Nasdaq, Inc. (NDAQ) Earnings Call Transcript & Summary

Yes. Yes. So we're going for the whole well-to-wheel zero-emission I think, but we understand also there's a transition on both sides, right? So you have to get the tailpipe emissions out there taken care of, and then we have to clean upstream. So electricity, we have some aggressive targets. 2045 is our target for carbon-free electricity. And then on the hydrogen side, industry is really leading that push, and we got to set some targets, first looking like 2030 or so on the hydrogen side.

An important question about the power challenges that the state has faced. So how does the state intend to decrease these rolling blackouts with an even more reliance now on electricity? I think it's a pretty important one.

Yes. It's an important factor when we're laser-focused on. We're trying to look at this as a real opportunity to leverage what we can do with zero-emission vehicles to help balance out the grid and increase reliability. But of course, there's a lot of work to be done to get there.

And there was another question specifically about our recent bill that didn't pass. Trying to get to that here, AB-326, what else is being done to help new EV companies penetrate the market.

I can't remember what AB-326 was offhand. So we're doing a lot to help new companies. I guess Lordstown is a good example. A lot of it is kind of what they're doing to bring it their product to market. But then, here in California, we're trying to -- all the state agencies, the legislature, the governor's office, we're all committed to making sure that there's a soft landing here.

All right. We're almost done here with this hour. We're going to try to get to rest of these, but we're going to turn it now over to the second panel. You guys have been great. Let's start with John bringing in our next roundtable with Jagdeep Singh and Jack Cassel.

Okay. We're going to start now with Jagdeep and then Jack. So Jagdeep, I want to talk a little bit about the SPAC structure. But before we do that, can we talk a little bit about your core business? What it is that you produce and why it's superior to the other options that are out there?

Yes. Happy to do that, John. First of all, thanks for having me. Great to be part of the panel here. So the quick summary here. I think everybody in the panel is aware that we are on the cusp of this transition of the powertrain from combustion engines to electrified powertrains. So far, we've seen a relatively modest penetration of EVs relative to the overall EV market -- or overall vehicle market, maybe about 2% of cars sold are electrified. And we think the fundamental reason for that is today's batteries just aren't competitive with the combustion engine. There are a number of metrics on which batteries fall short, they don't have the same range because the engine density is lower. There's a power density issue, which results in charging times being longer than refueling gas power vehicles. It takes about an hour to charge today's best batteries instead of, say, 5 minutes to refuel the gas pump. There's a safety issue. Today's batteries have liquid electrolytes that are basically fuels and will burn. There's a cost issue. Obviously, you have -- you can do nice high-end vehicles like Tesla's and so on, but the mainstream market is at a lower price point. And it's psychological issue. So fundamentally, all those problems can be solved it turns out if you switch from today's liquid-based batteries, which all lithium-ion batteries today use a liquid electrolyte to a solid-state battery. Solid-state batteries have been on the horizon, have been worked on for 45 years, unsuccessfully. And the main challenge has been that you need a solid-state electrolyte that's competitive with today's liquids, but yet doesn't allow lithium metal dendrite from forming. Dendrites are basically needle like crystals that will short circuit yourself. And without boring your audiences with what the technicalities there, the net of it is you need to have a solid state electrolyte that prevents dendrites. And that's the problem that has basically stopped the industry from being able to commercialize solid-state batteries. That's also the problem that QuantumScape has addressed. So we're a 10-year-old company. We've built the solid-state technology. It's the only solid-state technology that's been validated by automotive OEMs. We're fortunate to have the world's largest car company, which is Volkswagen, as our biggest single investor. They've also announced a manufacturing joint venture with the company to help us produce these cells in volume and deploy it across their brands from Proche to Audi to VW. So we believe that -- now that the solid-state technology is here that this really can be the accelerator, if you will, for the EV transition to be completed and both make a big impact to emissions in the environment, but frankly, also create an opportunity to create multi-hundred billion dollar company indices.

That's great. Thanks, Jagdeep. Tell me where does the race stand right now in batteries? Is there enough capital to go around that it was interesting one of your competitors, I believe Doug Campbell, said something like they beat us with a punch with this creative financing scheme. I mean, is there enough money out there to support growth in multiple battery companies? How does it feel to be right now?

