Carbon Revolution Public Limited Company (CREVF) Earnings Call Transcript & Summary

Hello, and welcome to Carbon Revolution's Investor Webinar. I'm Andrew Keys, and I will be facilitating today's event. Today, the company is pleased to be providing investors with access to 2 members of the executive leadership team. The purpose of today's webinar is to share perspectives about the company's U.S. market and its focus on managing customer relationships. Joining me is Ron Collins, Vice President of North America; and Jo Markham, Director of Customer Excellence. Ron is based in Michigan in the U.S. and Jo is on site at Carbon Revolution in [indiscernible]. In a moment, I will hold short and separate interviews with Ron and Jo. At the conclusion of Jo's interview, I'll open up for Q&A for investors and analysts. A reminder, when you send through your question, please keep it on topic. Noting that today, Carbon Revolution is not providing a trading update or commenting on program and production volumes. Please also note we'll be finishing within the hour. Good evening to you, Ron in Michigan, where it's just past 7:00 p.m.

Good morning to everyone in Australia, and I hope you've all made it through the earthquake okay and back on track. So let me introduce myself very quickly. I'm Ron Collins, Vice President, North America for Carbon Revolution. Having recently joined after retiring at 31 years at Ford Motor Company. While I was at Ford I held several assignments, including Global Chassis Engineering Director, Asia Pacific Engineering Director, which brought me to Australia for several years and China Product Development Director. About half of my career was overseas and half of my career was in Detroit. So a long history with one of the major automotive OEMs, but excited to be at Carbon Revolution now.

Ron, how did you become attracted to Carbon Revolution?

Yes. So while I was leading Ford Chassis Engineering, I believe it was 2015, I visited Geelong in that capacity, and we had an opportunity to visit the Carbon Revolution facility. And at the time the team at Carbon Revolution was just launching what we referred to as the Hummingbird program or the Shelby Mustang GT350R. And that's a very small volume program in Ford, but it's very high profile. And when I saw the technology up close, I thought to myself, this is great for the Shelby Mustang. It will be very well received. But the real potential in this technology is at high volume. I was thinking at the time S-series truck in North America. And during my career, there were a handful of times where I was involved with game-changing technology, electric power steering being 1 example. Antilock breaks, quite a long time ago being another example. And I thought to myself, this is a new game changer in the chassis space. So when I retired from Ford and had the opportunity to join Carbon Revolution, it was a very natural transition for me. And again, excited to be involved with this company and such a game changer in wheel technology.

And your role as Vice President of North America for Carbon Rev, why is that so critical for the company?

Well, the intention is to drive the broad adoption of the technology carbon fiber wheels across the North America market and ultimately, the global market. So the North America market being perhaps not the largest in the world anymore, now that China has gotten so large, but it's still the most lucrative market in the world with a lot of high volume of high-margin vehicles. So my intention is to leverage my automotive OEM experience to drive large, broad adoption of our technology.

Ron. Thank you. When you're thinking about the sector and the adoption of the new technologies, as you said, how far progressed or OEM decision makers with their thinking on this technology?

So automotive OEMs are always risk averse, and they always start slowly -- and slowly and at low volumes to make sure the technology is sufficiently developed for release into broad applications. And that's beginning part of the low volume evaluation type of application has happened at a couple of the OEMs Ford and Ferrari. And the technology has done very well out in the field. So they are past the initial adoption phase, the initial evaluation phase and have progressed to being more confident in the technology and more comfortable with considering larger broader applications. So I think the thinking is always evolving. There's always data points coming in. But I believe the thinking has matured quite a bit in the last year or 2 years.

Okay. So to be clear, the perspective of the OEMs or the thinking about the technology, it's evolving. I just want to recap on that how does that evolve? How has it evolved over the last couple of years? And how will it evolve?

