Innoviz Technologies Ltd. (INVZ) Earnings Call Transcript & Summary

Thank you, everybody, for joining us for this session. My name is Mark Delaney, and I cover the U.S. autos and industrial tech sector. Very pleased to have with me today, Omer Keilaf, the Co-Founder and CEO of Innoviz.

Yes. Nice to be here.

Really excited to dig more into the Innoviz story, and I thought to start, we could talk on some of the current programs the company is designed in on. The company estimates it has more than $6 billion in forward-looking order book. How should we think about some of the key programs that are driving that forward-looking order book and how you see those ramping up into serious production?

Okay. So up until now, we were able to design in into BMW Series and Volkswagen. And Volkswagen is the bigger part of kind of the order book. Based on several platforms that we are designed in, our initial design win was for an L3 program, which is quite big across the different brands. But actually, since the initial nomination, there were several additional platforms that are -- became an opportunity for us. Some of them are for Level 3 and some for level 4. Possibly soon, you will be able to see some of that. If you're coming to CES, maybe that will be a good opportunity.

I look forward to it. We're on your schedule. So lots of exciting stuff that come in for January. Maybe talk about your LiDARs and the whole solution you bring and what differentiates Innoviz from some of the competition?

Yes. So when trying to explain about what makes an OEM to pick you, to nominate you, it's a very long process. An RFI process can last 6 months where they mostly try to gather information. And RFQ processes where you actually need to meet thousands of requirements that they provide. And through the process of the RFQ, you need to align on a very accurate plan that once you are nominated, you basically kick off a very defined plan from the nomination until SOP, that could be 3 or 4 years. So there are so many details that you need to cover and agree with. And of course, you have the pricing negotiation. Of course, in order to be successful in this and to be interested -- to be interesting, your product needs to be meeting their KPIs. And this is defined by the resolution, the field of view. I think those are the obvious one. I think what people and investors maybe underappreciate the understanding that there is a critical role in being a Tier 1 to an OEM, you just saw Valeo was here. OEMs when they pick a supplier for series production for millions of LiDARs, they want to have the confidence that the supplier would eventually be able to industrialize the product and produce it at time, at cost, at the right level of quality that the product eventually would last for 15 years. And OEMs became much more educated about what it really takes. And therefore, during the RFQ, some of the things that we are audited for are related to the fact that we're acting as a Tier 1. Now since Innoviz already gone through an automotive process with BMW, which is launching soon with our first generation, so our experience is very much valued. The fact that we became a Tier 1 to Volkswagen a year ago, also allowed us to show a lot of experience, and we are going through many audits that we can be successful for -- with. So any OEM who is making a decision these days for a new program would definitely prefer to use a product that was already picked by other customers that are credible because the risk that he would be taking for to -- by choosing a product that no one else took earlier is too high. And it means that eventually, possibly, they will be the only customer for that product and the supply would not succeed. So it is generated by momentum. Winning one program increases your chances to win another one. I think that in the last 2 years, we're able to show that we're able to gather those wins. And you can see that by our ability to move forward with BMW from a first-generation program to a second-generation program, going from Volkswagen from the first nomination to increase more platforms also show to other customers that we earn the trust of our customers, and they can feel comfortable working with us.

You mentioned field of view, resolution as some of the key KPIs, your customers evaluate when they're considering partners. You're not sitting still with the product road map. You had the InnovizOne, which is now starting to ramp up into series production to support BMW, but you have the InnovizTwo, you have a new ASIC. How important are some of those capabilities and products as you think about the go-forward opportunity?