Well, I think this is kind of -- this is a question that's more general than just batteries or EVs. I mean in general, the capital markets tend to be pretty good about allocating capital to companies that have the credibility. And the credibility comes down to -- obviously, there has to be a big addressable market. There has to be a demonstration that technology risk is behind you. There has to be enough of a credible team and customer traction to make all that justified. What the capital markets -- what public capital markets don't do very effectively, and they shouldn't probably do is trying to take on fundamental science or chemistry risk. So you really aren't in a position to access public markets until you've demonstrated that the binary science risk is behind you. So it's not a question of whether or not a technology can work, it's a question of things like can you ramp up production fast enough, can you ramp up your sales efforts and so on. And I think every other player in the solid-state space, including what you mentioned is basically at a point where they have not yet demonstrated the technology works. And so they're really not able to access what is otherwise a really large pool of public capital that would love to be deployed in helping enable this massive transition.

Just one more for you. And then we're going to bring in Jack to talk more about the markets. Can you tell me what it was about the SPAC structure that made sense? I mean you've got great investors, big names, Bill Gates, Volkswagen, was it the efficiency of getting enough capital to reach full scale production? And how far out will you be once you're done?

Yes. So I'll answer your question in 3 quick parts. One is why go public at all. And I think the answer there is, now that we've demonstrated the technology works and validated by [indiscernible], we need to focus on building factories. And as folks already mentioned, building factories is not cheap. It requires capital. This is not a software company where you just make digital copies of the code. You have to actually build real stuff that requires tools and equipment and so on. So we need access to capital. All the markets are a good place to get a lot of capital. Second question is why do we use SPAC instead of regular IPO. Well, I've done a regular way IPO. My last company we took public with the regular IPO. It was about a year-long process from engaging the bankers to when we were actually listed. And I think as -- I think Mark mentioned earlier, the SPAC losses from the time we made first contact with the SPAC, or they made first contact with us. The time the deal was announced was about 2 months. And then from that announcement to when the deal is going to be closed is about another 3 months. So it's a lot more efficient and streamlined. And the company will end up with a multi -- with a $1 billion-plus balance sheet. And the final question is why this particular fact, Kensington? And the answer there is these guys had just a ton of automotive experience, which nicely complements the battery and chemistry experience that our company has. So when we put it all together, this just made a lot of sense for us. And I have to say we're very happy with the decision so far.

And if I could add to that, I would just say that it's -- for us, as the company to be able to take advantage of the SPAC, we're able to articulate our story because we can put out those projections, as you heard earlier in the conversation. And with all of these new businesses, I think it's important that the investors and retail investors and institutional investors hear directly from the management team to show what that differentiation is between these companies and their business models and how those projections work. If you were to use a traditional IPO process, those projections are basically comprised by the equity research analyst, so it's not coming directly from the management. So I think that's a very important element here for SPACs versus traditional IPO.

Let me just follow-up on that. You can answer this too, Paul. Just quickly. We talked with some of the other panelists a few minutes ago with Hope there about the process looking very similar to a regular prospectus the S1 with regular IPO and the S4 that we have with the SPACs, is it -- do you believe that the level of disclosure around important things like corporate governance and so on, is more or less the same in terms of what you had to prepare?

Yes. For us, in terms of running through that entire process, the S4, it is a very large document, and it does take a ton of work. The challenge is for a lot of these companies that are younger, making sure that they have the teams on staff to be able to meet all of those requirements, and they have all the systems and checking balances in place. But from a reporting perspective, the S4 is very similar to the S1 in terms of the kind of information that's there and put out there. So it is a very cumbersome process that all the companies undertake when they go through this.

Great. Let's -- I don't want to leave out Jack here. Jack, make sure you're not muted when you start talking here, Jack. Welcome, Jack, to the event, and thanks for coming. Jack is Vice President, Listings and Capital Markets at Nasdaq. So he oversees basically the West Coast. So Jack, I want to dig back into something that we talked about before, which you and I have discussed the role of the Robin-Hood effect or these retail investors, how much of that are you seeing in terms of trading volume in some of these new issues?