So our technology brings a variety of attributes that are not available with aluminum. The most obvious being a significant weight save, but we also have advantages in aerodynamics, in NVH noise, vibration, harshness. We have an inherent noise reduction attribute as well as we can deliver greater durability than aluminum. And last but certainly not least, we are capable of very compelling styling that's just impossible with aluminum. So those attributes are very much in the interest of the OEMs. Certainly, the aerodynamics and the weight savings, our range extension technologies, and as EVs are becoming more and more mainstream as petroleum becomes more and more, I don't want to say rare, but more -- the impact on the environment is greater and the desire to lessen the dependence on oil increases range extension and getting more out of every unit of energy is extremely important for the automakers and our technology is one of many that offers range extension. So that is why, certainly, there's a lot of attention on range extending technologies and we're among those.

Perhaps using an example, can you explain how new technology adoption in the auto industry works?

Sure. So new technology is almost always piloted with a small volume to test how it performs in the field, whether there's any hidden concerns or risks and taken slowly at the beginning. And an example would be electric power steering, 1 that I was involved with directly. The technology was developed in the late '90s. In the early 2000s, early mid-2000s, the first applications were made. I recall in Ford, it was on a hybrid vehicle, which at the time, a hybrid vehicle was a very exotic thing and very low volume. So that's where Ford tried the technology and in 2004, I think that was the only application Ford had of electric power steering. I went overseas to China for 6 years and when I came home in 2011, almost the entirety of the Ford lineup had been converted to electric power steering. So they tried it very slowly, very carefully at low volumes. The technology proves out. And then they went equally up in application curve to almost full penetration. So that's how it usually works. And we're in those flatter parts of the earlier part of the curve with carbon fiber wheels.

And just carbon fiber wheels and Carbon Revolution can we be really successfully disruptive to the automotive wheel industry. And I guess, if so -- what gives you that confidence?

Well, so I think it's really important to remember that the development cycle for new cars is a long time, typically from new platform advent to start of production, it's 5 years. And -- so you think about what we're producing today was designed, conceived, designed, engineered years and years ago. The first application of carbon fiber wheels on the GT350R, that vehicle was engineered in the early teens and we're producing those wheels now or getting close to the end, but that's how long those development cycles are. So I think of disruption having been a product development engineer, I think of disruption has something that occurs years and years before you see it in production. And certainly, our technology is having an impact on those architectural phases and planning phases of new programs.

I'm going to sort of challenge a bit there. You're saying that we're already disrupting the market. In the context of last year and selling about 13,000 wheels, that's a pretty small volume. Is that really disrupting the market?

Well, is it disrupting the market in terms of what is being shipped from wheel suppliers to OEMs today? Not to a great extent, if you look at it that way. If you look at what is happening in the planning stages for new programs, they suddenly have a choice on their pallet that wasn't there before. So in the past, it would be a just check the box, new car gets some new aluminum wheels, move on. Now new car, we have a choice here to make because we have a potential enabling technology that will enhance the range of the vehicle and the customer appeal of that vehicle. So from that perspective, it is disruptive. Is it coming out the back of plants yet? In that kind of disruptive way, not necessarily, but it's a long pipeline. And if you're only looking at what comes out the back of plants right now, you're looking at the end of that type but it's a long pipe and a lot of things happen in the interim that people along the way might feel very disrupted.

All right. Thanks, Ron. That makes sense. Appreciate that. Take a breather, and I'll now will catch up with Jo Markham, Carbon Revolution's Director of customer excellence. Hello, Jo.

Hello, Andrew.

Well, can you please explain your role as Director of Customer Excellence at Carbon Rev and your career experience beforehand and what attracted you to the business.

