Xos, Inc.

Thank you for standing by. The conference will begin momentarily. Please stay on the line. Thank you. Thank you. Thank you.

Greetings and welcome to XSINC's first quarter 2024 earnings call.

At this time, all participant lines are in a listen-only mode. For those of you participating in the conference call, there will be an opportunity for your questions at the end of today's prepared remarks. Please note this conference is being recorded. At this time, I would like to turn the conference over to General Counsel of Exos, Kristen Romero. Thank you. You may begin.

Thank you, everyone, for joining us today. Hosting the call with me are Chief Executive Officer Dakota Simler, Chief Operating Officer Giordano Sordoni, and Acting Chief Financial Officer Liana Pagosian. Ahead of this call, Exos issued its first quarter 2024 earnings press release, which we will reference during this call. This can be found on the investor relations section of our website at investors.exostrucks.com. On this call, management will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect because of factors discussed in today's earnings news release, during this conference call or in our latest reports and filings with the Securities and Exchange Commission. These documents can be found on our website at investors.exostrucks.com. We do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures and performance metrics. Please refer to the information contained in the company's first quarter 2024 earnings press release for definitional information and reconciliations of historical non-GAAP measures to the comparable GAAP financial measures. Participants should be cautioned not to put undue reliance on forward-looking statements. With that, I now turn it over to our CEO, Dakota.

Thanks, Kristen, and thank you, everyone, for joining us. On today's call, I will cover highlights from the first quarter of 2024, during which we generated $13.2 million in revenue, delivered 62 units, and achieved record gross margins of 21.2%. Gio and Liana will then provide operational and financial updates, respectively. During the quarter, we closed our acquisition of Electromechanica. which gave us access to more than $50 million in additional cash net of certain costs paid at close. This injection of cash, combined with our improving margins, significantly strengthens EXO's capital base and liquidity. With our improved liquidity, we are taking advantage of opportunities to improve our operations, but remain committed to tight cost control and judicious capital allocation. Exos' first priority is becoming a self-sustaining, cash-generating company, which we believe will come from continued focus on growing our core Stepvan, Exos Hub, and Powertrain businesses. Compared with the first quarter of 2023, revenue is up 180%. However, revenue for the quarter was lower than the fourth quarter of 2023 due to delays in customer infrastructure and at some of our body upfitter partners, causing planned first quarter deliveries to spill into second quarter. As we mentioned during last quarter's call, we expect 2024 volumes to be back half-weighted like 2023, but meaningfully higher than last year. In the quarter, we delivered Stepvans to a number of our most committed customers like UniFirst and FedEx Ground Contractors. We also made initial deliveries of our Stepvan-based powertrains to two new customers, a large on-highway bus OEM and Winnebago. As a reminder, Our powertrain offerings provide an opportunity for Exos to monetize our existing commercial EV technology in sectors beyond the last mile fleets that we serve with our complete vehicles. We see significant growth opportunities in our powertrain business and are looking forward to reporting growing powertrain deliveries in future calls. In step vans, sales activity during the quarter remains strong. with California's advanced clean fleets compliance increasing fuel bills and aging fleets motivating step-in customers to make the transition to EVs with Exos. In support of our vehicle sales, we took steps during the quarter to tackle the charging infrastructure-related delays faced by our customers. In January, we announced the updated Exos Hub, a rapidly deployable charging unit designed to expedite electrification for fleets. The hub combines 280 kilowatt hours of battery storage with four chargers, allowing each unit to support eight or more stepvans in typical last mile fleet depot applications. Onboard batteries dramatically reduced peak power drawn from the grid. allowing many hub customers to skip the lengthy utility upgrade process that frequently impacts EV fleets pursuing charger-only solutions. These upgrades can add 12 or more months to the timeline for permanent infrastructure installation and are hard for customers to predict before purchasing their vehicles. By directly addressing the utility upgrade and charger installation timelines that are the most impactful source of delays for our truck deliveries, we expect hub deployments to meaningfully improve the predictability of our step van volumes. To that end, we are pursuing a range of solutions, including bundling hubs with step van orders to grow our business and minimize the impact of infrastructure constraints on Exos. The hub is also available as a trailer-mounted mobile charging solution where its four charge heads and internal battery offer a solution for construction sites, remote work sites, or other environments where commercial EVs are deployed without access to permanent charging infrastructure. While enabling greater step-van deliveries remains the primary purpose of the hub, Strong and broad-based interest from non-step-van customers has motivated us to offer the Hub more broadly. To that end, we have already signed sales orders and booked production slots for a range of customers, including Xcel Energy, FedEx Ground Contractors, and SSA Marine. I look forward to reporting on the growth of the Hub business and its expected strong margin profile in future calls. I'll now hand it over to our COO, Geo, for an operational update.