So basically, the requirements of the LiDAR are meant to meet specific KPIs of the car. I mean, being very specific, when talking about Level 3, it's mostly focused on highway driving. And it means that you need to deal with very fast driving. As we know, the faster you drive, you need to be able to make an emergency braking decision for things to start further out because it takes more time for the car to get to a full stop. And in order to meet the 80 miles an hour or faster, you need to be able to make an emergency braking decision for a problem that might be 150 meters ahead of you or 200 meters ahead of you. Now how would you define a problem for a car. So generally, any obstacle that is taller than 10 or 15-centimeter could actually create a serious injury at a certain -- even a very small velocity. So it means that you need to have a very high resolution and very long range in order to be able to pick it up. And otherwise, you just cannot meet the KPIs of the car. So the better the sensor is, it allows you a safer and also a more comfortable driving because the car doesn't need only to react to what it sees. It needs to predict the scene. It needs to understand the scene so you can make more smooth driving. Because if all the car needs to do is to avoid a crash it means you are always going to be in a very uncomfortable drive where the car can break. Just to make sure you're alive, but you will not agree being in the car that you feel is unable to make decisions fast enough. So you need higher frame rate, higher resolution, longer range, it will make the car be not only safer, but actually more comfortable and something that people would actually enjoy driving, which is harder to meet than just safer. So we'll keep pushing on the performance to allow that. It's always important to keep the cost down, and we did reduce the price of our product. The bill of material, we removed it by 70% by removing a lot of components. And we continue to push those boundaries. That's one part, right? It's about also simplicity of industrialization and production and testing and availability. These are all important. But we also understand that the requirements of our customers are growing. For example, in the new program that we are working for BMW, we are no longer only providing the LiDAR, we're actually providing more than that. We're providing the compute model. We're providing the driving decision software, which is -- it's an MRM system. So we are providing a software that acts as a secondary driving decision policy. It means that in a level 3 car, you have redundancy, LiDAR, radar camera. We all know about it by now. But we -- actually, we can think about it, the main computer that drives the vehicle can also fail. And if the driver is not looking on the road because it's Level 3, that's not allowed. You need to have redundancy. So an MRM system, it's a secondary compute model that drives the vehicle in case the main platform fails. Obviously, it does not need to meet Level 3, 80 miles an hour in every condition because it's only for like 10 or 15 seconds to allow the driver to reengage, but that's needed. And we saw an opportunity that since we are developing the perception software anyway, and we are providing compute model for BMW for this, we offer them to be -- I mean, actually, that came from them that we will develop the MRM system. So now Innoviz not only selling the LiDAR, we're selling the compute model, the MRM system, the perception software, so our content per vehicle continues -- continuously grow. At all -- at any time, we are trying to understand what are the bottlenecks, what are the challenges? That we can help in order to accelerate the adoption. And if we can add value, we will do it.

When would the MRM system be ready for deployment?

So the launch of BMW is -- honestly the date, what, middle of the decade and onwards. It's in development.

And if you think about these various pieces, more sophisticated LiDAR units, maybe adding some software, but also then the bill of materials coming down. How should we think about the content per vehicle more holistically for Innoviz and how does that evolve over time?

So let's take the first program we won through Magna. So we were acting as a Tier 2. We had to find a partner, a Tier 1 that would make BMW comfortable with the industrialization. We were a very young company. We didn't know much about automotive and we partnered with different Tier 1s. We won the deal with Magna. So the total ASP of the program -- of the product was roughly $1,500 or $1700 that's Magna is selling to BMW. Our share of that is around $600 to $700 just for the components inside it that we sell Magna. Magna is also selling the compute model in that program. So that's the first program. Now in the new program, we are selling the LiDAR. But since the LiDAR is cheaper, it's actually repricing between $500 and $850 per vehicle. But in this opportunity, we sell the entire LiDAR, so we keep everything. We sell the compute model. We sell the perception software, and we sell the MRM system. So the ASP is actually north of $1,000 which is higher than what we had in the first program. And in a better -- I would say, even with better margins due to the fact it's also a lot of software involved.

That's interesting and very helpful. Maybe we can talk about the design win opportunity set. On the last earnings call, the company mentioned having 10 to 15 programs in the RFI or RFQ pipeline. Three programs, the company said we're on a more accelerated time frame. And perhaps Innoviz could hear back relatively, tune in on those. Any update you can share and time frames we should anticipate knowing more around when those OEMs will make their decisions?

So those programs are still in the making. And I would say, they're almost daily discussions. There are many OEMs that want to have a Level 3 on the ground in '26, '27. Basically, it means they need to make a decision yesterday. Obviously, these are complex programs. So there are many details. As I said, once the nomination is made, you need to have a very fixed and robust plan because if the OEM learns that he needs to change something in the plan, he would go back to you and say, okay, now we need to change something. What happens when you go into renovation in your house and you need to change something, it's expensive.

Unfortunately, yes.

Yes. So this is really the same mindset. OEMs want to be very, very confident, but everything is ironed out. And therefore, they want the RFQ to go through all of the details. And sometimes -- and since it's a complex program, then obviously, there are many discussions. But generally, really, we have good progress. I'm optimistic about our ability to gain more market share soon with very credible customers. And I think for a good reason. We have a good product. Our pricing is very competitive. Our experience is higher than anyone in this market. So let's see.