Okay. Okay, sure. I guess there's several aspects to that question. So when you break them down. So Carbon Rev wants to be considered a supplier of excellence. Given our customers are on the other side of the world and in a completely different time zone, we know the only way we're going to do that is we strengthen our relationships with the customers. So really my role is my function was created to facilitate that. In essence, that's what I'm here for. My background is predominantly all General Motors. So I had 23 years at General Motors and then just a brief state at following that. I'm an engineer by trade. So all my, I speak 15 years as part of the global product development team. And then later, I have the opportunity to join the whole executive team in more commercially focused roles. So I was the Director of Quality for a while, then I became the Executive Director of After Sales and I finished my career at General Motors as the Managing Director of On staff at GM International. So I really enjoyed that. But what it does mean is like Ron I come to the role here with the needed understanding what OEMs expect from their -- expect from their suppliers. So that's something I've been able to bring to the business here. What attracted me to Carbon Rev. Full transparency [indiscernible] control is been at the gate site in about wheels, where I chose the proposal from Jay. But at his invitation, I came down to visit the plant. I've got to say the third thing that really catched me with the actual product itself. Not only are these wheels are beautiful to look at. There's not much on, Andrew, and I could pick these wheels up easily, right? No problem at all. I spent so much of my engineering career trying to take weight down the vehicle. I guess Ron alluded to that a little bit, too. But I completely understood the benefits that, that brought to fuel economy and to range. And particularly given that OEMs now are all -- so many of them now moving towards electric vehicle. I just instantly understood that Carbon Rev had the right product at the right time. So for me, it was more of a question of why wouldn't I want to be involved. Why would not want to come down and join the company. And look, lastly, I guess, given that I have always worked for multinationals, the opportunity to work for an ASX listed company and to support local product development, local manufacturing and develop work and talent there was -- those are real attractions for me too. So yes, it was following that digit down here, it was a pretty easy decision to come to the team.

Yes. I understand the wow factor. I think anyone who visits the factory at Geelong [indiscernible] walks away. It's a really dynamic factory and there's an incredible wow factor here. So I understand that. Your role at Carbon Rev's, I guess, how does Customer Excellence worked at Carbon Revolution?

Yes. Okay. So I guess -- the key to being the supplier of excellence is really the effective launch of new products and customer delivery. We go to a lot of effort here to overcomplicate it more than that. We need to keep it really simple. So we want to deliver products on time to the great quality standard. That's what we want to do. So my Customer Excellence team and the way we do that, we've got formal functions. And Andrew actually I anticipated that we might get into some of these I've sent you a couple of slides, perhaps you might be on a slide there, perhaps you might pull that up for me. And that might just make it easier for everybody to follow a little bit. So the 4 main functions here. The first 1 is our customer quality team. That team is responsible for really defining that great quality standard with the customer. So we do a lot of work upfront to make sure that we get that locked down. And then this is a term that really work to make sure that we've got the processes and the systems in place to maintain those quality standards. The program management team, they now saying they manage all aspects of the program execution. Program Management team is really involved very cradle-to-grave type functions. So they're involved with the program and the customer even before contract signing, and they see the program all the way through to start of production. The third great thing can see on a listed launch engineering team, that teams responsible for the preproduction, the build of all the preproduction mill requirements. And in doing that, they are also responsible for creating a robust operational package. And that's needed too when we're ready to hand a program over the production when the customer is really going to [indiscernible] start a production, vehicle production. So that team is really defining the physical builders that we put through our plan. And then lastly, then you can see that we've got customer -- we've got the customer engineering. These are our engineers that are actually on site in Europe and North America. So these are the guys that can respond to our customers during their day in their time zone. If they need to be for the guys that really get to spend a lot of face-to-face time customers as COVID allowed, I guess. In close communication with us here in at the factory, but also spend a lot of time face-to-face with the customers as well. So that's how we put it together. And you can see from that, that -- we really -- customer excellence really we play across the entire business here. So that's how we make sure that we give a real thorough communication to our customers. We interact with the industrialization team as they're setting up equipment. We're working with the product development team, they're designing wheels. We're working with the production team to build the wheels. There's a lot of work done upfront with the sales and business development teams and financing or always want to know how we're spending their money. So that's a big part of our communication as well.

Thank you. What do customers expect from you and your team?

I think I alluded to that earlier. And I always -- again, it's something we keep really simple. Our customers, they expect really clear transparent communication from us. We need to meet our commitments, and that just means we need to do what we say we're going to do.

That's pretty short and sweet. How then are we going with meeting our customer commitments?