Thanks, Dakota. Exosys engineering, supply chain, and manufacturing teams remain focused on scaling production to match customer demand and delivering further gross margin improvements. Our engineers continue to develop and implement refinements that contribute directly to our strong gross margins. The supply chain team is collaborating with suppliers and inbound shipping partners to improve competitiveness, expand margins, and ensure the flow of components needed to achieve our delivery ambitions for 2024. As Dakota mentioned, we also began to build and deliver the updated hub in the first quarter. In response to the demand our sales team is seeing, we're preparing for production rates of up to eight hubs per month in the second half of 2024. This rate will remain flexible and tied to the signed sales orders we receive. This is possible due to the significant overlap between the hub and our step van platform. From day one, we designed the updated hub to leverage our existing step van design and supply chain as much as possible. For example, by sharing a battery system with our 200-mile step van, the hub was able to reach production many months sooner and with much better margins than is possible with a standalone design. The similarities also extend to the factory floor. Like the step van, the hub is built of major sub-assemblies in partnership with our suppliers, reducing the capital investments required to achieve our 2024 production targets for less than $50,000. All hubs are being built in the existing EXOS plant footprint in eastern Tennessee, alongside our step van production line. And with that, I'll pass it to Liana.

Thank you, Gio, and good afternoon, everyone. For the first quarter, our revenue decreased to $13.2 million from $18.4 million in the fourth quarter of 2023, primarily as a result of our reduced deliveries during the slower time of the year. Our cost of goods sold during the quarter decreased to $10.4 million compared to $17 million in the fourth quarter of 2023. Gap gross margin during the quarter was a profit of $2.8 million, or 21.2%, compared to $1.3 million last quarter, or 7.2%. Margin improvements were mainly driven by higher average selling price, reduction in overhead costs related to the normalization of a prior quarter change in our allocation and capitalization of freight costs into inventory, reductions in inventory reserves in line with reduced on-hand inventory balances as we continue to focus on prudent supply chain management, and a net benefit from physical inventory adjustments as compared to write-offs during the fourth quarter of 2023, as we continue to focus on improvements in our inventory management processes. It should be noted that gap gross margins for a vehicle OEM are impacted by a range of reserves that, combined with changes in sales mix between direct, dealer, and prior model inventory sales, introduce higher levels of volatility in quarterly results. For this reason, we continue to share consistent non-GAAP gross margin that you can find in today's earnings press release. Turning to expenses, our first quarter operating expenses decreased to $13 million from $13.2 million in the prior quarter. As a result of the asset acquisition accounting, the transaction costs associated with DMV acquisition are included in cost of assets acquired and allocated amongst qualifying assets using the relative fair value basis. Non-GAAP operating loss for the quarter was $9.3 million. We closed the quarter with cash-in-cash equivalents of $46.2 million compared with $11.6 million at the end of the fourth quarter. As the quota mentioned, the increase resulted from the acquisition of Electromechanica in March. Inventory decreased to $36.6 million in the first quarter from $37.8 million last quarter. Operating cash flow less CapEx or free cash flow of negative 14.6 million for the quarter, was an increase over negative 0.9 million last quarter, largely as a result of our net loss and unfavorable changes in our working capital, including increases in accounts receivable resulting from delivery timing and growth in incentive voucher receivables, as well as timing of payments on our outstanding liabilities. Finally, we are reaffirming our full year 2020 for guidance of revenue in the range of 66.7 to 100.4 million and non-GAAP operating loss of between 43.7 to 48.7 million and 400 to 600 units delivered. I'll now turn the call back over to Dakota.

Thanks, Liana. To wrap up, EXOS is prepared for the future. The over $50 million of cash that we secured this quarter and our industry-leading gross margins provide Exos with significant advantages over our competition. As regulatory pressure on fleets to adopt EVs grows, we are benefiting from stronger demand for our proven and profitable truck, powertrain, and mobile charging infrastructure products. As we look to a busy second half of the year, our competitive advantages and direct benefits from EV mandates and incentives have XOs on a track for long-term success that I look forward to sharing with you in the coming quarters.

