Microvast Holdings, Inc. (MVST) Earnings Call Transcript & Summary

Good morning, everyone. Thank you for joining us today, and we'll go to Microvast first Investor Day public company. I'm Monica Gould, Investor Relations from Microvast. And with me today to provide an update on the business, Yang Wu, Chairman and CEO; Sascha Kelterborn, Chief Revenue Officer; Zach Ward, President of the Energy Division; Dr. Wenjuan Mattis, Chief Technology Officer; and Craig Webster, Chief Financial Officer, and Shane Smith, Chief Operating Officer. A supplementary slide presentation is posted on our Investor Relations website and this presentation contains today's agenda and key financial information and assumptions for our long-term outlook. Today's presentation is going to be about one hour in length, over for a break, and we'll wrap up with a review of our financial [indiscernible] in a Q&A session. Mr. Wu will begin with an overview of company and then will pass it over to other members to discuss our business segments, including commercial vehicle, energy storage, technology, manufacturing and financials. We do hold your questions until we get to the Q&A session. And before we begin, I'd like to direct your attention to our cautionary statements regarding forward-looking and non-GAAP financial information. Today's presentation contains [indiscernible] information, important factors that may affect our future results as well as more information on our forward-looking statements are disclosed in our public filings. Forward-looking statements are based on our view of the business as of today, and Microvast undertakes no obligation to update any such information in light of new information or future events. During this presentation, we will be referring to non-GAAP financial measures unless otherwise stated. And this refers to various items that are excluded and reconciliations of GAAP to comparable non-GAAP financial measures are included in our investor materials. We are excited to share my response strategy and financial outlook. And with that, I'd like to turn it over to Yang Wu to begin the presentation.

Yes, I feel good. Good to see everyone face-to-face after 3, 4 years on the screen. This is the first time, I think, to the investors and analysts, they really feel good for today. And so thanks, thank you everybody for taking your time to join this event. I'd like to tell you Microvast will be a significant battery manufacturer in U.S. This is pretty sure. The reason the first Microvast has a full spectrum of technologies, including a raw material, battery cell, battery pack, BMS, it controls everything we have in-house. We are fully very, very integrated technology company. Those technologies are not even laboratory-proven and the same as laboratory proving and field-proven. That's important. Fuel proving is most important. You can have a great technology on the laboratory. But when you move to the application, maybe it's different. So the field-proven, this enable us to have a gut to put in a massive production. Otherwise, we cannot move to the market production. And the second one is the Microvast team is super, super stable. And the employees, we have the 2,500 employees, and most of them, they stay with me a decade and are very loyal. I'm very loyal to my employees as well, whatever hiccup we have in the industry, I never tend [indiscernible] my employee out from a company. That's my promise. Whatever problem we have, we stay together and as a team. So the solid team is the foundation of every company because battery, from all process, you have to be very careful for safety. And another -- if we -- the -- Craig Webster will -- my CFO will tell you financially, we are self-sustained, really good, as you -- we really don't need much money from outside. We can't move that roll off ourselves. And another reason is great opportunity for U.S. IRA, it's a great boost, everybody knows is a really big boost, is a mix -- more profitable and then make business easier. U.S. is that last one, last [indiscernible] for the electrification, China was the first one. And then Europe, when U.S. last one, I think the U.S. government understand this situation and then this IRA really is going to make us catch up with other countries -- or the continent. And I feel great. So as you know -- and another way is you will see Microvast, it will be profitable battery company. Battery company is hard to make money. Everybody knows it. And -- but we are going to make money. If you -- I show you this product, everybody can see it, this product we develop, we test 4 years in a field, in a laboratory and is sent to third-party for verification, and this product is fully mature. And this product is going to be our primary product maybe, 80% of what we are going to produce. The single products produced to -- for all applications is best way to make a business. You have much higher yield and also your raw material, feed material, you purchase from suppliers because you have a larger volume. You don't change around with your supply. And the supplier is going to give us better price. So it made it competitive. That's why these products will be our primary products for [ Tommy ] maybe 3, 4 years before we launched the next -- great battery, we will have it. And this company -- this product is going to 10 microwatts to be profitable. So if we look back, and I'm not sure everybody knows microwatts -- where microwatts come from. I can share with you a little bit background. I know it's not important in the past, it's important and more important in the future. But I'd like to share with you where we started this. I started this company in 2006 in November -- I registered this company, November. And after I sold my ex-company to Dow Chemical, Dow Chemical acquired my water [indiscernible] company, which is a great technology as well, and Microvast is my eighth company. I spent my whole life to build a technology company. None of them done, everyone is successful so far. And so we start from really different with any other private company. If you look at other battery companies, they have commodity battery before. They'll make a cell phone, not for battery. Microvast started from scratch. Always a dream. Yes. So only a dream and I want to build battery companies. In the beginning, I wouldn't have hired people. And I don't even -- they ask me what you're hiring me for? I said I don't know it. I just want to make a battery. That's where we started. And we started from nothing, which is good and bad. And good side in where we started our business. And after a year, sell-down in 2017 -- you see in 2007, you don't see much activity in 2007 because we really didn't know what do we do. And in 2008, I analyzed the consumer behavior, I hit them up with 3 fundamental category battery research orientation. The first is fast charging. I told my scientist that we need to make a battery charge in less than 10 minutes, which was insane in 2008, battery time for 6 hours in that day, 10 minutes is really a crazy idea. But we made that happen. I can tell you later. And the second, because the back charging is a fundamental, the function to ensure the mobility, you can use your vehicle anytime, especially for commercial vehicle. And a lot of commercial vehicles around 24/7, they don't have time to charge. They cannot charge for 6 hours, 5 hours or 4 hours and keep idle. And secondly is, battery is so expensive, and nobody afford to replace battery in the middle of a vehicle life. In the vehicle, if you want to replace battery, you never sell your second-hand car. Your second-hand car is going to lessen your battery cost. And [indiscernible] is a high, high safety battery, really, we need to improve the safety significantly and make it much safer, even safer than today the gas in car. That was the target I gave to my -- the research team. And after this foundation buildup, then we're going to work on the energy density. That's why I made the tree that Dr. Mattis is going to show you later. With that, the -- we -- with that approach, we figure out -- we focus on it. We decided to focus on the commercial people from 2015 from that year. Why -- I try to focus on the commercial vehicle in the EV industry because the commercial vehicle, if you compare with the passenger car, commercial vehicle require much, much better battery. That requires like a 4x longer life. Commercial vehicle you chase like a 1 million-mile -- mileage and the passenger car, the 200,000, 300,000 miles and you're going to get rid of a car. And commercial vehicle runs at most nonstop. And other big reason is CO2 emission, all the purposes we build electrification to cut down CO2 emission. And a commercial vehicle have 20x if you calculate CO2 emission in passenger car, they use 2.5 hours a day. In passenger car, you drive 1 hour a day or 2 hours a day, and they have a much bigger engine. So the -- to cut down the [indiscernible] that's a priority for our mission. That's why we focus on commercial vehicle. And commercial vehicle, since the companies -- commercial vehicle OEMs, they are relatively small. They are now like a size like a big -- the passenger car companies. They're really -- they are not able to establish the battery manufacturing [indiscernible]. And that's why we focus on this. And then we go focus on ESS, I told my guys, battery, the EV is not really -- it's not a clean energy. EV is not the environmental friendly, to be honest, and EV can produce because your electricity come from fossil fuel. And the electricity comes from all the CO2 producer. Your EV just to sweep the garbage it to somebody else. Fundamentally, you still need to resolve the energy source and that's why we plan ahead to get into the ESS business. And fortunately, we already established VRBO in U.S. We started in the U.S. from last year, and that did a great work. We had a big contract last year. And so -- and another thing I want to tell everyone is Microvast, they become a vertical integration company. And we didn't plan to become a very good integration company. We're just looking, researching the highest technology for the electrification. And those technologies require special material, require all the modification of the material and requires development for the applications, new development and eventually made us to the vertical integration. And later, we find that vertical integration is really a big benefit. The vertical integration, they give you ability to develop the next-generation battery much faster because you have all kinds of development in-house. You don't have the liability responsibility push around by suppliers. We don't know it. And that's why to give us much better development cycle. And also, when this company goes big in the revenue, we make everything by ourselves and make much more economic. And we contain all the properties -- the profit change inside -- into our portfolio. This is really good. I don't want to say too much on this page. This is the old numbers. You can read it. And let's number talk. Number can talk itself. And right now, we got 30,000 more vehicles in 34 countries. And I go to the next page to show you what do we promise in the public, what we have done? If you look at this, the slide, and only the revenue we're behind our -- the revenue really behind our -- the projections I think 1 year behind. The reason why you're behind it nobody expected Omicron -- nobody expected that. Everybody thinks that COVID-19, that sh** is over and Omicron come and China will control so tight. And -- also, we have a lot of work to do. Everybody knows the [indiscernible] chip shortage and as well as shipping, the problem, you cannot even ship out last year, ship out or you're good. That's why in our revenue, the year behind. And -- but we're going to catch up this year almost like a last year early production. And another -- a little bit shortage is our commercialize our raw materials. That's a little bit behind. Last page gives you the total market from EV market and ESS market in the U.S. And this page is going to tell you what we are going to do in the United States. We will continue to build commercial vehicle, gases, battery, battery cell, battery pack, battery container, all systems continue to expand to 2030, we plan to expand to 25 gigawatt hours. We believe it's going to be a significant player in this country. And in the same time, we will develop our raw material and the cathode anode and separators, the [ non-annual ] electrolyte, the separator, everybody already know the story, the separator is DOE. I don't want to talk too much. And this separator is really, really great for the people's safety and it's not only products for Microvast. It's a product for everyone, use EV for everyone, use lithium battery. It is a product for the industry for every consumer. And you don't see -- where is the anode. We don't have anode. Why Microvast -- we have everything else, we don't have anode because we believe lithium metal will be the best anode in the coming road and you don't need to develop it. Listen now, you only need to apply it. And that's why we do not have anode in our technology portfolio. You don't see it. Everybody wondering, why don't you -- you've got everything else and so -- and I believe with those technologies, we will be a significant player, I'm pretty sure. Thank you.