Yes. It's the natural next question, isn't it? How we're going with our commitments. Look, we're doing well. We're keeping our tents I'm not going to claim that it's all in Certainly, we've got challenges along the way that we've had to overcome. But I'm really pleased -- I'm really pleased with the relationship that we have with our customers at the moment. And I'm really, really happy with the level of communication and trust that we've developed with our customers over the last 12 months. I'm both confident and comfortable that our customers are really pleased with our performance.

Okay. Thank you. Anyone who visits the factory, I think, would pick up on the phrase flawless launch. So everyone who works at Carbon Rev is aware that need. For the benefit of -- for everyone who's joined us today, what does that mean flawless launch and how does the organization go about executing a flawless launch for the customer.

Yes. Well, I mean, from the customers' end, I'm going to reiterate again, it's really straightforward, but we deliver wheels on time when we deliver them to required quality standard. Internally though, we need to be a little bit more structured about the way we approach that. So we execute a mature cross-functional gateway process. We call that the wheel development framework. And that's what we follow to ensure that we execute these programs as required by our customers. Each gateway has patches and keep elements that we need to execute in a timely manner. So that's right from the initial conversations with the customers through program award, through our virtual design and testing there and then into the physical testing, physical builds all the way through to production ramp, PPAP and the customers start of production. In terms of the timing that, that takes, Ron alluded to a long pipeline. We overlay that wheel development framework on top of the customers' needs. So our time line will expand and track really based on what the customers' time line requires. It can take typically, it's 2 to 3 years, Andrew around that sort of timeline there.

You slipped in an acronym there. Not everyone may know what that means you used, PPAP. What does that mean, PPAP?

You should never ask what and acronym means. It's production part approval process. I've got to take on that one.

Thank you, right. So can you explain how the process and what are the critical steps for introducing a new wheel there?

Yes. Okay. I think there should -- Andrew, there's a second slide that I think might be helpful as stuff to talk about the world a framework. I thought, again, something that we talked about a little bit. Flight gateways that stretch over there. The first gateway, you can see there our program planning and definition. This is, as we're working with our customers, most of these gateways preboard preprogram award so it's really when we're working with the customers to establish the program and the requirements for that type of work upfront. We then moved through to gateway 2. This is where we're kicking off the program and the product in development. So team, our Director of Product Development and Design. This is where we really move into in the area. The guys really virtually designing wheel, establishing all the requirements for the wheel, not only from a styling perspective but also from a performance perspective and then making sure that the wheel is designed to make that all the FDA work that needs to go along the virtual analysis that happens to make sure that we meet those requirements. When the designs are ready to go, it's handed to really last thing to launch team through Gateway 3. So Gateway 3 is where we really start to build our physical properties. We're working out how to lay out the wheel and how to really produce the wheel. And that's where we also announced testing the wheel physically to make sure that it's meeting requirements. It's corresponding to see what we saw through the virtual tests and then it's meeting our production requirements. It's also when the customer gets to see the first physical properties. Not only are we doing our testing internally. But obviously, we're shipping wheels to the customers for their vehicle test programs as well. The fourth gateway is our production capacity range. So this is where we're through all our testing, we're meeting the requirements. We've got a great production pedigree with the customer, and we're really starting to work closely with our production team to build these wheels in volume. And so that's what we refer to as a production ramps and a production launch and Gateway 5 there our production handover. So that's really 1 we're in steady-state production, and we're shipping out to the customers. So yes, that -- I guess that captures, I hope that gives you an understanding of the way we progress through that real development framework. It's a process that all these factors would recognize and utilize in some sort of form. We're not reinventing the wheel here, but it is really important for Carbon Revolution that we have a system like this, particularly given the pace of our new product and process development. We're bringing a new and safety critical technology to market here. So we need to make sure that we've got a very structured approach in place to execute that.

I've got 1 more question for you, Jo, before I ask that, I just a reminder for all those who are watching or listening. If you'd like to ask a question, that opportunity will exist in a few minutes. Please to send it through or you can raise your hand in German we'll bring you into the webinar. A reminder, though, please keep the questions on topic today for Ron and Jo noting that we're not providing a trading update or commenting on program and production volumes. So my final question, Jo, for you is in relation to COVID. How is that impacted on launch activities since it's been around?

