assembly parts, a body, and so on, that will allow us to commence the production for those vehicles. So, you know, as soon as we start, then we'll be in a position that we can give a timeline as to the expected, you know, first production run that will come off the line.

Okay. That makes sense. I mean, just last one, you know, as we're, you know, starting to get kind of more visibility from, you know, workhorse, you know, some of these other agreements from the school bus side, you know, when do we think we're going to be in a position to start giving kind of either quarterly or annual guidance here? Is that, you know, a quarter or two away? Is that, you know, next year? Just any sense on kind of where we are as far as, you know, gaining more visibility there?

Well, we're, The comfort level is we're getting more comfortable with where we are with the finished goods, but not as comfortable in terms of what's coming down the pipe in terms of the follow-on quarters into March and June. So with the deliveries that I was talking about and the activities that Brendan was commenting on earlier, is that if we're able to get the substantial number of those nanobeasts and beasts deployed and the cargo vans as well as the CCs deployed with the principal focus on workhorse and then a secondary focus on other opportunities with those cabin chassis, we're able to accomplish those three then effectively. I think later on this fall we'd have much better visibility on what we're able to forecast off of. I think our approach to date has been that until we can get there and to move through somewhat of the lumpiness of the customer orders, voucher approvals, deliveries, which has been a big impact on us in the past, that with this higher level of deliveries across these different categories will give us the ability to provide for guidance on deliveries going forward.

That makes sense. Appreciate the color there. I'll hop in the queue. Thanks, guys.

And the next question is from Craig Irwin from Roth Capital Partners. Please go ahead.

Good morning, and thank you for taking my questions. Fraser, as we're talking to different school districts, participants out there about the vouchers that we're expecting from EPA, one of the biggest concerns is timeline for delivery of the buses from the different vendors out there. You know, I'm hearing that other vendors are talking about one-year and possibly two-year lead times for delivery of electric school buses. Can you maybe discuss for us what a reasonable scenario would be if someone does get vouchers and selects Green Power for the Beast or the Mini Beast? And, you know, what your ability might be to flex to serve that, given the issues that are still very real in the supply chain?

Great question. So I think we should break that down into two components. And the first being that the EPA program doesn't have the same level of certainty of many of the other school bus programs that we've been able to leverage or our customers have been able to take advantage of. And what I mean by that is that, for example, the California Energy Commission or CEC funding with their quality management districts, once you've lined that up and that's been approved, then you have certainty in terms of your funding partner to be able to move forward with your purchases. With the EPA program, they are taking these submissions the expectation is that the submissions will exceed the available funding, and there's a requirement for the funding to allocate to each and every state that has at least one applicant. So, the expectation is that there won't be 100% receipt for the applications that go into that funding. So, you may get your your deal approved, you may not. And so that's the uncertainty with the EPA program that we won't know how it unfolds until we get to October, possibly November, in terms of when they start to push out the contracts for the EPA funding. When they do push it out, if the applicant is successful and is moving forward with the Green Power program, BEAST or NanoBEAST under the program, then the contracts, once they're signed, the program allows for a two-year delivery cycle. What we thought, what we view as being able to properly or fully leverage this program is being in a position to deliver those first couple of vehicles. An applicant that is lucky enough to get up to the maximum of 25 vehicles under the program, it doesn't make sense to deliver all 25 at once because they're not going to have the charging or the infrastructure set up. They're not set up to train that number of people across the organization. It will be much more of a staged process. So what we want to do is to make sure that for a lot of these customers were able to deliver those first handful. And if they don't materialize, we've got as alternative the various other funding programs that are in place for sales that we've been working on in other states or other jurisdictions such as for the state programs in California. The summary is that we certainly understand that some of our competitors have backlogs or are indicating that their delivery time is 12, 15 months or even greater. But in our case, our focus has been on communicating to our prospective customers that getting the first number of beasts or nanobeasts deployed with them and sort of working out the kinks, if you will, is much more advantageous for both parties in terms of really optimizing a full rollout of the program. And being in a position with finished goods inventory helps us achieve that goal where others can't.