So thanks, Mr. Wu. Good morning, everybody from my side. And I will give you a quick overview about commercial vehicle, the market, the market trends, the development. And I will give you at the end, a very important highlight because I wanted to keep my promises in Q1, as I said in my earnings call, and I will mention on my last one. So you really have to watch right, you have all the patience, exactly what [indiscernible]. So as Mr. Wu already said, numbers talk, yes, for me, numbers talk and customers question the most important valuation of technology. So we are -- to date, based in more than 34 countries commercial vehicles in operation. I think this is a quite the sole diversification globally already where Microvast is an actor. The market into -- between 2022 and 2030 is a classical number from all out of your studies, 24 million electric commercial vehicle TAM over the period. We will have roughly a TAM in 2030 of about 5 or 10 gigawatt hours. So it's incredible. And for sure, we will need to have by far more production than we can see today already, and this Mr. Wu already talked about that, that he will increase its production capacity in due time. We have more than 12 years vehicle operation time. So we are not only talking about laboratory data. We are talking really about fleet up, about data, which is coming from various geographical regions, different temperatures, very cool, very hot, very humid. So we know exactly how a battery has to function in a commercial vehicle operation, which in the extreme phase can be [ 24 gigawatts ]. We have more than 30,000 battery systems deployed since 2011, since we delivered our only battery systems, but we deliver cell model and packs, we really stopped counting that. So we will move ahead with revenue numbers in the future. We are serving more than 10 different market applications. What does market applications need, just to give you an idea because pictures tell more about product than if I talk about -- if I show that this is Iveco-Daily, most common used commercial vehicle application outside the U.S. The oldest light commercial vehicle, which you will find in the market was established in 1970s already in Europe. This one, we deliver the battery. I think I'm really proud on that because our R&D team around Dr. Mattis did a good job by developing the 52Ah which I will show you later. London buses, I think most of you have driven in London on the double-deck buses from Wrightbus. Really proud on that because it's an hybrid bus application close to 18-kilowatt hours, and it's running 24/7 with LTO technology. Our LTO technology can reach up to 20,000 full cycle, which you will not find a lot in the market at all. Then you see the totally different aspect, medium, heavy-duty trucks. I took the extreme picture. It's a mining truck [indiscernible]. And even this is served by Microvast batteries. And then you have specialty commercial vehicles. You see here one of our customers. It's a classical harbor application. So no time for charging. It's also 24/7 operational. So the customers of ours are relying on battery technology in order really to perform their tasks on their side. So we need to make sure with our team, with our technology, our operations with everything around that this battery system [indiscernible]. I will not go too much in the details of that, but I put it in my slides because then you have something we can talk about. We can talk about this different [indiscernible]. At the end, it's on DNEF. You know that. So -- but what is -- I think it's very important is that the market for electric applications, commercial application is growing with 39% CIG. And this is extremely supported by government initiatives. And as Mr. Wu already mentioned IRA in Europe, Europe 55 Spring deal. All these important innovations will help to come up with fossil-free, alternative energy to me. One will be battery, which is very important, another one will be fuel cell, but it also was a battery. So for us, it's not a competition, it's actually an add-on in the market. And then you will, for sure, have certain issue applications, for certain areas, they probably will play a role, but mainly will be battery driven. If it's the full electric, the hybrid or the fuel cell. Everything needs a battery and the right battery chemistry. And this is what is the key about Microvast is focusing most on e-applications is we do know the cues of our customers. And we are not selling a mass market batteries that Mr. Wu mentioned at the beginning. We're dedicating our business on commercial vehicles. So we need to know. We know actually the drive cycle of our customers. And for that, we do adapt the battery for their needs. And this is done by our R&D team around Dr. Mattis. Mr. Wu already showed you the cell and I mean business in use product, right, putting in operation by Shane Smith, our COO, and it shows you here the comparison where did we start. We started with 21Ah and then we did a further development because we listen to our customer and we saw the market, what are the markets and came up with a new technology called 53.5Ah. Long cycle life more than 5,000 cycles, fast charging capable, all our battery cells are constructing cables. This helps for the future. Right now, you don't have enough fast-charging station. But as more and more fast charging stations you will have globally, you can still use our technology. You have fast charging already integrated in your vehicle, others need to switch because they don't have a fast-charging capability to integrate it into their cell, very important aspect. We have good safety and thermal management system because safety plays one of the biggest important roles in the company. We have -- with this technology, we are lowering the total cost of ownership. We are helping our customers to get more sustainable because we have long cycle life. It's still to last the vehicle life. That's also important here which I would like to mention. Coming to that, just giving you a quick overview -- just highlighted marketing slide because it gives you a quick bullet point. So this is the classic [indiscernible] you see it already with our customers like Iveco and others, 10 minutes to 80% charge [indiscernible] impact-level. So it's market-leading. For sure, they always have this upcoming -- they're developing them, but we will try always to be market-leading. More than 5,000 cycles. It's very difficult and tough to find somebody who reaches more than 5,000 cycles based on the overall pack energy density. Lifetime, everybody is talking about 1 million miles, right? This system can reach a thousand problems with million miles. So we didn't announce this. Others announced it, but this technology is good for them, and we have real lifetime data because our technology department did a great job on that. But this is when you dedicate your technical -- towards commercial vehicle and you listen to your fleet customers. That's it. Our 52, and I point it because it's one of our big runners for the JV right now, which [indiscernible] for the light commercial vehicle, minutes to 80% charge, 24 minutes, again, obstructing capability, low cycle life, more than 2,500 full cycles. Classical [indiscernible] in the other auto industry is 1,500 cycles for mass market products. You see the difference dedicated to commercial vehicle allocation. And also here, low lifetime mileage way above 200,000 miles. Let's just talk, as I said, right, so as Mr. Wu mentioned, we had a small hiccup last year due to the fact that COVID was still there, supply chain issues, ship shortage, all that kind of things. So we have project delays of our customers. So even if we would have been ready, we couldn't deliver because the market was not ready in certain areas because we have these hiccups on the supply chain. So now the SOP started. Remember, last year, IA Hanover, Iveco announced the SOP of [ 3 ] days, first more than 200 units or reorder. We have more than 3,500 [ auto Iveco bus ]. So the electrification is moving quickly [indiscernible]. And as Mr. Wu said, the next run after China is right now, Europe. The next afterwards will be the U.S. They will compete against each other with IRA Europe 55 [indiscernible], 100%. But at the end of the day, we will get more sustainable. So far, European customer, we received more than [ 300,000 ] units just in the short term. These are dedicated for U.S. and Europe. Our customers from Europe are moving to the U.S. and they're happy that we will localize now with [indiscernible] and Shane Smith, my colleague, he will talk more about that as well. And they want to use by building America selves. So -- but they already know the technology, 53.5Ah as an example here, and they want to move it over to U.S. [indiscernible] important logistics handling company, still family owned, they own more than 100 units for the U.S. as well as for the European business dedicated to logistic handling, airport terminal tractors, all these kind of things. So it's not a mass market, but specialized technology where the customer is relying on battery technology. And then a couple of things which I will later announce probably in Q3 or Q4 when it comes to earnings call, but this is an application, which will go into the classical pull-in trailer applications. So when you're in a black territory, you unhook your trailer, and you need to cool it further on. So they will use our batteries. Some further proof points. And I think that's a important laboratory [indiscernible] and everybody's happy about that. London, as I already mentioned, this is still the biggest hybrid diesel bus fleet in Europe, more than 1,000 units. They all operate with Microvast batteries, so far driven 62 million miles annually, right? And 24/7 operations on all their main lines. This is a very unique project in the Microvast batteries are dedicated for that. And transport of London, so they will use once more that battery because vehicle lifetime will be over in a couple of years. So after that, this hybrid bus fleet will in Europe move also to full electric and fuel cell. Netherlands, this was in 2018, the biggest electric bus fleet in Europe. And it's still one of the largest for 1 dedicated route. It's going from Amsterdam airport to Amsterdam Downtown City, and it has more than 100 units and its operating 24/7. It drives annually 19 billion mileage. Very interesting here, perhaps it is driven by 169 by our battery pack and this is fast charged during the stops by [indiscernible], always for 10 minutes. And then it's moving on another 50 kilometers, the battery itself can run up to 100 kilometers just to make to secure that in case of charging station is not working, the bus can always reach the next charging station. So it's dedicated, really. This route is already dedicated to future e-applications for commercial operations. Actually, it's the most important slide, everybody would see and I kept my promise. As I said, in Q1, we had $486.7 million backlog. And we grew at 38%. Right now, we had $672.6 million backlog, and I think all the team can be very proud on that because it was the team effort to get that things done. So we increased our backlog dramatically just in this short time because technology is talking, 53.5Ah cells in other applications were tested by a lot of their customers and they gave their proof of concept for that, and they are now starting to order. And here, you see a couple of them. And I think this -- and the latest backlogs are coming dedicated from the bus side and from special vehicles side. And this is actually -- we look at this technologies here, customers are approving it, backlog is increasing. And that's the way we want to move forward. And I think it's now starting in the U.S. because what I have to say, part of the backlog is also our first PO for Clarksville, not only Europe, not only Asia, it is also for the U.S. already. So we -- I think at that point, bringing cell technology to U.S., it was the right -- it's the right time now. And yes, I know that my colleagues are doing everything to get flexible operational because our customers are waiting also for made-in-America batteries. And with that, I will pass it on to Zach because he has a lot of good stories to talk about as well on the U.S. side, and thanks a lot for spending the time today with us.