Yes. Well, certainly, we're coming out of a bit of a tough time with COVID. All of the customers where we have products in development, all of the customers really were impacted by COVID in 1 way or another, and just that all of the delayed the launch of their programs to some extent. But we're at the other side of that now. All our development programs are progressing, which is exciting for us here. They're all seeing the milestones and ticking the boxes that we expect them to tick. So in terms of the impact of COVID there, I'm confident and hopeful that we're at the upside. I guess the only ongoing legacy that we do have is some freight and shipping our wheels, particularly through the development space to our customers. Typically, in the past pre-COVID, we might have allowed for 5 days to a real air freight into Europe or North America. At this point, we need to plan a bit further out. So we make sure that there's usually about 2 weeks allow for shipping. But other than that, it's pretty much back to business as usual, which is great.

Thank you, Jo. Thanks, Ron. We'll now go to questions from participants. So the question from Peter Blight, which I'll direct you Ron. Do you see any strategies that aluminum wheel makers are employing to fight back against Carbon Revolution for carbon fiber wheels?

So look, we fully expect competition. It was never the expectation that we would enjoy 100% market share of the carbon fiber wheel market, especially as it grows. So I think we can all rightfully expect that competition will come in. However, we do enjoy a significant technological advantage and lead time. And we will leverage that to try to grow our business as much as possible before the competition gets a foothold. And then we will strive to maintain that by continuing to innovate and invest in product improvements, manufacturing improvements to maintain the lead that we have built over our competition. And from my time at Ford, Carbon Revolution reminds me a lot of Michelin, where they're the best tire company in the world because they've established a great foothold in the market and then they continually innovate. So that they're always certain that they have the best tires available. And that's a model for us to follow as well.

Question from Hamish to you, Ron, in context of OEM product innovation life cycle. How has COVID changed? How are we thinking about product development and new technologies? Has it accelerated or slowed or reduced their appetite for change?

Yes. COVID is an interesting thing, and the ripple effects continue to touch us all every day. I can tell you March 13, 2020, I was responsible for Asia Pacific Engineering. My office was in broad and I walked out that Friday afternoon, Friday, the 13th, and said to my secretary, I'll see you Monday very. And to this day, I've never seen her again. And things changed a lot over that weekend. And I can tell you that the Ford product development organization had a few rough days that following week is we did things that we thought were frankly impossible. And we fell in a hole in terms of our product development cadence, but we started to get better very soon. And over the course of a month, I'd say we were back to normal as normal could be. And of course, I came home last year and I found it sort of surreal that those -- that massive campus in Dearborn that Ford has was virtually empty, and everybody at had gone to work from home. But a very interesting thing and very unexpected thing happened throughout the industry where we were certain before March 13 that we could not sustain a long period where people weren't in the office and still deliver our product programs. What we found was, in fact, we could. And 1 seismic shift that they talk about in Detroit a lot, Ford and GM have no intention of bringing back their massive workforces to the way they were before March 13, 2020. They found that they can be as or even more productive people working from home, they talk about hybrids, maybe a few days in a few days out. And they find that some things actually work better without people having to be in the office. So has it affected the way they think about products and new technology? Of course, it has. It's affected everything. And if anything, it's made them more nimble and more willing to accelerate new technologies because, frankly, in the world of Zoom and the world of everything virtual, the customers' patience for those longer, more manual product cycles has fallen off. So if anything, they're looking to leverage new technologies more, move into them as fast as possible, do more virtual development and prove out. And I think you'll just see that accelerate not only to the auto industry, but through industry and society in general.

Thank you. I've got a question for you, Jo, from Hamish Murray at lot How long does it take and think about the 5 stages, the gateways that you were referencing earlier. How long does it take on average to -- for the process to work through gateway 1 and 2?