Understood. That's a healthy position. So my second question is about pricing in the market for EV school buses. So Bluebird has had to put through 25% pricing in the last year just to get margins to hopefully break even over the next couple of quarters. This is obviously due to the heavy steel content in their vehicles and component cost increases, which we all know have been really dramatic. Your vehicles are made differently, have a different bill of material, and you use a very different manufacturing approach. Can you talk about the pricing in the market and whether or not you feel that it's necessary to put through 25% price? And, you know, maybe does this help you be more competitive out there in the market than some of your peers?

Well, in terms of the – sorry, go ahead, Brandon.

Yeah, I was just going to talk quickly to the strategy that Green Power uses also. So, Craig, a couple of the most expensive components in an EV right now, if you break it up into systems, let's say, the battery is the single most expensive thing in any one of these vehicles. Typically comes to almost half of the vehicle cost in some cases, not all. and not in school buses, but in some of the other vehicles with larger batteries. But Green Power only makes EVs, and we have battery commonality, cell and module commonality across all of our platforms. So that gives us a much better, let's say, purchasing advantage, lower cost factor, and better manufacturability. You know, we also use one brand of traction motors across all of our lines, so we get more competitive pricing because we just buy a lot more of them. So I would say there is some upward pressure on cost if you look at what it costs us to build vehicles. But because we're not just getting into the EV space right now, Green Power has been at it managing our supply chain and our vendors. for really much longer than these guys have been, exponentially longer than these guys have even been making EVs, we believe, at least for that, we have a better pricing cost factor. And we have not announced any price increases. And we do have statewide contracts that we are comfortable with our existing pricing right now on our school buses. that we submitted to. The other thing, Craig, I think we should consider here is that our use of aluminum has really helped us out. Where steel prices have gone up immensely, and aluminum did for a bit, especially on the LME and some of the other big exchanges, we're finding that aluminum stabilized relatively quickly. And with our Constellium, our aluminum suppliers' costs being relatively stable, we've not had to make the increases some of our competitors have. I'll turn it over to Frazier for his comments.

Well, I think the only thing I'd add is that, and you probably brought up one of the most relevant aspects of our build, Craig, is that Our Beast and our Nano Beast and our EV Star Plus for that matter, all three are built with the extruded aluminum body with a fastener approach that gives it an incredible strength and some additional flexibility you wouldn't normally get in terms of a traditional build. But the most important thing is it's lighter weight. It's stronger but lighter, so we don't have to use as much materials as our competitors do, and none of our competitors have a build like this. And so that does give us a bit of a competitive advantage on that. And as part of the reason that in the case of the Beast, we're able to have a product that with a 40-footer can accommodate up to 90 seats, for passenger seats in that vehicle, which is best of class for any school bus of that length. So that's, you know, for the combination of those two has allowed us probably a more stable cost structure to manage than some of our competitors.

Understood. Thank you for that. So next about the cabin chassis and your traction with Workhorse. Not to ask specifically about Workhorse, because I'm sure there's confidentiality provisions there, but your deliveries of cabin chassis buses, cabin chassis units, I should say, are in the single digits, right? And there's an opportunity for a few hundred, a quarter, maybe more. Can you talk about the ability to ramp deliveries in cabin chassis. What would it take for us to start seeing a couple hundred units a quarter? Where are we in that cycle? Is this something that's fair potentially towards the end of the calendar year?