Well, thank you, Sascha, for a great overview of the commercial vehicle market. There's definitely some exciting wins for some new platforms there and expansion into new regions. I'm really excited to walk you through the ESS business. The energy storage business is going to enable all those new fleets coming online to actually charge with green power. Like I said, it doesn't help to electrify all these fleets if you're not electrifying and eliminating the fossil fuels that charge all those fleets. I'm Zach Ward. I'm the President of the Microvast Energy Group, our stationary energy storage. This is really a high-growth market at this time. And it's a real complement to our commercial vehicle business. Commercial vehicle businesses grows over you when these platforms that grow slowly over time. They're very much backloaded in the way the revenue flows. The energy storage business is a real complement to that because it's now front-loaded. So it really allows us to increase our utilization, increase our supply chain. And it just enables us to get to that profitability much faster. So if you see here, I'm going to walk you through some of the numbers. I'm sure everyone has seen me many, many times. These are all your Bloomberg numbers, incredible growth, incredible demand. New record was set last year, 16% year-over-year growth. We added 35 gigawatt hours of stationary capacity [indiscernible] of the TAM, it's exploding rapidly. We're now at 1.4 terawatts or 1,400 gigawatt hours estimated by [ 2020 ]. If you look at the Americas region, you can see that the market is also really dominated by a key application, which is energy shifting. And this is as we shift away from fossil generation, this is really the tool that gets us there. Shifting that demand from -- to that from the off-peak to the peak demand. The Americas is now at the last report, now the largest market globally. So it's good that we surpassed China and demand in those regions. One of the big pushes here that we're seeing that everyone's talked about is the IRA. It's really lighting the market on fire here in the U.S. and creating the biggest market globally. Now projects can receive a 40% ITC, investment tax credit, if they utilize domestically sourced materials, and we're one of the only suppliers that are making those materials today. Well, I'm going to walk you a little bit through Microvast Energy. It's -- in 1.5 years, we've come a long way. So we were founded in the beginning of 2022. It was part of our public launch strategy. And so we've been fast and furious. We purchased the facility in Colorado. We expanded the team with some great new resources. We built an industry-leading ESS product based off of the 53.5Ah now. So that has a proven track record, field experience. So it's a great launching off point for the energy storage stationery business. Well, after we built this product, we took it to market and then some very large projects. The core of the product is really a 20-foot container format. It's really -- it utilizes the 53.5Ah cell and module. So where -- we're using the common products that Sascha went over in the commercial vehicle market. So we have that as an advantage of using that common product. It's 4.3 megawatt hours for 20-foot container [indiscernible] for being energy densities up to the entire market. As you can see from the customer response and securing so much business early on, you can see the benefits of that. This product -- some of the core values of this product is really much higher energy retention than a lot of the leading competitors. Definitely, the leading energy density versus the competition. This is the key thing that's often overlooked. It's not a big part of the system, but it's a very important part of the system from a cost standpoint. And that's the BMS. And so we've developed our BMS completely here in the U.S. to ensure grid security. That's been a concern for the last 10 years about how we secure bulk delivery for our utility grid. So that's all domestically developed and sourced. The other features of this product is that ease for transportation in a 20-foot shipping container kind of format that really enables a lot much for their installation and maintenance. And then if you look at this 53.5Ah, you see the performance is dramatic. In a 4-hour system, we have over 10,000-hour cycle life. I wanted to highlight here the dramatic difference in energy or current market competitors. You can see the thematic difference in some of the leading competitor technologies that are out there versus LNP, even other NMC format. I think a lot of people overlook the key value of this by optimizing their product around their operations, or if they're manufacturing, they also look to that low-cost labor market and optimize around the low-cost labor market. When you come into the U.S. or the European Union, it's a very, very high labor market, very high construction costs. And so we've really tried to take a look at a holistic view of the market to make sure that we're optimizing the product for the total cost of -- involved with constructing a battery power plant. And if you see this energy density difference, if you boil it down to the most simplest block, you're installing fewer containers. If you have a 65 different -- 65% difference in the number of containers are basically doubling the containers on the site. So you're doubling the land, you're doubling the construction cost. You're doubling the long-term O&M cost. Every system has to be maintained, right? So over that 20-year life of the battery power plant, you have to maintain twice as many of all those containers, cooling systems, everything that goes into the container. So it's a pretty simple economics when you boil it down. If you look at the -- of this, I'm sure you guys have all seen it, but it's a great-looking slide. So everybody wants to show it, right? And this is the global TAM for energy storage. If you look at the market is primarily dominated by China and the U.S. As I said previously, the U.S. has taken now the first position ever in renewable energy and energy storage projects. And we'll be -- with our first project is 1.2 gigawatt hours, we'll be adding to that capacity very quickly. I think also if you look at this graph, we really see the inflection point is 2023. It's right now. We're living in that inflection point. We really see that dramatic growth. This is the TAM also from Bloomberg, which I'm sure you all have seen that this is also a great slide. If you look at that growth and that inflection point going from 13 to 29 gigawatt hours, it's dramatic growth here, and it's all dominated by the U.S. America has really become the land of opportunity for energy storage, and it's really good having -- finally after calling out our business for the last 10 years in Asia, competing against Asian competitors, we finally are enjoying home building. So that part of this graph feels really good. This market is rapidly growing to 50 gigawatt hours per year. And if you look at the breakdown in the applications of this market by next year, 70% will be energy shipping, and that's our core focus of our product line with our long-duration storage. So one of our key messages here at this meeting today is really to talk about our growth strategy. And I was able to boil down the growth strategy into 3 phases in really what we're executing today. The first phase is really to build that beachhead in the U.S. market. We have wholesale advantage. Shane is putting together an amazing factory here in Clarksville. And it happens to be the largest market globally and the highest value market as well. So it's a great place for our launching off point. The second phase of our growth will be to expand our technology portfolio to offer turnkey battery power plants. So that's moving up the value chain and really taking a wider position in the power plant. The third phase is really to expand globally. Once we've added more capacity, we can expand into those global markets. We have established facilities throughout EMEA and throughout Asia Pacific. We can utilize all that infrastructure, service leads, sales teams, local offices, trading companies. We have access to that whole network to take that -- basically that foundation that we've built and just move it all over the globe. I'd like to highlight some of the effects of plummets that we have. Pretty exciting. Our first project, which is under contract last year and in our backlog, here's a 1.2-gigawatt hour project. It's a 300-megawatt 4-hour system. So they're deployed here in the United States and it's going to start delivering in 2023 and complete delivery in 2024. It's one of the largest projects in the U.S. that's currently under construction. We have also been awarded our second project. So we're starting to build out that pipeline and that backlog into 2025. The second project is awarded. It is a 100-megawatt project 4-hour system again. It's a 400-megawatt capacity. It's in the United States and will start delivering in 2024. So in summary, I really like to talk about what a huge growth opportunity in the energy storage is offering Microvast. I talked a little bit about how it complements the business, that slow growth and as we roll out all these platforms, platforms start building volume over 8 years, this allows us to really front-load the utilization and the profit of the organization. And I've kind of boiled it down to 6 points here that really summarized why it's such a huge opportunity for Microvast and then it's an exciting time for Microvast as well. Right now, as you saw with our first launching offline with our energy storage system, the 4.3-megawatt hour, we have the leading technology with our 53.5Ah cell and module. So get utilized out, which has a higher energy density, has a higher energy retention and a higher round-trip efficiency. The second point is really to talk about execution. As we've demonstrated in a very short time, we're filling up the backlog and filling up that pipeline into 2025 already. So we're in full execution phase. U.S. presence, like I talked about, having that home field advantage finally in the global market is a big advantage. Manufacturing in the U.S. is key value to all of our customers here. And it gives them -- enables them access to the IRA and enable them access to manufacturing credits as well as the investment tax credit that is the whole project. And so key value for our customers is our U.S. presence. The fourth item is really talk about the government demand. The IRA has really set the market on fire. I mean, you've all seen that every quarterly report that comes down, it continues to grow. And that demand is really insatiable right now, and there just isn't enough supply. That puts us in a very strong position in the market. The next one is really to talk about innovation. It's not enough just to be good today. You have to be good tomorrow, right? If you're working on those next-generation solutions, and our team, our specialized development team led by Dr. Mattis has really been spending the last 10 years working on that technology portfolio. And so we have those next exciting projects that are already in queue and ready to launch right behind this product. So we're really excited that we have that runway of technology to carry us forward. And I think the last point I'd really like to make is the right team. We've demonstrated our ability to bring a product to market, to secure business, to develop the next-generation leading technology and partner, and that's really the important detail of Microvast is the strength of our team. Thank you, everyone.