Gateway 1, where we're interacting with the customer leading up to a program award. Adrian Smith, our Director of Business Development. He is working in that gateway. That could actually be a conversation that stretches over quite a period of time. Those conversations can be quite lengthy. In terms of my team, so that's Adrian, they're having those conversations, and that's naturally part of business development type dialogue. I guess once my team gets involved at that point, we're more established. So we're starting to talk more specifically about -- more detail about what the program looks like and how it rolled out. So yes, it can be a matter of 1 month, I guess, from when Adrian engages the customer through to program award at that gateway 1. Gateway 2 then, it's really the point where we're working with the customer around defining, really defining and locking down the specification of their wheel and finding a design that works for that. What leads that really comes down to the complexity of the wheel. So the complexity of the design that they're looking for. If the customer looking for the type of thing that we've done before from a styling perspective? Or do I want to explore some of the bespoke type designs and styles that Carbon Rev can enable. That's 1 of the exciting things about Carbon Rev. So working with the design teams and our OEMs. There are some of the most challenging aspects of really getting the reel off the ground. So that can take a period of time going back with support with the design studio there. The other thing that needs to be determined is the performance of the wheels. What sort of low rating the customer wants. Is the customer looking for a separate front wheel design and rare wheel design? Or are they just looking for a wheel that is to same a square segment on each corner of the car. So all these aspects will go into how quickly we can progress through that gateway 1 with the customer as well. I guess I guess, Andrew, the other thing to point out though there is if we're working with an existing customer, and we're looking at a new program, inevitably, we do progress through Gateway 1 and Gateway 2 more easily. I guess by then we understand how it works. It's better understanding of what's expected, and we can meet through those gateways a little more smoothly. As we're working with new OEMs. There's always that learning period. It will be more backwards forward through there. But it's always -- so it's an exciting part of the program through there, it starts to work out exactly what's needed.

Yes. A question and sort of a follow-up that Hamish Murray asked was, do customers I guess you talked about the 5 gateways, do customers always go through or 5? Or is there -- or a small percentage of customers that sort of get through the first 2 gateways and for whatever reason to decide to not progress with the vehicle. Does that mean not everyone goes through 5?

That will come down to -- as the direct answer not everyone will go through all 5, but some of that will be because of the agreement that we established upfront. So some customers we'll reach out to us, engage Adrian through business development, and I'll talk to us about has a proof of concept. So they've got an idea that they'd love to try out. There might be a specific test that they're aiming to pass. They're exploring the technology a little bit. So in the past, we have worked with customers where really it's at the end of that gateway 3 where we've got physical properties, and we're working -- we've worked with them for a specific need. Inevitably, though, where that program based the intent and the experience has always been that, that will then lead on to another program, which then once you get through that proof of concept, you then move to a full vehicle program. So we're always excited to see that happen. And inevitably, that next program will proceed through the full 5 gateways, and we'll see that we go in production.

All right. Thank you. I do have a few people that raised their hand. So I'm going to attempt to bring them into the call. The first 1 is Cam McDonald from Evans and Partners. Cam, you need to unmute your line. Don't you do that, go ahead.

Sure Thanks, Andrew. Question, Ron, for you, if I can, just to go into a bit more specifics around the benefit of the EV weight reduction and the range extension. So how much weight can you take out versus a normal production passenger vehicle. And what does that translate to in terms of range, please?

Yes. So I'm really glad you asked that question because I spent hours on that for another reason this afternoon. So thanks for that. The weight reduction is dependent on the -- a couple of things, wheel size, the styling choices the studio makes, the diameter and the wheel width. That having been said at, say, a 20-inch wheel which is fairly common these days, a carbon fiber wheel is about half the weight of an aluminum wheel. And as the wheel sizes get bigger and they are getting bigger, we're seeing 22s, 24s even some 26s the advantage that carbon fiber has increases over aluminum. So at 26, we might be 60% lighter. That adds up to somewhere between 40 and 60 kilos per vehicle when you multiply it by 4 or 5 depending on what the spare strategy is. And those 50 or 60 kilos might be worth somewhere in the range of, say, and it's, again, very dependent on the vehicle and so many other factors that go into it. But let's say, 10 miles of additional range, which don't sound like much, but let me assure you, as an automotive engineer that's of improvement. So it's a significant wait phase and there's significant value associated with it in terms of range extension.