With that, let's open the line for questions.

Thank you. We will now begin the 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 your question, you may press star, then 2.

At this time, we will pause momentarily to assemble our roster. Today's first question comes from Donovan Shaffer with Northland Capital Markets.

Please go ahead.

Hey, guys, and thanks for taking the questions. I want to first just start off by asking about the kind of infrastructure, the charging infrastructure causing some delays. You know, we've seen that before. And if you can elaborate on the upfitter part of that, if that is also infrastructure related, if it comes down to them needing chargers at their own sites to do some of the upfitting, and then how we what gives you confidence that this, you know, you said some orders pushed from Q1 or deliveries from Q1 to Q2, you know, what makes you feel confident in the full year guidance, reiterating that, that, you know, you don't just get kind of these rolling pushes where some of Q2 to Q3 and then Q3 to Q4 and, you know, that hit the whole thing. So anything there would be great.

Yeah. Thanks for the question, Donovan. Good to catch up with you. I'll start with the first question in regards to the upfitter delays. So it's not tied back to infrastructure at the upfitters. When we build the chassis, we're sending it to one of our upfit partners, and that requires very close coordination with them around their production schedule and making sure that we have build slots well in advance of when those need to be delivered to customers. In some cases, those can get pushed back from their own supply chain issues or other challenges that they've had. And so this quarter was one of those times. We don't expect it to happen again. We're taking a much more proactive approach towards planning with those upfitters and making sure that we're looking out about two quarters to plan our production timelines and get build slots scheduled for those deliveries. But that is really something that we anticipate will continue to improve. and not related to charging infrastructure the second question was really around charging infrastructure and making sure that this rolling pattern from rolling some of the vehicles and from q1 into q2 doesn't happen and we actually have strong confidence on those vehicles particularly that came from q1 as several of them have already been delivered in q2 at this point so It gives us much better confidence in being able to say it's not going to carry on for two or three quarters with those few units that pushed into this second quarter. And we're actually testing out some new temporary charging infrastructure tools that complement the hub and will allow us to be able to deploy charging infrastructure if we continue to see unanticipated delays either from the utility or from the permitting side when it comes to deploying permanent charging So this is one of the first quarters where we're going to be deploying sites, we're going to be deploying hubs and temporary charging where customers will have temporary charging in place until their permanent charging gets installed. And that should give us a lot more predictability and forecastability and stability in our production numbers in being able to deliver everything that we build in a quarter.

Okay, thanks. That's very helpful. And then Turning to the hub itself, it seems like, you know, there's some real positive developments there, which is kind of very interesting, potentially exciting. So, Gia, you said that you'll have things in place to be able to do eight hubs per month in the second half of the year. You know, that would be 48 hubs for the year. I guess the first question or, you know, kind of compound question here would just be, Is that kind of more of an expectation or just being prepared for it? I mean, do you think is it a fairly likely chance that you'll be, say, delivering north of 20, 30 hubs, something like that? Or is that you're just gearing up to be ready? And then the other part would be how do they compare from an ASP and gross margin standpoint to the vehicles?

Yeah, Donovan, thanks for your question. This is Geo speaking. It's more about getting ready for those production volumes. We're not providing specific kind of production guidance or total hub production for the year guidance, but we are building the production system to be able to handle those kinds of volumes, and I can say that we are actively producing multiple hubs even now. because we're getting a ton of interest and positive feedback from customers and folks placing orders for hubs. I think your second part of the question was around ASPs, and I'll let Dakota answer more of the margin and ASP questions for the hubs.