Yes. So it has been an incredible year, right, 2020. And I think this Robin-Hood effect as we see some of the headlines in reference to before, has been an incredible phenomenon for the amount of trading on the retail side that has come up. And it really started at the beginning of COVID. As we saw the S&P in the month of March dipped down about 34% when they hit the trough. And most of the institutional investors had started to pull back and/or rotate around. And what you saw there was -- or excuse me, retail investors basically diving into these buying opportunities. And we look at a lot of the stories I came out of it. It was not necessarily the kind of educated or people that were traders by trade, they were the sports bettors. They were [indiscernible]. They were kind of the millennial group that was now leveraging these no commission apps and brokerages to go in and make these trades. So we've continued to see this really through the summer, buying into the dips as well as the -- into some of the news. And what this -- in August this year, it actually eclipsed institutional trading per volume or it was 53% of the daily volume was retail investors. It was the first time unprecedented in the U.S. capital markets. And it's still -- it's about on par now, and we'll see again how this continues to evolve and transition. But I think Ramsey brought up a really good point in how this plays into the SPACs and their respective target acquisitions, especially once the announcement is made, is this notion of a redemption. And when you look at the education and people taking the time to understand not only who is the SPAC acquiring, what is their story? I think Paul made a great point, you have to become educated and who these companies are, their management team, their narrative, their KPIs. But also importantly is when it comes to the redemptions, as you look at the wealth management, the broader retail, even through broker-dealers, there's not much education on whether or not they should do. And how does this redemption form into their planning or financial planning, kind of their strategy, their broader strategy. And so you're seeing a lot of missed opportunities or a lot of question marks coming up to this. And we've seen this in several of our combinations on Nasdaq this year where the wealth management arms of these investment banks are kind of scrambling to make sure that they're not to blame for some of the bleeding of the retail story.

That's great. This is good timing, Jack. Someone just asked a question, which is a technical one, but maybe you can address this. How do these ticker symbols work? And what exactly is going to happen when the company is -- the new entity is created? And can you even move exchanges if you want to?

Yes. So all great questions. I'll kind of hit them in order. So one, the tickers at the end -- for this fact at the end that you'll have a U or a W for units and your warrants. Typically, there are going to be 4 letters for the SPAC plus a U or a W. Then when it comes to the acquiring company, they get to pick based on what's available, right? There's already 39 -- about 5,000 -- a little over 5,000 publicly traded companies. So you have to identify a combination that is available. And then that can be listed on either exchange. So it used to be kind of smaller, single letters on one exchange, longer letters on Nasdaq. Now it's all portable, similar to, I guess, your cell phone number. And then as it comes to the listing itself, you do not for the acquirer or excuse me, the combining company, they do not have to list on the same exchange as the SPAC, as their SPAC holder. So we actually have a great story with Velodyne here in San Jose. They have been acquired by Graf Industrials, listed on New York. And at the combination felt that Nasdaq was a better home just based on not only our relationships, being the home to innovators, being a lot of the package and the IR, Investor Relations services that we own and operate and provide others that are actually going to make that change once they come to their actual filing. So it's company to really choose which listing venue is the best for them.

Just -- the question is, when does that happen? It should trade on the new ticker the day after the closing, right?

That's correct. That's correct. So... Yes, go ahead.

Sometimes the ticker will be associated with a different company. I mean, we saw that with Fisker. There was a different name altogether. You had to go to the actual exchange to see that FSR was actually Fisker and not -- I can't remember what was our name came up.

Okay. Yes. So we'll work with the group and just to get all of that information, the announcement disseminated out to as many publications as we can. I mean that's part of the exchange as well as the bankers and in some instances, lawyers. Usually, it kind of works its way down. But it does trade. So the vote and then the -- it's just basically a switch. In the next day, they are trading under that ticker on the exchange, the combining -- combined company that is.

Great. Thanks, Jack. Jarred, before we move on to open up the rest of the panel here to our other guests, can we just look at these slides quickly here from our friends at Sentio. So these -- it's always just nice to have this data, which they pull, and it can be done very quickly, thankfully. And as you can see here, the mentions, and this is in corporate transcripts, earnings, investor days, et cetera, is absolutely exploded in the last 10 years here. And then there's one more slide, which is a fun one to look at. So what you have here is the combined market cap of Tesla -- I'm sorry, the market with Tesla versus the combined market cap of Exxon, Chevron, GM and Ford and look which one is bigger now. So this is really something. All right. On that note, let me hand it back to Hope, and we're going to introduce the other folks in this roundtable.

Yes. And these are great -- for context, right, to talk about the opportunity here. And so if we could just remind folks our agenda for the rest of the afternoon, just for the remainder of this, we'll have an opportunity for both parts of the forum, Part 1 and Part 2, all the panelists to come. But for now, I'd like to introduce Paul Catuna, who is the CFO at Canoo; Michael Farkas, Founder and CEO at Blink Charging, and Executive Chairman; and also Tod Hynes, Founder and Chief Strategy Officer at XL Fleet. Lots of questions about the schedule today. So our next roundtable will feature these 3 gentlemen. And really the common thread among them, as we've discovered through our practice sessions with them is that there is such a massive opportunity for enterprise for fleet. And so I really want to focus this topic with -- focus this roundtable on this topic with them and start off with Paul.