So just looking at that 10 miles, so what's that in terms of percentage, please? It's like sort of what's the average range, like 300 miles?

It depends on the vehicle, again, but I think the range of EVs right now appears to be somewhere between 300 and 400 miles of range. the very best ones are approaching 400 miles, and it's pretty standard to get 300. So 10% would be -- or I'm sorry, 10 miles would be roughly 3%, 2.5% depending on what the base range was. The thing I would leave you with though is that's not all of it, because remember, we have advantages in aerodynamics as well, which again extend the range as well as because of the NVH benefit, there's not on benefits where they can take weight out of the vehicle from sound package and mass campers, which doesn't come from directly from our wheels, but indirectly from what our wheels provide. So there's a pretty significant range benefit to carbon fiber wheels.

And when you're talking to customers, how much how much do they value that benefit given the cost of the wheel versus aluminum because they're looking at a $12,000 investment to put these wheels on. So do you have to like is -- where is the inflection point where all of a sudden, this has become mass adoption at a price point?

Well, I think, again, there's several factors at play there. Every vehicle is going to be in a unique -- every vehicle program, it's going to be in a unique position for some of them, for whatever reason, they live to good life, and they've always eating their peas and carats and they're not in trouble. So what they're willing to pay for a weight save isn't very much. Most programs have led a very, very horrible life, and they're always in deep trouble and what they'll pay for weight save is significantly more. But again, it's in the context of that program and what they're trying to accomplish and what they're trying to do. I think the other thing to keep in mind is it's coming from 2 directions. On 1 hand, the OEMs have a desire for range extension, and that will drive value that they assigned to the attributes that we can provide in that regard. The other thing is as they want more of them, the economies of scale kick in and as Henry Ford taught us 120 years ago, make more and they're cheaper to make. So hopefully, we can meet somewhere in the middle, and everybody is happy.

I want to also now bring into the call, try you need to move your line as well, if you're there, go ahead.

Just a quick question for Jo. It's probably pretty straightforward. I'm just interested in -- you talked about you need to meet -- keep it simple and meet requirements on quality and timing and just call up your end of the bargain. How does it feel from your side in terms of the OEMs? Are they very predictable? Or is there -- how do you think about the risks that they change their mind, delay their thinking? How rational are they? What are some sort of the risk of a surprise from your point of view?

Sure. I have come from an OEM, I think the OEMs that, as I expect, and to answer that question directly, OEMs can change their minds partway through. One particularly once you start to get physical wheels to them. There's always -- there's always a possibility that someone might not like to look at it. So we need to tune that a little bit perhaps they see the billing with it. They want to push the boundaries a little bit more. So certainly, that type of dialogue does happen with the OEMs. But I've got to say as we work through that, again, given I'm really pleased with the relationship that we have. We were able to work our way through that. So we have been asked to tune to things we've bearable to do that and do that in a way that fits the timing requirements and to manage the program. If we've been used to things that are outside of our boundaries, we've been very clear and transparent with that communication as well. So I think it's just a matter of communicating very clearly with the OEMs and with our customers. And we've seen the size in every case, we've been able to find a really nice point.

Yes. And I just wonder whether the sort of rise of EVs and the urgency that perhaps is there on that front. Is that changing anything? Is there kind of more urgency is the decision-making different? Or is it just another kind of new development like past developments?

The OEMs -- I mean, they -- we've got the processes in their system internally so that they need to progress through. So in terms of the programs put 1 to the other, I'm not seeing a lot of change in terms of the activities that we need to go through with the OEMs. These processes that need to be followed. Certainly, I think there's the 1 thing that we are always conscious of is just time. I think that's the 1 element that the OEMs will look to potentially accelerate over time. And we're always looking to make sure that we make the requirements as that come along as those demands come along. But other than that, as I said, the OEs that all buy their processes. And it's proven it works and they tend to stick to those.