Yeah, so in looking at the hub from a commercial perspective, the comparable comparative solution utilizing DC fast chargers can range anywhere from $150,000 to north of $250,000 for an apples-to-apples comparison to four 80-kilowatt DC fast chargers. We fall right into that range, right into the kind of middle of that range And the benefits of the hub over four DC fast chargers that you would install via conventional permanent charging infrastructure is that we are simplifying the installation by standardizing it into a single enclosure. We're reducing capex significantly by having one connection point instead of four connection points through various different ways. We're minimizing the amount of conduit, minimizing the amount of cable runs, trenching, site work as well as soft costs and engineering that go into site development. And then we're also adding in an additional nearly 300 kilowatt hours of energy storage combined with that DC charging. So if you were to scope this out for a traditional permanent DC charging infrastructure project with four DC fast chargers and approximately 300 kilowatt hours of energy storage, it would be significantly more than what a hub costs our customers today. And that's in a fixed-mounted application. Obviously, one of the biggest attributes of the hub that's been so well received by our customers is not just that capital cost savings for permanent infrastructure deployments, but it's the flexibility of our trailer-mounted hubs that actually allows them flexibility in deploying vehicles either in facilities that they don't necessarily own such as a leased building or a leased depot or a yard, or to be able to deploy them for roadside service or maintenance, or in the event of resiliency where there might be a storm or a power outage, we can deploy a hub onsite. So it really gives fleets a tremendous amount of flexibility. While we have talked a little bit about some of the pricing dynamics, in the early stages of production, we're still finalizing what those those margins and gross margins will be for the product portfolio. We're confident that they will be at the high end of our product margins, potentially higher than even step van or powertrain. And I think that's really speaks to the technology that we've put into the hub, the core technology, which is the energy storage systems, the charging power electronics and all of the software and energy management planning software that we've developed to run the overall hub. A lot of it's been developed over the last five or six years that we've been manufacturing vehicles. So we've cost-produced it. We've made it durable. We've made it reliable. And now we're taking it into another market that ultimately can see the value significantly because, you know, the charging market is not as established as the vehicle market has been in the last few years.

Okay. That's great. Thank you, guys. Okay.

Yeah, there is some variability and some flexibility depending on who's buying the hub and whether they're bundling it with trucks. So, of course, we originally designed the hub to help our customers with some of their infrastructure bottleneck challenges, and that was the primary use case we intended for it. So we do have customers buying trucks and hubs at the same time, and we can be flexible on pricing in that sense. But we also have interest on the hub from folks that don't purchase or use step vans at all. So, from different and unexpected industries that they are looking to use the hub to charge vehicles, but not necessarily delivery vans or walk-in vans.

Great. Okay. Thank you. I'll hop back in the queue. Thanks, guys.

Thank you. The next question is from Mike Schliske with D.A. Davidson. Please go ahead.

Hi, good afternoon. Thanks for taking my questions. I want to pop with you on some of your comments you've made on gross margin. If you take out some of the one-time items, and again, I'm still going through the press release here, but it looks like you're around the low-teens gross margin in the first quarter. Do you think that's a reasonable, sustainable level you can get, taking out all the one-time items and gains and losses, et cetera, the rest of the year? Or does a little more volume, which you'll be getting later in the year, get you a little bit higher towards the mid to high teens? Maybe that's my first question.

Yeah, thanks for the question, Mike. So we are confident in those gross margins continuing to stabilize and grow even further. We are now almost completely through some of that legacy inventory that was lower or negative gross margin. We're moving into our 2024 model year vehicles, which are in the high teens and even into the low 20s range. There's always going to be some variability based upon product mix, customer incentives that we might do with various customers or specific markets that we're going after. But we are confident that that will continue to improve at the product level. And then when it comes to kind of contribution margin beyond that and some of the one-time transaction costs. I'll let Liana speak a little bit more to that and what our margin profiles look like beyond Q1.

Yeah, I think with respect to the one-time transaction costs, those have been normalized. We took additional capitalized freight costs as a result of the change in the methodology in the fourth quarter, and those have been normalized and reflected in our results. And we are also seeing just overall lower inventory reserves based on just our overall improvement in our inventory processes that we expect to sustain. So all of that gets us to a positive direction that we feel confident in the outlook of our margins going forward.

Great. Super. Thanks for that commentary. And then turning to operating expenses, you cut that year over year by almost a third. Do you think that's about $13 million a quarter is a reasonable way to go. And you can probably see I'm trying to figure out when you can get to positive here. But is on the operating margin side, $13 million a decent run right now?

Yeah, I mean, I think just to highlight two important factors on the operating expenses for this quarter. You know, a lot of the DMV acquisition-related transaction costs have been capitalized based on accounting rules. We did record about 2 million of severance-related costs that's reflected in operating expenses. But, you know, as far as kind of the normal cadence on what we expect moving forward, while we don't necessarily guide to that, but directionally, you know, we might see some increase in operating expenses in the future quarters as we continue to wind down the EMV operations and some of the Operating costs, we assume that related to the mainly to the two leases that were actively subleasing. But I think, you know, just overall, we have significantly cut our operating costs and we continue. We feel comfortable that we'll maintain that cadence to help us get to the cash flow positivity.