Good morning, everyone. Welcome to our Investor Day, and thank you Zach for sharing with us your strategic insight in energy storage. I'm the Chief Technology Officer of Microvast. I am honored to have working with this company for over 10 years. And it's -- I take a greater pride in our mission. So not only we advance the technology and energy storage and also we contribute to the society to [indiscernible]. And the -- it's a privilege to work with the team of highly filed researchers and engineers guided by our visionary CEO, working with the team of the highly proficient team. And with all this combined effort, we have developed and manufactured remarkable technology and product that has marked on the market. So the -- as technology innovator, Microvast has established our leading position in 17 years. With the 3 continental spanning and we have established the operational facilities with extensive RMB and also production and business units. Technology center is the home of over 780 research engineers than in the specialty of chemistry, physics, electrical engineering, mechanical engineering, et cetera. And we have created this extensive portfolio of the patents and the patent applications of 626 that have a substantial hold on the key material sales, multi-type battery management systems, [indiscernible] et cetera. And with this vertical integration and our contribution to the other technology announcements, the user electrification, we have been rewarded by the regulation and the financial baggage from both the U.S. government and the Germany government. Since 2006, Microvast has identified with 3 fundamental criteria of this battery. That's the kind of needs for the widest spread into the EV adoption, which is the fast charging, safety and long cycle life. Safety, without saying it's crucial for the passengers and also for the carmakers and the battery-makers. And fast charging equals e-mobility. So that's the fundamental from the vehicles and also that it can give us a faster return in the investment in the charging infrastructure. And as for the long cycle life, so the battery cycle life should be expanding last as long as the car body. And for this one has also enabled the secondhand EV market to really create a competitive product compared with the combustion engine car. And with all of these 3 fundamental criteria ensured by increasing -- adding the density of the test the material, ends of the material and working on the maximizing the cell design, module package design, we keep increasing the energy density of our products. So with the deep and healthy route, we can flourish this energy trade. So starting from our first-generation products. Internally, we have increased the energy density to above 300 [ watts per CPG ]. And even at that high energy density, we can still do monthly charge and the back economy fully charged from 0 to 80% within 30 minutes and this time cycle for 4,000 cycles between 0 to 100% SoC. So even to achieve that 4,000 cycles data that cost us over a year. And that's the testing data in the pilot line. And we are ready to move into the production line once the market [indiscernible] it. Yes. So with this, the energy trade growing and the internal selling of the resources, so Sascha has shared with you the type of products we developed that has rapid charging capabilities with the extended cycle life and also high safety and yet at the peak energy density that has created the competitive advantages for our OEM customers and also that showed with met criteria and elevated energy density, we are highly valued by the newly emerging ESS market in United States. Yes. So now we entered into this -- embarked into the multiyear high growth with the HpCO-53.5 ampere-hour ourselves, we expanded our capacity, we entered into new markets. So [ Mike ], as for the -- starting with the battery types, that is the heart of the electric vehicle. And all the energy in the battery pack is coming from the south. And the superb performance of the sales all resulted in this battery materials. So from our success really deeply rooted into our commitment to this vertical integration, which gives us the capabilities of manipulation all the way down to the material level. And Microvast has created several unique products I would pronounce this type of material, [indiscernible] electrolyte and it's [indiscernible]. Yes. So with those materials, we created also all the 3 chemistry in lithium battery that's available in the market, LTO, LFP, high-power NMC, high-energy NMC that got recognized this by the third party and also in the field. Yes, so all those is still perfect performance of the sales, I will talk more in my last -- the next 2, 3 slides. So we have standardized our cell demission and also standardized our module and some pack also standardize what we can't do have mighty package for our customers. Yes. So with the standardization that also reduces the cost, helped to increase our purchasing power and increase the quality to come for. So with this spectrum of the vertical integration, we have created this comprehensive system that we have began over 10 years of experience with developments, manufacturing and that ensures from this end-to-end approach that reduces our product-to-market cycle that increases the efficiency and also reduces the cost and enhances the quality. So here is from 12 years ago that we have deployed the fourth generation of products to the market. So such as LTL, Sascha has introduced this. So we installed 1,500 [indiscernible] electric buses back in 2011. Those batteries are charged 5 times a day. By today, they have been through nearly 18,000 cycles and it still maintains about 80% of the retention. And as for this 52 MTL ourselves, so if we put that into the passenger vehicles, then we can install about 100-kilowatt hour energy in a vehicle and that it can be fully charged -- sorry, 0 to 80% within 30 minutes. And the time cycle for over 3,000 cycles. With all of those numbers together, we already enabled the million miler. And then we add for the high energy density, the next product that is ready to drink as long as we get the justification from the market that I introduced earlier. So this product also won as the -- R&D awarded 100 awards back in 2019. So that's like off our award in this whole R&D development from the [indiscernible] industry. But we don't sell there. We have been developing solid-state battery. We can [indiscernible] battery that can reach to the volumetric and density of beyond 1,000-watt hour per liter and also the high-temperature cells that has been appreciated by high-end the sport carmaker. So the -- as for all of those efforts, there are -- for the technology and then earlier, we need to start. As for the solid-state battery, we have been putting resources since 2015. So there is so much more to tell you, but I have limited time, I would just have more exchange during the Q&A session. So as for this spider web, for any product that we want to win the market is about to be a healthy all-around winner. So got to have the good energy density, both volumatically and quite magically. We have good charging ability, staff charge capabilities, long-cycle life, both at settling and the time and also the cost. So with the premium products in our production line that has been standardized for [indiscernible] and also 52Ah that [indiscernible] for the low floor application. And of the same duration, we are deploying these fast-charging products that is [indiscernible] covering shelves/shifts busy and it seems [indiscernible], can go about beyond the 12,000 cycles, this 48 [indiscernible]. So for all of those applications, for example, that would help us to greatly reduce the total cost of ownership for our customers. These 63.5 MPL per cells over designed for their application. So we can do, say, beyond the 5,000 and 6,000, 8,000 cycles if you tell me how you use it. And we only need 3,000, then that it can reduce the total energy load in the front. And if they have the capabilities of giving it a boost of the energy during the operation of the day, then we have reduced the total energy you saw in the beginning. So for example, this car can be fully charged within 15 minutes, then with the loading unloading to customers were -- the passengers were the foods then we could get to install half of the energy as for the other [indiscernible], for example. And our LIT products also have a good development. I'm not going to show you here. Yes. So talking about our key material, 2 material really stands out. And so the type of the material provides all the energy in the south and also takes more than 50% of the cost of EBITDA. And as for the current market, NMC has all the material is a majority winner because of its high energy density and it's a long-lasting cycle life. So the full concentration gradient has the material that Microvast produces, we have a 20-liter cubic reactor that can produce 600 accounts of this case material since the 2018 that has been applied into our product, some have been running in the field. So this material is different, largely different from the -- was offered in the market. So all the types of NMC material in the market right now is homogeneous. And it has 3 transition metals in that state, right? So nickel, manganese and cobalt. Nickel offers the capacity, but it's not safe. Manganese offers no capacity, offers the safety and the cheapest but no capacity and the cobalt being scarce, expensive but yes, it's necessary because it offers stability and great performance. So to make extensive of all of these properties, we increased the nickel content and yet accumulated more close to the core and then having the manganese concentration higher on the surface so that it will keep the high energy density in the box and has still yet increased the safety to reduce the reactions between [indiscernible] electrolyte. And we only use the cobalt where it's the most necessary. So with this strategy, we have developed the type of material in the pilot line that the nickel content reached above the 92%, cobalt content reduced to below 2% and the rest is manganese and this type of the material offers nearly the maximum capacity of oxide-layered material offer, which is 240 and [indiscernible] has reached 236 million program. And the cost is reduced because of the minimized cobalt content. Yes, the last but is not the least the [indiscernible] manufacturer. So this offers the great safety for all of our cell products which have been populated into the south. So the -- looking into the 60 triggers that happens in unit cells, so there are external figures and internal figures. So have the external triggers that will be mostly in build condition, such as overcharge, over-discharge to high temperature to low temperature mechanical impact, et cetera. And those can be minimized that were presented by the cell design, multidesign, type design and also BMS. So that gave us gauge -- fixed stage to prevent the external figure. However, when the triggers coming in hurdle date, coming from the date impurity metals introduced to 1,000 from the materials and the cell production that becomes intensive deans. So those cells would be qualified as good cells going on top of the factory. But yes, sooner or later, intensive dean could grow into a bigger problem caused the internal shortage. When this happens is bad as a massive sale that can cause the thermal runaway of cell and more into a pack. And this has to begin the annual second sale, which is beyond any electronic control we have in the vehicle. Even with redundant measures, it's hard to prevent it were controlled when the thermal runaway happens. And we have seen several records in this industry. So the Microvast [indiscernible] grabbed the key issue, and we figure out a way to minimize these recoveries by creating a polymer that will separate that will outlast the type of the material. So all the separator in the market right now are polyolesen-based, such as PE has a melting time feature of 138. PE has a melting temperature of 160 and polyaramid separator that the same raw material as the [indiscernible] have proof of that has no melting temperature, and it's intrinsically non-flammable so as it demonstrated, it puts the separator on the hot stage at 300 we received for 1 hour, no shrinkage. So this technology was invented and skilled assets by Microvast, we have a pilot line that runs at 5 million square meter per year started in 2017 and also have produced that separator implemented into our sell product that has been running in the market. And with this technology, a proven technology passed by daily lab and also the 3 OEMs that is [indiscernible]. We award, yes. So now we are scaling up as in the announcement, this is a 10 million square meter separator line as to further improve the speed and the efficiency, reduce the cost and our goal is to sell these materials FCT and the [indiscernible] to the separator to the passenger vehicle, cell makers, the commercial -- sorry, the consumer electronics cell makers, that's our way to penetrate into those 2 markets. Yes. So with that, I pass the stage to our Chief Operations Officer, Shane Smith to show you how to transfer technology to production.