We'll be anxiously awaiting for any news that may come out on that.

By the way not only new customers only from -- also from existing customers -- as I mentioned earlier, even from the existing customers, we are in discussion about extensions with additional platforms.

Okay. No, that makes a lot of sense. Your company mentioned working with 2 of the 3 ADAS compute platform providers. There's Qualcomm, there's Mobileye ,there's Nvidia. You talked about also being in advanced discussions around integrating with Nvidia more closely, I think, on the Hyperion platform. Maybe talk about what have to happen to complete that integration. And is that tied to any OEM decision and then sort of asking for that integration to occur? Or is that something you'd be doing on your own anyway?

So the answer is that it is affiliated to a specific OEM that is in an RFQ process where Nvidia is involved, and they are actually part of the sourcing process. As I said earlier, OEMs became more educated. I think also Nvidia and the platform players became more educated about what really is important when you pick a LiDAR supplier. And therefore, they are more involved than probably they were in the past and they have a lot of experience. Generally, when thinking about those platform players, these are very important, I would say, part of the industry. They are not our customers, but they are our partners, meaning when an OEM designs the vehicle, he chooses a camera, radar, a LiDAR, a compute platform. Sometimes they need to pick also a driving decision, software developer, sometimes they do it themselves. It really changes, right? In some cases, the OEM wants to do the development of the software, sometimes they source it from Nvidia or they source it from Mobileye or Qualcomm. So whenever we are going through an RFQ, it is important for us to know which platform is going to be. And the reason is, if we can show the customer that we are already integrated into one of those platforms, it gives the customer lower risk and less spending because basically less needs to be done. And right now, we are already integrated with 2 out of 3 platforms into series production. Actually, the third, we do have a program where that platform is used, but all of the integration is done by the customer and not between us and the platform. And we -- I hope that with the selection of that customer, we will have all 3. And I think that it's really important because I think OEMs tend -- they used to be very kind of I want to do everything. I want to develop everything from scratch. I want to have my own version. I think this changes. I think everyone understand that they need a faster time to market, less spending, let's take something more mature, less risky, and therefore, relying on solutions that already proved to be working, affordable and with the experience are very likely to be adopted by others. And therefore, I think being on 2 of the major platforms already is really a key step for us to succeed.

Talk about how you see the industry evolving in terms of take rates of L2+, L3 growing in size, maybe eventually L4, what outlook do you have around those various stages of autonomy and how big they become over time?

Yes. So basically, my exposure to the expected growth comes from the RFQs and the figures we get when we bid on programs and the volumes that we need to be prepared for. And I think as I said at the beginning of the year, I think the market has shifted from being kind of an R&D project, small volume to programs that are in the figures of millions per customer. And that's, I think, an indication that the market is going seriously into Level 3. I think a big step would be when China would be -- would regulate Level 3, that will drive the Chinese market to develop Level 3 platforms. Today, they are very focused on Level 2. And the sourcing decisions they make are optimized on cost and less on performance because level 2 requirements are less -- are lower. I believe that next year, Level 3 would be available in China, and that will drive the Chinese market to run faster and source LiDARs that are adequate for Level 3. And that would actually be a bigger opportunity for us. And I think then the market would run faster to Level 3. But the fact you see BMW, we have said this already, with Level 3 out is a sense of urgency -- creating sense of urgency to other OEMs. And I see that through the RFQs that we are part of. When I'm thinking about those 10 to 15 OEMs that you mentioned earlier, I think those are probably all the names you probably can imagine, I mean, it's not a very -- like a very fragmented market. There are basically 10 to 15 relevant customers in this market. So basically, it's everyone. And based on the time line and the RFI and RFQ discussions, it means that in the next year, you'll see almost everyone already with a plan for Level 3.

And how agnostic is the product decision between L2+ and L3. I mean does it matter so much to Innoviz if the OEM ships an L2+ or an L3 system? Or is it really more what they want to take the legal risk on for?

Look, I'll say the following. There are customers that want to start with Level 2+ and transition to Level 3 over time. But -- if they only target Level 2+, then the requirements they have is actually for a very average LiDAR. I think that whenever an OEM is targeting Level 3 as kind of -- as part of his road map, I feel very confident because I know what he needs in order to get to Level 3. And I know that what we have is actually the right fit. Even if it goes through Level 2+, and it makes sense sometimes when you want to launch with Level 2+ because you don't take liability. You have the hardware on the road, you can collect data, you can test, which is great. But it's already out there. It helps you run faster to reach Level 3. So whenever Level 3 is on the road map of OEMs, I feel confident. And I think that any OEM that doesn't have Level 3 now is making a mistake because if you will now choose a LiDAR just to reach Level 2 that's a decision that you will live with for the next 5 to 6 years. And I think it's -- it means that you're going to be very, very late to adapt to the market.