Great. Also, I want to get a little more information on the EV bus and Winnebago customers. Do your deliveries that you've done so far this year, were those actually part of sales or were they more demos? And do you think those will be a material amount of the revenues this year? I'd love to hear a little bit of a commentary on what might be in the cards for 2025 from those two relationships.

Yeah, absolutely. So I'll speak to our powertrain business in general and not speak to specific units or customers, but We did deliver some powertrain units in Q1. It was a relatively small number compared to the total overall deliveries, but we do anticipate those will grow pretty significantly in Q4 and well into Q1 of 2025. Those sectors, both the on-highway commercial vehicle that we're building with Winnebago as well as some of the bus applications, and even the off-highway powertrains are growing, and we're seeing the demand for those products increase since we've made some of those announcements earlier this year with Winnebago, and we have forthcoming announcements this quarter with some of our other partners. So we do anticipate that being a bigger mix of overall deliveries this year. That being said, it's still one of our secondary business units, and we anticipate trucks will be the the majority of the volume that we're delivering this year.

Okay. Let me just squeeze one more in. Average price in the quarter looks pretty solid. I think you're over $200,000 on just dividing revenues by units. There is some mix in there, but is that a good assumption going forward to be above $200,000? Or am I missing something on your top line?

It's a great question. So this quarter we saw a lot more long range vehicles being delivered with that higher range battery pack. And that's really why the higher ASPs were reflected in the quarter. We don't anticipate that sustaining into the rest of the year. We will have quite a bit of deliveries with those longer range battery packs, but it will be a more even mix of short range and long range options. We do anticipate it will grow slightly from last year, but not to the extent that we saw in Q1 where we saw significant volume of deliveries of those 200-mile range of vehicles.

Okay. Got it. Thank you so much. I'll jump back in queue. Thanks, Mike.

Thank you. The next question is from Steven Gungaro with Stifel.

Please go ahead.

Thanks. Good morning. Good afternoon, everybody. Two things for me. The first, can you just remind us the impact that MIX has on margins and how we should think about that going forward?

Yeah, happy to. And thanks for the question, Stephen. So when we're looking at product MIX today, typical stepfans on our short-range 100-mile configuration generally going to be in the low teens range of gross contribution margin. When we're looking at some of our longer range vehicles with specialty configurations, whether it be lift gates or power export or specialty bodies, those can get into the mid-20s range. So it varies, again, quarter to quarter, depending upon what's in our customer delivery schedule and what's in the pipeline. But ultimately, we've really thought about a two-thirds to one-third ratio, with two-thirds being that hundred mile short range vehicle, and a third being the longer range vehicle with some of those specialty up fits or configurations on them. And then when we're looking at powertrains and some of our other ancillary businesses such as Excess Energy Solutions, those are generally in the higher range. So when we're looking at services, anywhere from the 20 to 30% gross margin range, and then on the powertrain side, anywhere from the mid-teens into the high 20% gross margin range on those product mixes. But both of those businesses make up less than 10% of revenues today.

Great. Thank you for the details. And the other question, just from a market perspective, what are you guys seeing in the market from a demand perspective and inquiries, and how does that What kind of confidence does that give you as you look at the rest of this year, your guidance, and even into next year?

Yeah, that's a really great question. So I think there's been a tone across the industry that's been particularly set by the passenger car sector around growth potentially waning or the market slowing down. We have not seen that whatsoever yet. In Q1, our sales for Q1 this year versus last year were up significantly. And as we're tracking today, sales orders signed for Q2 is tracking very similar to Q1. We're continuing to see strong interest driven by a few key tailwinds, one of which is still the California ACF or Advanced Clean Fleet Regulation. That's prompting a lot of fleets to really be proactive about their transition to EVs. Another is the cost of fuel still remains quite high in a lot of our key metro markets. And so customers are really looking for some of the fuel savings that are afforded by our vehicles. And then, again, the third factor as we look at deployments is customers who have already deployed a lot of excess vehicles are placing recurring orders because they're seeing maintenance costs come down and they're taking advantages of a lot of the incentives that exist within the market today. So there are both the state level incentives and municipal incentives that exist in places like New York and Texas, Oregon, as well as a lot of the federal incentives that were afforded to the industry by the IRA. So there's tremendous tailwinds in the commercial sector right now. And we have not seen growth slow down, obviously, Going from a converted sales order to a delivery and recognizing revenue and getting that truck on the road is still a process, and we're trying to streamline that and improve our infrastructure deliveries to make that happen quicker. But there has been no shortage of demand for the products this year.