Well, I'll start off with what actually Brendan was talking about earlier on the earnings call, which is We're building in tranches of 100. And as far as your single digit, you're quite correct that I believe that was the delivery in July, but we also had follow-on in early August. So it's sort of double what that delivery in July was. But on a more macro level is we build in tranches of 100, and before we can – Actually, or not before we can, but before we do build the actual cabin chassis is that we need all of the significant and key components in hand in our parts supply on the production line before we start that. So then we have to back up and make sure we've got 100 battery packs and that we have the 100 traction motors and we have all of the electronics all are there before. So there's a multiple stage of production that is occurring is that there's one level that our team is managing. When I say team, we've got a group of six people that are full-time focused on this, where they are managing all of the key components up to the build of the cabin chassis. And so, as Brendan said, at the end of June, we were substantially complete on the first hundred. We were starting the next hundred in terms of the actual cabin chassis build, but we were also on the third hundred working on battery packs and the key components and the fourth hundred tranche and the fifth hundred tranche in terms of supply chain on electronics. and many of the other key subcomponents that go into the ultimate build. So it's very much a layered process that we're working through that will result in the increased deliveries over the next quarter or two.

Understood, understood. Well, thank you for taking my questions. Congratulations on the progress and the great positioning. and I'll take the rest of my questions offline.

Thank you. And the next question is from Kate Sullivan from Maxim Group. Please go ahead.

Hi. Thank you. I've been following up on the workhorse. Brendan mentioned earlier in the call the integration of the workhorse EVCCs. I mean, on the workhorse side, what does that entail, just testing the cab? I'm not sure it's more Putting the cabin on top of your chassis, can there be any determination from Workhorse in terms of wind taking delivery of those chassis as well?

Yeah, Tate, that's a very good question. So the integration is Workhorse has developed a very compelling body. For these vehicles, their W750 is a step van, similar to what you see UPS or FedEx and now Amazon and some other uniform delivery companies, what have you, driving around delivering packages with. And that's a vehicle that allows the driver to get into the back of the vehicle, walking through the cab itself, and then has a roll-up door typically in the back or hinge door in the back. sliding doors in the front so you can just drive around with a sliding door open and just kind of pop out. That product has been largely developed and the prototypes have been out there and well received. They're currently finishing up their assembly line and making sure that that's ready for the vehicles themselves. And there's there's always tweaking here and there we've introduced a new, uh, a new shifter for the vehicle. Uh, that's a rotary knob shifter. Uh, they're, um, incorporating those into their newest vehicles and some other improvements that have been requested by, uh, by the workhorse folks, including regen, some other things to make the vehicle more drivable for their duty cycles. But, um, That's really the integration we're talking about, integration into production line and integrating some new features or some features that they believe are going to be compelling for their customers. As far as deliveries are concerned, we have a delivery schedule that we've been keeping to for them, and we have a first small number of vehicles coming out. that they're getting, that they've gotten actually already, that they're starting to align with before they start mass manufacturing, as it were. So that's where we are right now. They've gotten their first tranche of vehicles for the production of the W750. Green Power is sending out some engineers and technicians to work with their teams, kind of go through all the things that they're doing, making sure we're all aligned with all the processes and procedures, and then we're off to the races. So we expect to be very, very soon, we expect their line to be, you know, running at full clip, but we'll leave it to them to announce when and where they're going to be doing that.

Thank you. And, I mean, you have meaningful ramps ahead for product lines. And can you talk about the number of employees that you potentially have to add to get there? I mean, both in South Carolina, both for the school bus facility in West Virginia and your facility in California.

Well, we try to do a relatively modest employee ramp. make sure we baseline everything. We have employees that are in very, very, you know, essential positions with the appropriate training. So we've already started hiring our South Charleston facility, West Virginia employees. We expect to have 150 to 200 employees by this time next year just for the manufacturing of our school buses. And our California facility, as well as product inspectors, you know, for our supply chain and QAQC folks for supply chain incoming quality control folks. So I would expect our workforce to quadruple by this time next year and a nice steady ramp up to that number. Thank you. That's it. Thank you. You're welcome, Tate. Thanks for the questions.

And the next question is from Tyler D. Mateo from BTIG. Please go ahead.