Thank you, Dr. Mattis. My name is Shane Smith, and I am in operations. Of course, when I think of operations used to be a nuclear engineer on a submarine and it was more power, more power. Now I'm in operations 25 years later. I've got this energy storage team, commercial vehicle team, Sascha and Zack, more cells, more cells. So it's just kind of like a snap back into the past. And that's my job and role doing now. We have 3 manufacturing facilities on 3 different continents. So you can see one of the key messages I want to highlight here is manufacturing battery cells, modules and packs. It's not new to Microvast. As a matter of fact, they've been doing it since 2010, with over 2,000 people building battery cells. And it's a very complicated process, getting a battery cell from a lab all the way to something that can be cost-effective and reliable, high quality in the field is very challenging. What I get advantage of is leveraging all that skill set that has been taking place for a -- for over a decade and then able to push the accelerator because basically, of the 7-gigawatt hour, we're putting 4 gigawatt hour of that capacity in 2023. You can almost say, "Hey, guys, where have you been? Why are you finally going? Why is it things are really happening for you now?" It takes a long time to build all these battery components, these battery cells, get it in the field, get feedback to make sure it works. And then when you finally all got it, and then you make a really good product like this one, it works in 2 different types of markets. Energy storage and commercial vehicle, we all get the benefit from harvesting this great technology and time and innovation and investment that's been taking place for so long. So that's what I'm here to do is to now turn it in to excellent financial success. Basically, Microvast's global footprint overlays to our electrification market has expanded over time. If you wanted to sell a battery in 2010, you had to be in China market. It was the primary market at the time. Therefore, we built our first manufacturing facility in Huzhou, China and have been delivering batteries incrementally increasing the number of lines over time. The one -- the primary one I'm talking to you about today is actually Microvast's third manufacturing line, the most automated, the most innovative line we've ever deployed in Microvast's history. From China, the market went to Europe. Europe was the next region where electrification started to take hold. How did Microvast respond? Hey, we need a manufacturing facility right outside of Berlin, Germany, and it was a [ majo pack line ]. Maybe last but not forgotten here comes the United States. And as Zach said, energy storage, #1 in the market, pretty strong in that area, here comes commercial vehicles, the same business that we've been doing for a long time. So what we do with -- pick Clarksville, Tennessee, a lot of people other than Nashville and you said, okay, you picked your backyard. It didn't work out like that. We looked all the way across the country. But Tennessee Valley Authority, TVA, that power, that can also be green, 100% hydro and its last of the federal utilities is one of the most cost-effective, stable sources of power from an electrical point of view, you could have for a plant. So it was very relevant and why a lot of electric companies are moving to the TVA area. So one of the things we -- the form factor of what we're building is very relevant. I know it has a number here, 53.5Ah. I don't look at it that much like that. I look at it as the form factor. This 4-gigawatt hour of capacity we're putting online builds this form factor. It's one of the largest battery cells we've ever built here at Microvast. And the advantage is, it impact so much energy in this. So when you make one, you're adding to your capacity and utilizing it very efficiency -- efficiently. Now I've spent 3 of my last 7 months here at Huzhou, China, putting this new 2-gigawatt hour online. Happy to say it's up and running and ramping, building these cells, again, back to my opening, more cells, more cells, every cell we build, we have a customer for. I can't build enough of them to fulfill a backlog that's almost $700 million. I hope you get that message. This isn't about Microvast in win business. Can they get qualification? Can they execute? Can the operations team deliver all the demand that we had been expressed to us through purchase orders? Coming from the semiconductor industry, a lot of times we made big investment, we'd say, "Well, we think this customer is going to buy it or maybe we have some opportunity to look at the market growth." In this case, we've got homes for all these batteries we can build all the way through 2024. That's a lot of visibility for something that you're bringing online. So that will be successfully happening. I'll show you here, you'll see a video here in a minute. We actually build enough building to hold 12-gigawatt hour. So even though we have 2 of this new capacity, we can go all the way to 12 as we secure more and more business in the Asia region. And then supply chain. That's always something very important. One of the advantages of Microvast and its long tenure is that long-term relationships have been built over time. As a matter of fact, I've visited all our key raw materials manufacturers. The relationships are deeper than what I've invested in. Actually, our team, as Mr. Wu said, have been in place for a long time, well-known, well-established. And really, they're now being rewarded with a significant increase in capacity and volume that we're now doing. And so they're more than happy to say, "Hey, we've stood with you through the thick and thin. We're happy to engage in you with these long-term contracts and reap the benefits of what Microvast has been able to do." Changing gears a little bit, got this plant up and running. Because we were able to standardize the manufacturing process all the way down to the equipment suppliers, optimizing this process. Our goal is to do what we did in Huzhou even faster in Clarksville because we have been optimizing the machine, the process, the yield trying to get that going, which takes a while when you start a new process. Now in Clarksville, we're making changes to the equipment. It's now put that we had to do in Huzhou to get that running. It's now being put on boats through June, July, August, September, all the equipment is coming in to Clarksville. You'll see some pictures. Right now, it's just a building with utilities, with the equipment on the way. But that is a great advantage of being able to send U.S. employees over to China. And then they come back, see after learning how the process works, how things are running. Then we have our China team able to come over to the U.S. saying, "Hey, I just did this, this equipment looks the same way. We just need to make these changes, this optimization, and we've already -- see how this is going to work." So it's very nice to have 2 different facilities even they're on 2 different continents, leveraging the same manufacturing process. And then again, the same thing is true Huzhou, Clarksville make the battery we got a home for it. So making them in Q4, we're going to validate the quality of it and then ship them to customers. And in terms of maximizing utilization for these 2 plants of this new capacity will be fully utilized all the way through 2024. That's a significant advantage of what we just put in place. And then finally, the supply chain. We do make some -- a couple of minor [indiscernible] modifications by the location of where the [indiscernible] manufactured in order for the tariffs perspective. But at the end of the day, the supplier base is very, very similar. So what we're just telling them is, hey, I -- we ordered 3,000 tons for our China plant, we need 6,000 tons when you add Clarksville. So we're able to build off of that and leverage with the common supply base. So those are the words of the operation story. You can ask questions when we get to the question, I want to now show you a couple of videos of first starting out with Huzhou, where I spent a lot of time and what we were able to launch and build. So I'll get this going [Audio Gap] back this whole campus existed before we expanded. We took the money from our [indiscernible] investment in July 2021, and we built this area from here all the way down here. This is a 12-gigawatt hour building and a 2-gigawatt hour line just runs across a bit back. That's a whole finish to the warehouse. This is raw material, and this is the utility plan. So it is a huge aspect and footprint of our existing campus there. [Presentation]

All right. Now I want to spend just a couple of minutes just showing you where Clarksville is on the construction side. Again, the building is in the construction phase, so the equipment you just saw is what we're moving into Clarksville. We purchased an existing building. So we had to do some adds. This is what that is. That right there is the slurry mixing building. Remember, we start from the power, the cathode and the anode and we make a slurry and then it goes on aluminum or copper, and we put that slurry on the top and then create the cell development per period. This is all the outside part of the cell. This is where that inside that new mixing building that we just added on, all completed. This is 2 gigawatt hours with the capability in the same building, all this space, you can put 4-gigawatt hour. Why is that important? Because the Inflation Reduction Act. You can make $80 million up to, you make $160 million of tax incentives of before. If you have the same building and just all the cooling systems in place, how to use some switchbacks, switchboards and a little bit of transformers and we're often running, adding the same equipment and building more. So it's an exciting story. And on the same campus, it's 85 acres, I can add 400,000 square feet, and I build a substation, it'll be ready in 2024 to do 8 gigawatt hours here in the U.S. on the same property by adding 1 additional building. But again, we can go from 2 to 4 just by adding equipment with a little bit of utility out of building 400,000 square feet on the same land, have all the power in place and reserved with the TVA, which that's important with all the companies moving down into the region we are that, that electrical capacity is already reserved. So if you are excited to hear my voice, it is exciting. All we got to do is make it and we can tell. Appreciate your time.

We're going to take a great few minutes if anybody needs and we'll return with the CFO section. [Break]

Thanks everyone for coming today. I think most of you know I am, but it's a little bit virtual for a few years. It actually gives me a figure in person. I know you're super busy, a lot of companies to cover, but I think there a lot to tell you about Microvast. Actually, my job gets a bit easier because these numbers, it all comes from my colleagues, too. So if I look at the revenue CAGR, it's because of what Sascha and Zach were doing. So based on that, we're seeing this route fruits about 50% plus to the 27%. This is what we call the fast growth wave, right? Fast growth wave was underpinned by the 53.5 Ah cell. As we do that over that period, we're seeing our way towards 20%-plus gross margin target and then probably something that has changed there is a real focus on the operations side. As we scale into business, you'll start to see some of that this year as we add a large amount of capacity to grow the revenue, but we can manage that OpEx, and we'll bring that down and you'll see a slide of that later on. And then a proof point of [ all view in ] this fast growth phase, this is not even the right number [ anymore ] so fast growth phase for '23 [indiscernible] grew at $486.7 million backlog, that's now $671 million, and I've not even included that contract that we told you about. Some of that tells us is that, as Shane mentioned, we're going to have this utilization very high in both plants that we brought and that's Huzhou and Clarksville. And that utilization that we've never had the chance to do before because we've been making so many different cell types. So in 2022, we have to make 9 different cell types to get our revenue number. The very nice thing about utilization in Clarksville is that, that [ is going to lead ] through the IRA credit that we've been obtained for our business. And you'll see later on that has really helped us finance the business as we go forward. So you all know we have 0 leverage in the U.S. on this asset base that we're increasing. So 2 years ago, the big story for the merger and the hype was to take the money. We have the technology which was already proven at that point, and we have to bring it to [indiscernible] utilization levels naturally. As Shane said, [indiscernible] at Huzhou, that's done. There's no more CapEx to spend. We have a project finance facility that's got some dollars left to undrawn, and that means final payments that we've got to contract with an equipment point. Phase Ia, it's in a significant construction phase. It's in maintenance as Shane said, it's exactly the same line. There is a learning experience when you bring on capacity in Huzhou first, you take that into Clarksville. And that gets into a $1 billion revenue potential already online that is going to be well utilized. And as I said, the only really main difference, and it will be a material difference at economics whilst if this benefit from the IR credit. We give you a little bit more detail on what's happening at the Huzhou level here. It's really that utilization and contracted from what Sascha and Zach have said. So with a $500 million revenue potential already for Huzhou where 75% contractors on what's available. And these are the customers we're talking about. And it really pushes this diversification into Europe underpinned by customers like Iveco, Gaussin, MAFI & TREPEL, [indiscernible] and really think about Huzhou that is a manufacturing base to meet this huge demand in Europe and Asia Pacific. As I mentioned before, the CapEx investment is complete. And the other proof point is it's the clear adoption of the 53.5 Ah cell. We told you 2 years ago that we'd be industrializing that, and it would be like our driver of our revenue over this next 2 to 3 years, and I think that's a proof point for you. It's very same, same on Clarksville. Similar revenue potential. And then what we're seeing already on the 2024 utilization is we're looking already today, it's going to be at least 70%. The customers, underpinning that, again, it's European customers taking forward is this year that have clearly got a big U.S. market as well like Gaussin, MAFI & TREPEL, Iveco, [indiscernible]. It's also very significant for Zach's energy storage business. Zach is an NDA contract we don't disclose to the customers, that is a firm contract. They're paying us payments already under that contract, and we also have commercial vehicle customers as Sascha mentioned, first PO, the commercial vehicle in the U.S. We've had the energy storage effectively PO. As we push through with this high utilization and the matured plan, we'll see gross margin expansion and EBITDA margin expansion. The very unique thing I'll come on to it now is clearly Ira. We summarized this year for you. I think a lot of you are familiar with the Ira, and I think probably the specific section that applies to Microvast, which is actually [indiscernible] you can see the highlight numbers here. So you'll get $35 per kilowatt hour if you manufacture cells. You've got to sell them. It's not just manufacture, you have to sell them. You get $10 per kilowatt hour for modules and in total, that's $45 a kilowatt hour. Shane is making cells and modules in Clarksville. So that's $45 a kilowatt hour on everything that's produced. When we look at Phase Ia, which is what we're bringing up first, that's an $80 million potential. Shane show to the building, that building accommodates Phase Ia and Phase Ib, and that gets you $160 million IRA potential. The IRA lasts for 10 years, it starts to taper up a little bit in 2030. And over that period of time, we foresee a potential tax growth of $1.5 billion to $2 billion. The reason we can actually optimize sales is because of this -- the 53.5 Ah. Backlog feed through to utilization, you read through to that is that we can actually access these credits. Two years ago, we told you that the opportunity for Microvast was Europe and the U.S. We just show you that year numbers with the $204.5 million China, Asia Pacific were a big part of it, and that is or, let's say, 9 different cell types to do that. We couldn't optimize utilization. This is our midpoint guidance for this year, $358 million. you'll see later on how our backlog number gives you confidence and we get that from where our business is going, is that EMEA and the U.S. are going to be about 30% of our revenues going forward. That gives us great planning of the business to do that. It's what we're talking about on backlog. Looking at Q1 number was $486.7 million. And this takes the net to $671 million, where we'll report that in Q2. That will go higher when we include that awarded contract. We don't include awarded contracts in the back of -- its only what is contracted. That's our midpoint guidance is $358 million. And as we look forward into '24, and what we're telling you is that '23 is the only high growth year, we're expecting multiple high growth years. When we look at '24, we see a way that to be at 1.5 to 2x year-over-year growth. And our confidence in that is a management team is down to backlog and that backlog keeps on growth. Okay. So we always get this question about how we like to fund our business. And I think what we want to be very clear on and you see that this fast growth phase that we're in now to get that capacity is well funded. And the benefit of Clarksville and IRA credit is that we can monetize these credits to fund future expansion. So Phase Ia which is under control, as we showed you, that has a potential of 80 million credits is showing you that we have the utilization to get there. And as we go forward, we also include prepayments from customers, and we get to a position where budget self-funding capacity expansion at Clarksville. As we mentioned, the golden rule for our business is that we only expand if we have contracts. This is not the field that dreams [ type of ] stuff. You've got to have like firm customer orders. So let me point this out to you here. I'd like to get on this high growth phase here that is funded to do that. And I think we're showing you based on our backlog. Now we utilize that, we've got good confidence in the management team to get here. We're clearly putting things in place this year through Sascha and Zach, getting to this fast growth phase in '24. And if you think about it, what we're talking about is really, this sale is going to get you all the way through the '25 at least. It's all about the industrialization of that cell. And you're clearly seeing that from customers outside. The proof point for this year, and I'm sure you'll [indiscernible] that we think that in this year, we're going to have 4 gigawatt hours of capacity this year. We're going to grow revenue 17% to 18%, but we think that the OpEx is only going to increase between 20% to 30%. We believe we can keep on doing that year-over-year. So you'll have this curve of fast growth here and then the operating leverage coming down. So how do we become profitable? We've really got the levers to do this. This is where we are today. We're actually gross margin positive, already 8.2%. We have a target to get through the 20% plus at least '25, '26 time frame. But the levers to do that are really -- it's industrialization. What we mean by industrialization is 53.5 Ah cell. We have one cell to dominate like our business in this fast growth phase. The customer orders are clearly there for that. Automation, Shane is change bringing on fully automated lines for the first time. We are in semi-automation mode like the last 5, 6, 7 years. And then the utilization, we're going to achieve utilizations on our capacity that we've not achieved before. And then what you get from us is that you've got this ongoing commitment to innovation. We're not needing to spend R&D dollars today to get into this. Our R&D spend has been incurred already to the 53.5 Ah. And as I said earlier, this late year, those capacity expansions get it there and they're fully funded. What really is bringing it all together for you is that what you've seen from Microvast is we're in fast growth phase. And it's all about proof points for us as a company, be it -- it's a real business, it's real technologies and that comes through in the financials. The backlog is increasing, and it tells you that the 53.5 Ah is a winner. You'll get more technical knowhow that from Dr. Mattis on why that cells got [ such good ] performance. CapEx, you can trust us with your money, like we take your capital, we turn that into productive capacity, that productive capacity as customer. Funding. We don't need any equity from anybody, like this capacity is coming online, and when you've got growing sales, when you have a growing customer base and they're locked in, you've got plenty of financing options. We said we diversify the business. We're doing that. We're doing it by end market. We told you 2 years ago, we're getting to energy storage market. Zach's told that. But he's done it and he has got customers. We can scale this business, you're seeing that, and we've got a route to profitability. And as I say, it's really about those leads that I just mentioned. We just revised the cell, we hit the utilization. We have automated lines and we're currently innovating. I'll hand back to Yang for closing remarks.