Great. Thank you for the details. Thank you.

Thank you. The next question is a follow-up from Donovan Schafer with Northland Security Markets.

capital markets, please go ahead.

Hey guys. Um, okay. Uh, so I want to real quick on just, um, going back to the delay, just trying to understand your capability of handling that type of stuff internally. Um, you know, you took in, uh, the, the facility in Birdstown, uh, you, you took that over yourselves from, I think Fitzgerald. Um, and so, In the case like this where there are some delays in terms of customers taking deliveries, are you able to keep running that facility at the same run rate, or do you run into sort of storage or warehousing capacity issues? And just trying to think, if you get like a lumpiness from something like this, but then it gets unstuck the way Dakota, you seem to have described it, like the deliveries already happened this quarter, does that allow you to just run into more normalized you know, you have a normalized operating rate, even if from like a, you know, gap accounting, revenue recognition, whatever, it could somehow look lumpy, but you're able to just keep humming along. Is that, are you able to do that? How does that work? If you could elaborate, that'd be great.

Hey, Donovan, this is Gio again. Yes, we're able to keep humming along. This was one of the main design goals when we switched over from the previous version of the step van to the one that we're building today. A lot of the step van is built in subassemblies. And so if we have a blockage in one of the areas, we can continue to build ahead on subassemblies so that when that bottleneck gets unlocked, we can continue building trucks. But we've not had to send people home or had massive lumpiness due to some of these issues. We've been able to keep building consistently. And now we are adding another product, or we've added another product to the same facility, which is the hub. And so we are also able to cross-train folks on building step-van chassis as well as hubs.

Okay, that makes sense. And then for the hubs, so I think the standard configuration, I believe, is four chargers, You can charge four vehicles at once from the hub. Is that, is it safe to take that as kind of like the rule of thumb? I'm getting at the bundling here. So when you bundle, and I understand, you know, some vehicles are long range, some are shorter range, so on and so forth. But hypothetically, like if we were modeling or looking forward and suppose the bundling became a more regular thing or, you know, maybe say 20% or something of vehicles were sold part of like bundling, then is it kind of a four to one ratio generally or does that sizing in terms of just the capacity for the vehicles versus the capacity of the hub, it may actually be better to size like three to one or something? Is there kind of a rule of thumb ratio where you've landed?

Yeah, it's a great question. Getting into a lot of the nuance with deploying the hubs, it actually kind of works the other way in our favor. So with most of our shorter range vehicles, our customers are driving an average of 50 to 80 miles a day, utilizing the range of kind of 40 to 80 kilowatt hours per day. And so what we see is that you can actually support quite a few more vehicles and run a dual charge cycle per day with the hub. So that actually will allow customers to be able to run up to eight trucks per hub in a bundled environment. It really makes a lot of sense for them because as you're thinking about their operations, if you can charge eight of these vehicles quickly, get them back on to the package line or the delivery dock to be loaded for the next morning. It's really not disruptive to their operations and ultimately allows them to deploy charging infrastructure incredibly quickly without waiting for that site infrastructure or power upgrade that a lot of times four or even eight chargers would necessitate.

Wow, that's actually pretty impressive. In that case, you know, if you can sort of, you know, if you can sort of enable or facilitate the delivery of eight vehicles, is that something where you would look at offering the hub like at cost for that type of a situation or part of bundling it? Or would you just go for like a lower margin or just trying to think about how to think about what that would, how you would look at that?

Yeah, we have a range of different customer incentives. It really depends on the customer profile and the lifetime value of that customer. But ultimately, we're going to try and expedite and deploy as many trucks as possible in a sustainable manner with our customers. Some customers will require different loading configurations or they need more energy storage or less if they're running the higher, longer range vehicles. They might only be able to get four charge cycles off of a single hub. So it's really nuanced and dependent upon the customer, but we are really focused on getting as many trucks out there as possible. And if the hub can support quicker deliveries, we're going to deliver them.

That's awesome. Okay. Well, thanks, guys. Thanks for taking all the questions. I'll leave it there. Thank you.

Thank you very much. This concludes our question and answer session and the conference has now concluded.

Thank you for attending today's presentation. You may now disconnect your lines and have a great day.