And Paul, feel free to also introduce yourself a little bit before the first answer. But look, not all customers are the same. You've told us what a sweet position you're in at the moment, where you've got not only in the B2C, but also you've got B2B covered here as well. And are these more efficient wins though, at scale when you've got more the B2B?

Great. Thank you. I appreciate it. So I'm Paul, I am the CFO for Canoo. I have been here with the company since it was founded and really great to be here with everyone today. So Canoo is a mobility company that is leading the transformation in the way that vehicles are designed, engineered and manufactured. And part of our strategy, and we touched on this a little bit earlier in the panel, was to have that flexibility. We have one skateboard that we can use for multiple markets. And that includes both the B2B and the B2C market. And we like to call it B to all to be able to go after wherever that largest total addressable market is for us. And the B2B side of it has its advantages because if you're using delivery as an example, the fleet managers really understand total cost of ownership for an electric vehicle. And consumers don't necessarily dig into it that much. So if I ask a consumer, how much they actually pay on a monthly basis for their vehicle, they're only going to give me most likely their monthly price for the lease, but they're going to forget the depreciation, the fuel, the maintenance and all the other costs that come into a vehicle. But on the B2B side, the fleet managers understand this equation. And for us, what it is, it's about designing a platform where we can get around the cost of a gas tank. So gas tank is a plastic tank that costs $5. And I have a $10,000 battery pack or an $8,000 battery pack. We're trying to reduce that cost overall. And that's the challenge with EVs for the consumer market because they are more expensive. But working with the B2B players, whether it's last mile delivery or it could be autonomous driving technology players, corporate campuses, suites, all of these industries are in need of electric vehicles. And this is all being driven by the regulatory environment. And also, more importantly, ESG, where the companies are taking it upon themselves to become environmentally friendly from an emissions perspective.

Thanks so much, Paul. Michael, I want to talk about your business model, and again, feel free to introduce yourself as well prior to your response. You have a fascinating observation that's really helping to drive your business. Which is what you've told us that when people are on the road, they have to go to the bathroom and they have to eat. So explain a simpler business that you've got versus everybody else.

Our model -- hello, this is Michael Farkas, Founder and CEO of Blink Charging. Our model is very simple, wherever cars are stationary already, we'll have an outlook for them to fuel their car. Whether that's at multifamily residential facilities, single-family homes, retail market, hotels, and if you're driving along highway paths and you need to charge, supercharge as well, we'll have a solution for you as well.

And McDonald's is part of your play. Could you explain a little bit more about how you're working, how you're targeting these companies to work with?

Yes. It's not only McDonald's. We deal with a lot of fast food chains, and we'll have some really interesting developments over the next few days and weeks. Bottom line, people travel, and they need to get from city to city. And when they need to do that, they need to believe themselves as well as fuel themselves the beat. So having a McDonald's, a Burger King, Chick-fil-A, any of like the fast food type of locations. It's a perfect place for them to plug their car in a supercharger, get something to eat, relieve themselves. By the time they're done, they get back in their car, and they could drive another 200, 300, 400, 500, 600 miles, depends upon how long they have in their battery.

All right. And we'll come back to both folks, Paul and Michael, in a sec. And Tod, I want to bring you into this conversation as well. You also have a perspective here on this. And you've also seen some changes in demand. So I would love for you to start there, and of course, as well as introduce yourself.

Well, thank you very much for the opportunity here. XL Fleet is a leading provider of commercial fleet electrification systems. We're very focused on the electric powertrain development, so electric motor, battery, inverter controls and everything else needed to get that system into some of the most popular commercial vehicles. They were Ford, GM. We just announced we are expanding our plug-in hybrid option across 4 new GM vehicles, the 2,500 to 3,500 heavy duty pickups as well as the 3,500 and 4,500 cutaways. Those are used for everything from school buses, delivery trucks, ambulances, so a very wide range of commercial vehicles. And our company is, again, extremely focused on the electrification of those vehicles. So that's the electric powertrain. Also how to get those systems produced. We have a very low-cost and highly scalable production capacity that leverages the existing manufacturing capacity of the industry. So our systems get installed as the vehicles are manufactured and then shift anywhere in the country and end up as brand-new vehicles at the at the customer's location. Another thing to support and note is that some of our customers are looking at plug-in dozens and in some cases, hundreds of vehicles at the same facility. So there's a really interesting opportunity there around solving the charging infrastructure challenge for those customers. And while we've announced XL bridge from an investor perspective, it's in our materials, we haven't fully launched or announced that part of the business. So we really want to be a comprehensive solutions provider for commercial flu electrification, and that's across Class 2 to 6, so you're like duty Med and beauty trucks, but we also plan on getting into Class 7 and 8 as well as all-electric solutions in the 2022 timeframe.