Okay. Can we double click on the regulations? You brought it up a little bit already and perhaps China regulating LiDAR. A few questions on this topic. So first, within China, did you mean that next year, you think some of the OEMs would have L3 capable systems and then there will be regulation? Or is it the other way around, you expect regulation next year and as a result of that, you'll see some systems come out?

I think that in this industry, the regulation follows the readiness of the industry and not the other way around. OEMs are building Level 3 platforms, knowing that by the time the product will be on the road, the regulation will allow it. I know -- I believe that China will allow Level 3 because I know a customer that is planning to have Level 3 next year in China. And therefore, I believe that they know better than me, what's going to be there. And since China did not yet regulate Level 3 to be available, the motivation of the Chinese market is lower. They work very different than the Western. They are very, very fast. They can -- with Chinese OEM, you can have an RFQ for a car on the road next year, which is very, very different than what you get with a German OEM. The RFQ is here. Okay, then you start working and the car sometimes would be on the road. And therefore, I'm actually -- I believe that once the regulation would start to go in that direction, the Chinese market would move very fast. And that will be also our opportunity to step in.

Okay. And as you think more globally around the regulatory framework that may or may not come into fruition going forward, how focused do you think regulators may be on vehicle capabilities versus the exact vehicle hardware? And do you think there's going to be a requirement that some of the L3, L4 vehicles have to have LiDAR or is that not...

No, I don't think regulators care how you do it. They care about the value you generate, right? I mean, regulators now talk about having pedestrian detection not only on day, like now they change it to make sure that it operates also at night, which is actually an opportunity for LiDARs. But they don't define a way to solve it. They just define if you are able to show that you're able to comply with it, you get like the benefits of it.

When we look at the opportunities beyond automotive, you've had some success garnering customer wins in other industries, how much revenue could that be? And how applicable are the products that you're already developing for the automotive sector. Do they pour right over to some of these other segments? Or does R&D work need to be done in order to make them useful and relevant for these other industries?

Yes. So the non-automotive market, that's very fragmented. It can be a forklifter, it could be a crane, it could be a surveillance system, it could be many, many things. In terms of the hardware, there is no real need to change anything because eventually being part of the automotive in terms of the quality and the cost and size and power consumption. I don't think there's any market that is more demanding than that. The challenge is actually in the integration in the UX right, with the interface and like extracting the features, specific features that you are interested to do. Now on those, we don't want to deal with because it's really too fragmented, so we will need to deal with everything. Our approach for that is working through distributors that are integrators, that are interested in going into specific niches or applications and bring the value out. I think that from our point of view, the value that we create by focusing automotive is -- cannot be matched by any specific program we can work on. There is no specific customer, I can spend a sales cycle and eventually get a contract of millions of LiDARs now. So therefore -- and the NREs and the amount of money that we're creating from that is just -- there is no compete for that.

Okay. How do you think the LiDAR industry might consolidate over time? There's dozens of companies, the varying degrees of scale and traction in the LiDAR space. You've seen some consolidation occur, but it's been relatively targeted so far. I mean do you see the industry getting smaller over time in terms of the number of players?

Definitely. And I think it won't take a lot of time because I personally believe that the automotive market would converge. You will have 2 or 3 suppliers. Those will be defined by the early decisions made in the industry, primarily the Germans are those that make decisions before the rest of the market. And from there, it will trickle down to everywhere else. Because the Germans, they want to do like take the best technology, give them the best performance; the volume, they are not matched to the other bigger OEMs. But they're very oriented on technology. The other OEMs, they want to bring the value. They have volume and they don't want to take any risk. So I believe that the next decision -- I mean, we work with BMW, we work with Volkswagen. I hope you know what we wanted to do now to get to where we need to. But basically, I believe that in the next few months, there will be more decisions and I think it will kind of show where the market is. And I don't see any OEM say, oh, now we want to do something completely different. And eventually, that's the growth opportunity for LiDARs. There is no other markets that is big enough for the LiDAR companies. And therefore, I think the market will consolidate. It won't be through mergers, et cetera, because at least from my point of view right now, I mean the only motivation for us to do a merger with another LiDAR company is if I see a blind spot in the market it is important for me, right? And right now, in the automotive, I don't see any LiDAR that I think is a gap in succeeding in the market is important from it. I think what we have is at the top, I believe that it's very competitive. I think the performance is amazing, et cetera. So I don't see a good reason, at least from my side for a merger or something like that.