Hi, everybody. Good morning. Thanks for taking the questions. I just wanted to follow up on the inflation reduction comments and the $40,000 tax credit. I know you gave that as an example. Can you speak to some of the other benefits that you guys could potentially see, especially on the school bus side?

Well, we're still sifting through all of the different programs that the bill offers. The bill, by the way, is 725 pages. So there's a lot that the Act is pushing through. But there is funding for infrastructure that will be very beneficial in terms of on the school bus side. over and above what the EPA program is bringing to market. But the big federal driver right now is more the EPA program with the half billion dollars a year over the next five years.

Okay. So I guess following up on that then, so in terms of positioning of the EPA program, like how would you stack up so far in your experience the Canadian incentives versus the U.S. incentives? Like how do those two compare for green power?

Well, I think the – The big thing is that two months ago, there wasn't really a federal program that provided funding that was directed to the commercial space. And when I say commercial space in terms of, you know, like our EV Star Cargo Plus, our EV Star Cargo, there wasn't federal funding. And what we have found in the past is that a big, you know, a growth driver that really gets legs is one that has some federal backing or federal support and isn't regionalized as it has been with the California programs in life. So in the case of the Canadian program, there are only a couple of other Class 4 vehicles where the suite of EV Star Class 4s on that program were one of the dominant vehicles eligible vehicles listed by Transport Canada. And so that's a program that was just introduced July 11th. And we have really been engaged with a number of different fleet operators in terms of taking advantage of that program, as well as the fact that you can stack it. So, for example, our EV Star could generate a or utilize a $75,000 voucher incentive on the federal program and then get an additional voucher in the province of British Columbia up to 75% of the purchase price of the vehicle. So that's a near-end driver that we're able to utilize both of those programs today. On the Inflation Reduction Act, the $40,000 credit doesn't kick in for purchases until after December 31st, 2022. So it'll be a program that becomes a great sales tool this fall for deliveries that can occur literally on January 1st, 2023 to utilize that credit.

Okay, great. Thanks, Fraser. Really appreciate the call there. I'll turn it back to the Q.

And the next question will come from John J. from The Quiet Investor. Please go ahead.

Good morning, guys. I'm showing a lot of signs of progress, but in view of the inventories you're going to have to build up, what sort of money are you going to have to get hold of, and in what form might it be in order to satisfy these inventory buildups?

Well, we're pretty happy with the current level of inventory in terms of the different groups or go-to-market groups. So as we talked about with the school bus side, we see more of drawing down what we have, not adding to or maintaining an inventory level. Same with the cargoes, is that that's more of a – a timing situation in terms of the vouchers are aligned with the cargoes are ready to be delivered. So over the next number of months, we expect to deliver substantially all of the approximately 40 cargo vans that we have. And likewise with the cabin chassis, the priority is with workhorse and then Secondarily, there's the other market opportunities that we have to deploy tab and chassis. So across the different categories, we expect to be drawing down in a number of these as opposed to just continually adding or building up additional inventory. So that's the first part. And then the second part is that if There is a substantial uptick in additional orders on school buses, which will have much better visibility in the next two to three months. And with other categories of vehicles is, as Michael referred to in his comments earlier, we have been working on traditional financing structures that, you know, in terms of debt facilities. that we could utilize with increased requirements this fall or this winter.

Very good. I get the sense, then, that you're satisfied with where you are in terms of capital and that as the sales unfold, then you will act accordingly. Exactly. Very good. Well, thank you. I appreciate it.

Ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

So thanks, everyone, for listening in to Green Power's earnings call. We're very excited about our current position and our We believe we have very strong product offerings in the different markets that we're addressing. And as the last caller just asked about, we believe we are well positioned with product that can be delivered to our customer base as we work through the balance of the various vouchers requirements and take advantage of customers that now have approved vouchers that we can deliver product for. So exciting times for us in the next quarter or two, and we look forward to providing our stakeholders and shareholders with our next update. Thanks for listening in to the call.

And thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.