Thanks, Jo. Mark if you're still there. I've me to your line if you can do the same go ahead and ask your question.

One has been really, really so really helpful. Thanks very much. I'm not sure who best answered this, given you both came from competing OEMs. But at the start of Ron's presentation, he mentioned how risk-averse how we end the start slow with low volumes to make sure the technology is actually sufficient before they start to develop it. So clearly, that was a reference Ford where Ron came from. But how does it actually apply to the other OEMs like with GM, for example, do they should be quite happy with all the early work at Ford funnel or they want to start back can do, we'll just step themselves as well or any OEM for that matter.

That sounds like a question for Jo.

Feel like question for me. Look, I think all OEMs will be cautious to a certain degree. But you're exactly right in the point you made. As soon as 1 OEM seeks another OEM demonstrated the capability, the get on to the bandwagon pretty quick is what I -- is typically what we've seen in the past, and we're hopeful that it be any different with the technology we're bringing to market here. I've certainly seen behavior I mean when I was with the General Motors as Ron talked through his experience around electric power steering, I've certainly had a very similar experience around electronic floral control. I was thinking of exactly the same thing at the time. So I suspect that there's not that much difference from OEM.

And would you -- was your comments based on what you're seeing with the 3 U.S. OEMs or with the Japanese and the Europeans also equally as fast.

I guess my experience has been -- my history has been more North American-based with my background at General Motors. Ron, I don't know whether you've got any more insight into perhaps the attitude the Asian-based OEMs.

Yes. I would just say a couple of things. First of all, whoever goes first, always takes 1 for the team. So if someone -- if Ford launches a technology first, GM will follow, but GM will do it in a compressed development time, still careful and conservative but compressed from what Ford did. Because -- and as I often said to my engineers when I was at Ford, if GM can do it, if Toyota can do it, then we're not talking about flying to the moon here or maybe I should say Mars because there's people that can fly to the moon as well. But the point being the second, third, fourth application regardless of it's a different OEMs is always much -- they catch up much faster than it took to develop it in the first place. The second thing I would say is I think all of the traditional OEMs are sort of the same level of conservative, probably because they've been subjected to the same level of American lawyers. But the Chinese OEMs are fast, they're super fast. And I would expect the Chinese OEMs to be quick adopters of new technology. They are quick adopters of new technology.

All right. We're not coming up to you. I've got 1 more question, and then we will look to wrap up the webinar. This is for you, Jo. In terms of program to program, what makes the difference in workflow and effort for your team? Is it volume attached to the program? Or are there other factors?

Andrew, I don't want to say to that I'll go back to sort of reiterate a little bit of what I said earlier. It's not volume basis is the answer to the question, whether we're launching a program with T wheels or we're launching a program at 100,000 wheels. We still need to go through the same activity. So again, the work required through my team really is based around the complexity of what we're building. Are we building a straightforward styling design? Is it a bit more complicated? Do we have a different wheel on the front and rare? Are we working with a new OEM? Or are we working with an existing OEM where we know the processes. So for my team specifically, we're really talking about the complexity of the product that we're building rather than the numbers that we'll be building in time. Now if we're talking to Andrew our Director of Operations, and he's going to be more concerned about how many wheels that he needs to push out the assembly plant. And certainly, as we develop the wheel and we get through Gateway 3 and into gateway for my team next to make sure that we're developing an operational package that the production team can pick up on runway and execute through the plant comfortably. So our concern initially is around the complexity of the deli. But over time, certainly, we do need to turn our focus towards making sure that we can produce that in the volumes required.

Thank you, and thank you, Jo, for participating today. There's been some great feedback come through and messages. I really appreciate your effort. And Ron for joining us from Michigan, wrap it up now. You need to go and enjoy the rest of your evening, if that's possible at now 8:00 p.m. That concludes the webinar. Thank you to all the attendees and participants and for the questions. enjoy the rest of your Thursday. And if you're in Victoria or following the foot, enjoy the grand final on the weekend, go dogs and good day to you.

Thank you. Goodbye.