Thank you all that time. Yes. I just want you to say you only confirmed this company is going to rise up, and let's work together to make that happen.

With that, we'll have management come up to the front, and we'll be ready to take some of your questions. [Operator Instructions].

If I can just preempt one thing on the Q&A, you've probably all got a zillion questions on DOE and separator. We don't want today to be dominated by that because as I just highlighted, that is not how we get to scale, is really important, and it still remains a really important technology for safety. I think we made clear in our press release, the news from DOE came as a surprise to us. It wasn't anticipated. But as we said, it really has no impact like on the business. We still have the technology, it's super exciting. It's really important for the industry because it enhances safety, but there's 0 impact on our guidance this year, impact our funding position to scale the business, it's all about the 53.5 Ah technology. It would have made some modest contribution to revenue in '25, '26, and it still may do that as this year, we will be increasing the pilot line to $10 million per square meter. So if you've got more questions, we can answer it. We just don't want today to be dominated by that. I think clearly we've got so many exciting things to tell you about the company.

Maybe the first one is for Shane. Just with the Huzhou facility having a ramp and basically doing a copy back in cars, can you talk a little bit about how much you've derisked that ramp in Clarksville and the ramp to like target built in target scale? Like how much you've been able to shorten the cycle time on that ramp?

Right. Great question. That's why I spent so much time in China. So I could actually see it for myself, watch the progress, what were the challenges? What do the know-how. We actually had a communication channel with our equipment suppliers. We had about 200 of them on site when we brought up the equipment. We had another group communicating back to the suppliers where they actually manufacture the equipment, given the feedback of what changes we may. We had to buy new tooling because we found that this will be a better portion of the process, we did quickly feed that back to the suppliers, they would then buy the tooling so the Clarksville equipment could be operated or modified. Same thing with software. You've got to make some software changes and fly, trying to get this optimized. It probably took in the neighborhood of 4 to 5 months to try to bring that up to get the process up to speed and ramping. We're still not at full capacity. We're just taking incremental approaches because one of the things you want to constantly do when you start a new line is test your cycle life is exactly like that you have from our R&D and pipeline. And the cycle life testing is just not fast, right? Cycle life is charging and discharging the cells. We can only do so many per week, so many per month. So that's why the feedback in terms of delays about a month -- 4 to 6 weeks after that. But the confidence is very high because the U.S. team was with me while we did that. Those that weren't there are now -- we have a team there now. We've got another team going in June. They get to see a production line already operating, already program set up, and then they go back home and say, okay, as soon as it lands, we're going to do that. Additionally, the same supply group that brought on the line at Huzhou, the suppliers are going to fly to Clarksville. Our China expert industrial teams come into Clarksville. And then, of course, we all saw that. So I would like to believe that we would be able to cut the time in half of what we did in China should be able to bring the same form factor up and running.

Perfect. And then second question is really about energy and power density, it may not be for your Shane, for the organization. Just the leverage that you get from a CapEx perspective as well as for the customers, seems really substantial. So if you could talk about the interplay between the customer dialogues that you guys have, both on the transportation side as well as the stationary storage side and how that feeds back into the R&D efforts to drive that energy and power density, which seems like it has a capital efficiency amplifying loop.

Colin, great question. And I'll give you a quick answer because when we talk with our customers in general, we receive [indiscernible] so we take a look at that. When we have more detailed talk, we get to that real fleet that means what kind of drive cycles do they expect, what are the temperature conditions and all these kind of things. So -- and on that basis, the 53.5 Ah actually was developed by the tech team around Dr. Mattis. So we took all our experience from the past, which we had since we started a couple of projects in China, a couple of projects in Europe and so on, and we took all that into one bark and said, okay, was is the optimized commercial [indiscernible]? What should we have, right? And we've all had experience different, different attitudes, different temperature ranges, different drive cycles, we developed the 53.5, and we said at the same plant, okay, between the [indiscernible] which Dr. Mattis mentioned, right, for different applications. So this is right now the stage of the yard, and this is what our customers are buying right now. So if we come to the next level, we received the next [indiscernible] right? And they said we need a low floor application. We need this. We need -- we have this black box design available. So what is the next step? The next step in the future will be okay, optimizing the cell, optimizing the chemistry in order to fulfill the next project, which will happen in '26, '27, '28 onwards, right? So that's what we are doing continuously [indiscernible] for our customers. There's a very, very indeed dialogue between them. We're watching our competition, what they are doing, but we have dedicated [indiscernible] So this means we leased the mass market out on a time because this is more and more standardized. So they want to have a standardized global cell on the mass market side, which is for classical [ automotive ]. So we are dedicating us on the 24/7 operations, where really total cost of ownership plays the most important role. And we are supporting that with our technology so that they get sustainable. You can only get sustainable if you have a long cycle life, right? If your cell can operate 24/7. So -- and these are the important factors. So we are supporting them on their way to become green. And that's what we're doing.

Great. The last one is for Kevin. You've been in the industry for a long time, right? And the choice to come to Microvast and develop the product on the cell. I would love to understand your decision-making process and the leverage that you're seeing in the order of magnitude on demand -- I'm sorry -- and so we'd love to hear the just the decision-making process and then the order of magnitude of demand that you're seeing on that product because I think it's not particularly well understood how deep demand pool is.

Yes. Yes. Great question, Colin. So let me unpack that. So I think on the demand side, as you see, everyone is globally is executing the same initiative. So it's pulling on the same supply chain, right? And so really, the demand far exceeds the supply of this, which is really good if you're a manufacturer. So I think that answers that question. Everyone is positioned with the same problem as you create more renewables into that market, wherever it is, either Australia or the U.S., European Union, China, you have to supply that during the peak demands of the grid and the most cost-effective and the greenest thing to do that is to move that energy from the off-peak with an energy storage system to the on peak. And the first part of your question was why did I come to Microvast?

Yes.