Maybe talk a little bit around the financial outlook, if I could, please. And the company guided for some pretty meaningful growth in the fourth quarter relative to 3Q, so a nice improvement in profitability. What's driving that sequential increase in both revenue and margin?

So several things. I mean we are SOPing with BMW. That's one. There are several programs, which we are involved with, that are -- that we already won, that are providing us NREs and there are -- and NREs are done over milestones. End of the year is a very interesting milestone. It's an opportunity to define a milestone. So it's through sales of samples to different customers, it's NREs, it's SOPing of a customer. That's basically what makes it.

I think the company guided for NRE revenue this year of $20 million to $70 million. How are you doing relative to that target? And what is the implication of the NRE revenue for cash flow?

So that's related to a program that we are waiting for to close. And that we paid in the next -- I mean, some of it will be paid year-over-year. It's important for us because -- and that's through a single program. That's a very meaningful amount for a company like ours at this point. NREs are payments you get before you go to SOP. It allows you to offset your expenses. If any customer will give us NREs that order, obviously, it will help us tremendously to get to the point of our breakeven. So that's an example that it is also important for us to show to the market that how meaningful it is that we became a Tier 1, how meaningful winning a program could be in terms of getting payments through SOP. And yes, that's it.

You mentioned there's a number of OEMs in the RFI and RFQ stage, 10 to 15 of them and 3 more accelerated programs. As you think about that opportunity set, do you believe the NRE revenue will remain in this higher level even as you go into '24 and maybe '25 to help with some of the costs?

Yes. For sure. By the way, the NRE for this year is actually unrelated to these new programs. It's with existing activities that we are working on. The opportunity of NREs is crazy, it's really high. I mean 10 to 15 OEMs, the NRE can vary between $20 million to $70 million in the kind of what we see and it really depends on kind of the program. Then obviously, you understand that the opportunity there is very high and could be very meaningful to our funding.

Maybe you can remind investors on your longer-term gross margin target? And do you think price cost is trending in a way that will support the company reaching those targets, especially with all the engagements you have today and bidding underway for these various RFI and RFQ programs?

Yes. So I would say we made a dramatic cost reduction between InnovizOne and InnovizTwo. We targeted -- we're using an architecture, which is based on 905-nanometer which is the more standard and low-cost solution, and we're using a single laser and a single detector, silicon-based. So our baseline is really based on very low-cost components. We are pricing the LiDAR between $500 and $850. And that at volume, it gives us a gross margin of 30%, taking into account that we also need to add to it, of course, not above the bill of material, the cost of the assembly, warranty and liability, et cetera, we are very conservative. And since we're also selling our software, that obviously comes with a very high gross margin.

We have time for a couple of questions from the audience, if there are some. And otherwise, yes, Jim, do you want to ask?

Yes. This L3 ultimately -- I want to go back to the question you raised. Is it going to be a regulatory kind of mandate or is it going to be a service that is must have in terms of consumer? The waters have been so muddy by Tesla FSD that this idea of, no, this really matters now. L3, you can read a book, you can relax, you can mergerize, don't drink because you might actually have to takeover under certain situations. So okay, I can take dinner. I'm trying to figure out if this is kind of a must-have technology in 2026, I think BMW is talking about their time frame? Or if this is something that might be '28?

So it's actually much more simple than people think because Level 3 or basically any feature in the car that is related to safety, needs to have -- needs to avoid a single point of failure. It doesn't have to be an autonomous car, right? It could be anything that if it has a single point of failure and it can lead to a safety situation, that's not allowed. Functional safety is defined across the vehicle for anything that is related to safety. Obviously, Level 3 is very much related to safety. Tesla is not Level 3. It's Level 2. The redundancy is the driver. It means that if the car unable to make decisions because the camera is blinded or a drop of water is now blurring the camera, the redundancy is available, it's the driver. If you want to remove out the driver, it's not allowed unless you bring another sensor that is resilient to those situations. So the regulation defines that the carmaker needs to prove that it has redundancy to any feature that is available in the car. So when you talk about Level 3, which means there is no driver, you have to add another sensor, whether it's a LiDAR or telepathic I don't know, something from the sky. It doesn't matter, but you need to prove it operates and works and that it is resilient to the cases where the camera or the radar fails. That's regulation. It's not Tesla decision. Tesla is Level 2. They never said it's Level 3, and therefore, they are allowed to operate their FSD so-called. It's because it's not Level 3. It's because the driver is looking at the road and should be ready to engage if something fails.