It was because of the opportunity. The -- we compete with the same usual suspects when it comes to cell manufacturing. But when it comes to energy storage market, those suppliers typically aren't offering directly to the market. So that vertical integration is really the key to success in energy storage. It's just that -- it's a really simple problem. The market is full of these integrators. They are buying cells from the same usual suspects. And then you have to take $1 and wrap it around a $10 bill and the economics are just really difficult to do that when you look at project wraps and negotiations and securing that supply chain, it's the tail wagging the dog. And so when I saw the opportunity with Microvast, our ability to take a cell directly to a container and have control of that supply chain and that vertical integration, as I looked into the future, and I was like this is an unstoppable company.

Zach, while you're up there. I did have a question around energy storage. Clearly, right now, your chemistry is not LFP as we hear a lot, and it looks like the market is really thinking ESS is going to be more around LFP than NMC or other chemistries. Just kind of curious on your view around that. And obviously, it looks like Microvast is working on LFP chemistry that probably will be ready to go as this evolves. Or is the other way to think about it that energy storage means lots of different things, lots of different people. You have utility scale, you have energy storage and cell towers. So really, what I'm wondering is, is there -- do you see a bifurcation of the market where, hey, maybe it's in the area like the U.S., maybe 70% of it is LFP, but there's going to be this area just given the focus on the need for energy density and more tight areas that allow Microvast uses existing chemistry in the energy storage.

Yes. Yes. Great question. Yes, the way that we like to view the market, it's -- and all of our customers' view of the market as the total cost involved to build, employ and operate an energy storage power form. So the LPs that are mass produced, especially, they're sold to the passenger vehicle market. These are commodities, right? And so they are driving a lower price. But as I said in my presentation, you really have to look at the whole ecosystem, deploying projects in the U.S. labor cost is very high. The performance of your energy retention is dramatic. So if your battery cell degrades faster, which we have that characteristic, right, that means you have to deploy that much more CapEx to have the same game play in your power plant over that 20-year period of time. So it's a pretty easy equation for the developers to figure that out. And that's why you're seeing the uptake into our NMC product, even though there is this kind of swell of enthusiasm about these low-cost LFP cells. They just haven't quite got there yet. And you can see when you add up all the construction costs, the long-term [indiscernible] cost , the energy retention over that 20-year life cycle of that asset, it's just not there. And so the market is under tremendous demand. So that supply -- all those products are getting to the market, whereas if there were more supply, they probably wouldn't have the success. The market right now is split really 40%, 60% between NMC and LFP technologies. And we have our placeholders for both of those technologies that we're commercializing. So we're ready to take that on. But we try to really take that holistic approach in the pounded plan. And that's really true for all the regions outside of China. If you look at the European Union, it's not easier to construct a power plant there as it is in the United States as it is in other primary markets.

You talked about ESS side, the fact that you're vertically integrated gave you an advantage relative. I mean can you help us quantify what the cost per megawatt hour advantage was in the projects that you won relative to other bidders that -- and specifically around what that vertical integration did for you to win those bids?

Yes. It's a little difficult to get specific about a project to work for a client. But if you look at the cost of the cells going into the plant, it's roughly on the order of 50% of the total cost of the project. The other cost goes into your substation, their lands, your construction costs, all the software and controls that go into the system. So you can kind of look at a project and kind of get into that detail in Q1, but we just can't give you specifics about cost per wireline projects.

Any rough percentage that you can share as much more competitive you were?

Yes, I think you can do the math on some of the energy densities you see. And you can see just do the multiplication if you have 100 fewer containers for the same size project. What that ends up being on cost and maintenance over a 20-year life cycle. That long-term operation cost is really important because you're multiplied in times 20 years plus the time value of money on that asset. So if you can reduce the number of containers by 10%, by 30%, by 40%, in some cases, some of the integrators that are in the market, where we're over 50% fewer containers. So I think you can extrapolate that and really determine what that cost advantage is.

There were some incredibly confusing the rules to come out of the treasury department around content requirements and additional 10% savings. Do yourselves help these customers qualify for those domestic at the extra 10% [indiscernible]

Yes, we're -- everyone in the industry is unpacking that. It's only been out about a week now. So we're impacting that and doing all of our briefs in details in orders, but we do anticipate to be compliant to the domestic content requirements of the ITC.

And these 2 deals that -- the 2 projects that you've won, I know you can't tell us who it was, you're under NDA, but can you help us understand the profile of the customers?

Yes. It's the classic global energy market if these developers are working on all the wind projects, PV projects globally. The market is pretty small, and that's why we don't want to be specific. But if you look at the market, it's shrunk a lot over the last 10 years when it comes to the [indiscernible] and PV sector.

Amit?

How much of the backlog build is from new customers, Craig?

So I'd say current -- you mean -- so okay, you try to get into the ESS commercial vehicles...

Just how you can break that down -- how much of it is coming from customers you already have? And how much of it is from new relationships you're forming in the market?

Okay. So I'd say, split-wise, your -- it's around 50-50, right, ESS commercial vehicle. Now yes, that we're acquiring use of the slide, we have 2 customers, right? So we're in 2 projects there. Commercial vehicle side, a lot of that's underpinned by the European customers. Big part of that is going to be obviously Iveco, you saw from what Sascha said, we're on multiyear contracts with them. So that's going to be across New Zealand electric. It's on the -- on the crossway platform and then [indiscernible] applications. Overall, you have a lot more commercial vehicle customers the ESS because the ESS project is just so big. Does that answer your question, Amit?

[indiscernible]

Two questions. So first, can you just talk philosophically about pricing? You obviously spoke a lot about the distinct technology advantage, energy density, safety and so on. On the flip side, you have -- you don't have the scale that's sort of a big Asian incumbents do. So how do you think about pricing compared to the more commodity lithium-ion products out there?

Okay. I'll try and speak to philosophical, but the -- you've got pricing, you've got really 2 distinct markets. You have commercial vehicle and you've got entity storage. And as Zack said energy storage is a market-driven price. Now the slide advantage in the U.S. right now is that those developers are getting a 30% to 40% investment side credit. So that's lowering their effective price. Now as a business, [indiscernible] be ready for and it's now is that eventually those credits come down. So the market is probably pricing ESS projects right now, 250 to 300 a kilowatt hour, but they're getting 40% of that back. Now on commercial vehicle side, because it's a niche and unique product, we're not competing with passenger vehicle pricing, it's about the TCO. So the way we think about pricing on commercial vehicle side is TCO. And we're not driving our price down to what a passenger vehicle customer could opt because they can't offer the same performance chart. Does that answer your first question?

Yes. No, that's helpful. You didn't spend much time today talking about the Berlin factory, obviously, smaller than either China or the U.S. How important is it for you to have a physical manufacturing footprint in Europe? And could there be some policies coming out of Brussels that will perhaps lead you to expand there.

Apologies to the German and European for emitting them to date. But the -- for Germany right now, it's module and pack production. So probably and Sascha alluded to this, where the market is going is going to be very regionalized, but you always have regionalized supply chains for OEMs in car manufacturing anyway. You had a very established European manufacturing base, mainly around Germany, classic ones, BMW.You have that clearly in the U.S. And in Asia, you had it traditionally around Japan and Korea. The big difference is being that China as Yanzhuan said, move into electric vehicles earlier, and that's why we were in China first. So where you get to public able very regionalized production because you're going to have to meet CO2 footprint. And we're getting ready for that. So we have right now Huzhou, which this year is global, meets the globe. Then as Clarksville comes online, Clarksville going to be Americas. And then what we need to be ready for is green deal and European incentive is that they will also want localized production as well. But we clearly have the customer base there. Hopefully, you saw that from what [indiscernible] Do you want third question?

Absolutely. At the time of the stack, you mentioned hypothetically, you are open to getting into light-duty EVs and also consumer electronics, right, kind of a distant. Is that still on the table at some point? Or is there just no need for that?

So the consumer electric is really around like separator applications, right? So separator. So we still have -- if you think about Microvast, right now, we have the $53.5 million is about to sell a module manufacturing. And that's what gets us to scale, and it's really important to get the scale quickly. Then behind that, you've got -- you're going into the cell component level. So the separator part, we can use that across our own customers, you also use that in passenger vehicles. We sell it to OEMs or their favorite battery supplier. That's how we would get into the passenger vehicle market that we're very similar to like capital production as well. So we don't want to go head to head at the cell level because those guys are at massive scale already. We want to be at scale for commercial vehicle, for energy storage. And then behind that, we want to be at scale like either cathode or separator. But it's always going to be the quickest way to scale for us. We've got to sell module manufacturing, especially around 53.

Any other questions?

Sp you answered my question reference to Polyaramid. But for BMS, do you have any monetization opportunities there. Are those systems compatible with other batteries.

Yes. So the battery management it really needs actuate and intelligent algorithm to be able to managing the path tender in different working conditions, a variety of some features, different state of charge different on health and with a different demand for the power and also the charging on patents. So to generate intelligent, to be honest, we need extensive the inputting data. And with that, we have collected joining the development of the sales, of the key materials understanding how they would perform under different conditions and how to give accurate estimation of the different SOX, right, the charge, health and the power. And with the implemented, we can still not yet predict all of the conditions. So they've got to have some of the machine learning capabilities, the digital twin. And it's better to have a remote control that we can monitor in the operation. So that would also offer. And what we have in our BMS cyber security, the function of safety that has been required by this market. Yes, the BMS can be applied for other products and the shoes we need to do the extensive testing on the south. And BFS is not only part of it. So for the south and the module pace to deliver the highest performance home as for the power and the cycle life we need to ensure that the mechanical field, the thermal field just and the electrical field as unit forward distributed crosstie product. And the BMS also helps us maintain that beyond the design of the products, so that controls the thermal control the BMS that we have worked -- we customize for our own products with event beyond the generation.

Understood. And sticking to BMS and moving to Zach's field a little bit, the ESS systems, they will be grid interfacing. Do you have plans in the future to demand response kind of applications or any other applications?

Yes. Yes. As I showed in some of my slides, you just see how the market is quickly getting shut down and you see us next year, 73% of the market will be energy shifting. So really, when you look at what's left there, that's kind of been 3 or 4 different pieces. So it's really not something that we're taking a look at right now. Those applications a niche. And so we're really going after the large market, which is energy sector.

Okay. And just last one from me. The $676 million backlog. Is that expected to be delivered within the next couple of years, 3 years?

So probably around 30% of that is going to be delivered this year. So [indiscernible] really underpins out in guidance we have around $358 million for this year. The vast majority is going to be delivered in '24. And that's why we get the high utilization in [indiscernible] any colos. So I think what -- where we stand today is that even before Clarks was cranking that for at least 70% utilization for it. I think in carry on and you see the background data from the guys on how quickly the market is growing, but our expectation is we're going to be fully utilized in '24. And as long as we have customer contracts, and that's what I said to start is obviously at the customer contract, then we'll start planning for additional capacity. And we saw from Shane that that's a matter of adding another production line because Clark was ready for that. And I think we explained really it will be even quicker that will be then the third same line that we brought on and us bringing on quicker.

Is this capacity from 1 shift or multiple shifts?

It's 3 different shifts. We start selling, you have to operate 24/7. Otherwise, you've got to plan out the slurry mixing portion. So module pack line, we do buy ships. It's 24/7 operation and so.

Anyone else?

Yes, Craig. So you're talking about 20% plus gross margins in 2027, I think we look at what the industry is doing kind of low 20% gross margins. But just given what you guys can deliver with Cyclolife and some of the value of your technology. I'm curious how you think about the business long term? Can this be a 25%, 30% gross margin business? And if so, how can you get better?

Yes, we would like to be because we're not in that commodity for the commodity we stay as an start. We did literally stayed away from that market because it's scale, it's super competitive. We think that or OEMs that are going to take over that market production themselves. The commercial vehicles for us is higher ASP. The benefit for everybody will be clearly the effective margin impact from Ira. So you will get margin expansion from that. Certainly, through to 2029, and maybe probably as a minimum for us, it would be clearly want to be beyond that 20% look, part of that is always having like the better technology, like I think what you saw from today, the 53.5% when you look at applications for commercial vehicles, it's a really awesome technology. Awesome technology needs has always been better pricing.

For sure. And how does automation play into potential gross margin expansion from here? Can you talk about some of the improvements from the first line to your latest generation line going in. And is there a road map for further automation or improvements on the manufacturing side.

I mean I'll quickly and then I'll pass it over to Shane. But where we see that is the automation is that right now, this year, we're happy to use line that could produce maybe 3, 4 or 5 different types. You can't have that full automation, your stop-start production is quite manual, people being involved. You then flip to what who show 3.1 and for Clarksville, it's fully automated and dedicated to 11 product. Now the other part of that is then volume pricing that because you've got one dominant product across 2 continents, you're going to volumes that we've never had before. And you get lower pricing. But I'll pass it over to Shane, he can just talk through about some of the other read-throughs on automation as well.

Yes. And I'd just prefer to talk to headcount because the region's labor rates in different regions are different. So we're about getting a 30% advantage in a reduction in headcount compared to a semi-automated line to a fully automated line. That's probably the biggest change. And I know we keep talking about a number on itself. Remember, from an operation, we don't care what the number is on the sale. We care about the form factor. So Dr. Mattis' road map, given the time this number would change a lot and even the chemistry would be modified. But this call is what is carrying us in the future, not just one product. There's a series of different numbers that can work. Of course, there's always advantage if the part number is the same, which is true over probably through 2024 that this part number will be the primary one. But the flexibility of the automated -- fully automated manufacturing line, she can change all kinds of types of chemistries and thicknesses of paths and make super competitive additional next generations that we don't have to -- and we can utilize the same lines.

Yes. Also, the fully automation actually gave you 2% better yield, the production yield. That's the beauty of fully automation. That's a lot [indiscernible] that's a lot of money. Yes, net profit.

Full automation now to replace everyone on the lot. You also still yet need to have the quality control folks such as our margin line, we are installing in Clarksville, 2.3 gigawatt hour, we only need less than 100 tonnes. But then you do need to implement the quality assurance, the quality control also.

Any other questions?

So just stepping back and winning orders in the competitive landscape that you are playing in -- or at least in the orders that you have won, who are your main competitors? And if you have lost orders that we don't know about who -- that whom did you lose to?

I would not mention the ones which we have lost right. So it would be the same, but they're always winning and losing, but it's not a real losing? So sometimes the other one has perhaps as oil price or he's buying a project. So sometimes, he wants to have a less cycle life because he said, "I don't need that fact. Sometimes he has a different cost sector, right? Well, we don't 100% reach the black box design if we sell a complete access stuff. But sometimes, he says, "okay, I don't want to pay development costs if you do my customized pack. So there's always winning a lot.

And real estate warranty.

Yes. And then we come to a warranty topics as well, right? Some people expect that maybe 15 years warranty. So at a certain point, you cannot give that because you have to look at the liability risk as well, right? So if you buy a gasoline car, you get 3 years, right? So -- and everybody expects in the industry, it's a new industry. And I mean the technology in the gallon has more than 120 years old, right? So -- and it's somewhere came up from Asia at the end of the day that you today give 6-year, 8-year or 10-year guaranty, but some customers even expect 12 years. So if you take a look at the technology itself on the battery side, it's not even 12 years old sometimes. So how can you predict how long will the with the cell last 15 years? So how can you give a warranty for 15 years if you cannot predict that you can do laboratory tests. But our data, which we presented is based on laboratory as well as on field, right? It's real data. So when we talk about 5,000 cycles, we do reach 5,000 cycles. And it's not laboratory, drawing a graph. No, it's a commitment. And I think this is a big topic. And the other thing is sometimes we have global RFIs and Qs, which expect to have local manufacturing in the U.S. which we didn't have. So now we have. So now it's a different game, ball game again. Because at the end of the day, if you want to do in the future commercial vehicle project, you need to have an app in Asia, you need to have in Europe and you need to have happen in the U.S. So on all these kind of projects, we are working right now, and we're getting them ready. And I think then we have set for the future, right? If I go today to customers, I'm not talking about projects which will happen in '24, right, or mainly in '25 because we are already in discussions about that a long time, right? So we are talking about future projects in '26, '27, '28, '29, 2030 when the next heat of big point and they play for us available. So we're talking to fleet customers, how can we optimize the pool. We are trying to support them. And given the motor years, how can they optimize the hole, right? These are the topics which pay trader. And then we're optimizing our sustainability profit, right? We are working very closely together with the Turkey, [indiscernible] and Germany, the sites in order to get the circular economy Part of that will be ESS right, very important second life, right? But also -- so this all takes work. How do you recycle batteries stay on, right? You have a lot of recycling topics ongoing in Europe, in U.S. And this would be an important part in the future as well. You will use recycled materials, which will go back into the sell process. So you will reach a circular economy. And this is where we're working on as well, yes. So -- and the green aspect plays also right? Let me add to that Euro 55 green deal, yes, it's an important factor. And yes, customers are requesting for the future to have localization and also cell level in Europe. We are working on that. And as Craig said, and as soon as we have customer contracts, we will build, right? So -- and we have ongoing contracts. And as soon the request is there, we can switch them and can team can then do the first step of localization, right? It's just the process though. And it's a step-by-step process. We started in Asia. We moved over. We did post-petition in Europe. We moved over to full localization in the U.S. and then later on, we will go back -- go back to Europe. Europe and U.S. will be the main drivers of the company. We will not talk about it in India because India is also a huge market. It's a very important market. We have a lot of Indian customers, and we are helping them also to electric fiber fleets like just mentioning [indiscernible] DBM price, very important. So -- and we will never forget a Asia of the rest also note China because there are a lot of customers which also need superior cell technology. So in the flexibility of our business model, when a customer comes to us and we talk about that, some customers want to have all we sell. Some cases want to add a model, retail the model and they design their own pen. With other customers, we designed their pack -- they produce the tack on their own or we help standardize packs, where we always make sure that they keep the same black box design as the same interfaces in order to optimize it. So it's easily to upgrade an existing perhaps in 2 or 3 or 4 years' time.

Any more questions, yes, Pablo?

One more quick one. Several of the commercial, let's say, material handling vehicles that you guys are supplying Golsen, Cargotec. Are they looking at all at hydrogen fuel cells as a substitute for battery storage in these products? How much of a competitive dynamic is that?

Pablo, it's a good question. So hydrogen and fuel cells is not a competition, right? They always see the average. So you have different aspects. How can you electrify or can you make a complete logistics system more sustainable opined batteries, the other is the fuel cell. And you will have always different customers we expect from their manufacture different solutions, right? At the end of the day, if fuel are always retire stage fully and retire the battery. So we are working on both sides, right? So we are working with Cosan, we are working with Karma and all the others to make their system was sustainable, more great, right? And that's the major cost adding CO2 emissions because in the harbor section, especially, you have a lot of CO2 emissions. So -- and we are minimizing that, and we are helping them to get that more often. But the very important thing is we need to fulfill 24/7 locations. And so charging stations must in harbor areas as well or in big logistic pumps. And at that point, and it's upcoming, you will have also more ESS in that area because they need to create a charge. And in battery technology in general, we move ahead as soon the utility network is set for that. I mean, Europe is moving very quickly to become free, but then what they realize is the utility network is not set for that. So they need to do also a lot of investments into fast tracking stations into energy storage systems because they don't have enough activity on hand, right? So the same thing the testing you have in the U.S. So it's a system which needs to be built in parallel, yes. And I oil support that in the U.S. and European 55 grade will support that in Europe. And they will push it a half and they will make sure that you always have in a certain area closed environment, right? Europe wants to have the raw material from Europe. U.S. wants to have a raw material possible from the U.S. like our[indiscernible] . So the same will happen more to Europe. So you will see more localization spots in the future. Then right now, you still have a lot of sales coming from Asia. So this will change. So Asia will be for Asia, Europe will be more for Europe and U.S. will be more for U.S. Anyone else?

Any more questions? Great. I think we're all set then. Thank you so much for coming. And final remarks. Mr. Wu.

Yes, thank you. Today, I think we answered the last questions. And comprehensively, we -- the first time we introduced Microvast the market company is a market see us, and it's great. Thank you all for coming. Thanks.