But again, to pay for that Level 3 safety, $6,000, whatever that's going to be in terms of the packaging cost. I'm trying to think about it as when BMW launches that, they're going to make it standard on the BMW. It's built-in hardware because they think the take rate is going to be so high or they going to say, well, we think maybe 5%, 10% people want to pay for this. And so that's how we're going to equip the vehicles because it's a really big event when it starts to come. Is it standard hardware or is it optional?

So between InnovizOne, InnovizTwo, we were able to reduce 70% of the cost. Okay. $6,000 that you're referring to is the BMW platform with InnovizOne, okay? So InnovizTwo significantly cheaper. I'm sure that it means that also the platform would be available at a lower cost. Based on the volumes that are defined in the RFQs and the volumes for the programs, I see it means that it's actually standard because I don't understand how millions of LiDARs would be an optional. So -- and actually, in some of those cases, the LiDAR is mounted in the design of the vehicle that is really affected by the LiDAR. And I don't see how they can design something with an empty box.

Yes, one last question.

You mentioned beginning to ASP in Gen 1 [Technical Difficulty]. What was the biggest driver again, I missed that? Is it the perception that wasn't on Gen 1 and then the follow-up? Was that because your perception was better than Magna's at that time or there was a driver that they left the Tier 1 just to put everything in reception for it?

You're talking about the software, the software perception?

You mentioned Gen 1 went from ASP 600 to 1,000 Gen2, right?

Yes.

So you got this correct. What was the biggest driver? What was the incremental that you got then? And why did you get it versus Magna that got it in January?

Okay. So -- in the second generation, we are not only pricing for the LiDAR. We are also pricing for the compute model and the different software packages. That's why you can say it's a bigger content per vehicle. And why we're able to generate more ASP per vehicle than the first generation. In the first generation, we also -- we only sold the components of the LiDAR, not the entire package. Now on the question of why we decided to compete on the business alone, right, as a Tier 1 versus a Tier 2. Well, there are many motivations. You want to own your destiny. You want to own your success when you're competing on programs when you want to be closer to the table to negotiate. You want to allow the customer to get a product at a lower cost because there's no stack of margins of 2 companies. When 2 companies go into 4 years of development, there is a huge amount of investment of R&D of too many people. And it's a very complex project. You want things under one roof. That's kind of my, I would say, lesson learned from the program. And I think also from BMW. It's a program where you need to have the most accurate working level to work on things. Eventually, the technology is ours. When we wanted to bid on new programs with InnovizTwo, basically, it meant for Magna it said, okay, let's start over on something completely different after the production line was already up and running. It didn't make a lot of sense. Now obviously, we took a very high risk to try to bid on the business as a Tier 1 because we had to convince the customer to feel comfortable with Innoviz as a young start-up from Israel being now they're direct supplier for such a critical component. And of course, I think that because we were able to absorb a lot of experience with working with BMW and Magna, and many of the tests that you would maybe expect that actually the Tier 1 would do, we did, we designed the product, designed the production line. We design the software. We did -- we took -- we managed the suppliers and basically, we did many of the tasks that you would expect the Tier 1 to do because it's our technology. And going through the audits with Audi at the time when they audited us to become a Tier 1, we managed to convince them that we are almost there, okay? So -- and once we got the nomination, we started to take it very seriously. We took many advisers to help us to understand how to improve our processes, our quality. We are being audited on very regularly by both Volkswagen and BMW and new customers that are looking at us. And I think we're doing a great job. I think that we're going to be a very good Tier 1. I see the grades we get for those audits, I feel very proud because I know it's a huge overhead for the team going through those processes and audit. But I know that it will make my company better because those processes, those quality measures are going to make my company better.

Just you move from being a Tier 2 and Magna be allowed to use the Tier 1 or the big part of...

BMW and now Volkswagen.

Great. Well, unfortunately, we're going to have to leave it there, as we ran out of time. Omer, I really appreciate you joining us today.

Thank you very much.