Thanks, Tod. Michael, we were talking about the changes this year. Obviously, we can't avoid the topic of COVID. What are the changes that you've seen in terms of driving habits? Are they picking back up? Are they staying stable? And Paul and Tod, please weigh in as well as this of course impacts your business as well?

Obviously, during the midst of the lockdowns, there was very, very little utilization. It is picking up. We are seeing -- getting up close to where we were beforehand. People are getting back on the roads, and there are a lot more EVs on the roads right now. So that's definitely impacting our utilization. Again, utilization across the board almost is similar to what we're seeing as a percentage of U.S. car sales, low single digits, but as more EVs get on the road definitely going to be seeing more utilizations. COVID definitely impactful. But one thing that it's also done is you had a lot of millenniums who really didn't want to have their own cars. And they're looking more at sharing services, using public transportation. And what we're seeing now is a lot of the younger generations who were not really into having their own cars are now looking to have cars because of COVID, and the cars that they are looking to purchase are EVs.

On the demand front. I was going to say on the demand front, which you had asked earlier, we just announced our most successful quarter ever with Q3 this year doing over $6 million in revenue. And that was growth of over 140% compared to Q3 last year. So we've seen demand from customers increase significantly over the last couple of years. There's definitely been some delays due to COVID, but we have a pretty flexible network of installation capacity. So an example where we had a facility that had some -- had to ramp down production because of COVID. We actually were able to move that production capacity over to another facility and other partners. So relatively flexible production as well as supply chain. We have multiple battery suppliers. We worked with a range of battery technologies, LTO, NCA as well as NMC. So we've got a great electric powertrain platform that can evolve as technology evolves. So we can incorporate that new technology as it's available, but also work with multiple suppliers in an industry that's moving very quickly. We've definitely seen a lot of new suppliers from the market, and we've been able to work with some of the best and biggest to get various pieces of the supply chain and integrated into our system.

I also think that coming out of COVID, you're going to see a number of different use cases. As you heard Michael say, in terms of utilization is increasing, but consumers are going to be using vehicles in different ways. So for example, they may not need 2 vehicles, but they were signed up for a 3-year lease for each of those vehicles. I think this is a great opportunity to show that subscription or other types of models, flexible leasing models become pretty interesting in these kind of scenarios, especially as you think about vehicles and demand changing on a geographic basis in a very extreme way like we've seen over the past few months with COVID.

Excellent. And I want to tie in the themes from our part 1, which is California really driving much of the acceleration demand production. Also, fleets, ray, and delivery vehicles, trucks, hearing that from Steve. How are all those 3 aspects all impacting each of your businesses? And Tod, if you want to start first?

Yes. So I think we're one of the only customers. It's actively in the market right now. It's also providers of electrification solutions that's active in the market right now. That hasn't relied on subsidies or incentives. So a vast majority of our sales, we've sold thousands of units. We've got customers that have bought hundreds and thousands of units. So it's really something that has not relied on a check going out the door with each vehicle. So again, if you look at the existing commercial fleet electrification solutions, typically, they're very expensive. They come with a big incentive on a per vehicle basis. And in some cases, significantly negative gross margins. Where we actually had positive gross margins, they're increasing. We expect that to continue. So I think the prospects of additional incentives are great and it can definitely create a huge tailwind to expand even more quickly. But again, it's not something that we've relied on or had to rely on. And I think that's a huge differentiator compared to other solutions that are in the market today.

Great. Michael, anything that you want to add? And also, again, there's been a ton of discussion around fleets, again, delivery trucks, pickup trucks, buying them sort of in large quantities for varying companies. Do you see any of that impacting your business at all?

Without a question, granting rebates impact our business. Bringing down the cost of EVs, it stimulates buying. It's that simple. Having President-elect Biden, literally just minutes ago mentioned that he's looking to put 550,000 additional charging stations on the ground is going to impact our business. And any subsidies that we can receive we're gladly moving to accept. It does unfortunately, put money into people's hands who should not be in this business. It creates some competition that maybe isn't as experienced in doing what they should do. But ultimately, that allows us to buy companies for pennies on the dollar, as we've done in the past. We have solely relied upon grants and rebates for their survival. We look at it as anything that will help more EVs on the road, ultimately will help cost as a company. Our business is not being in the hardware space. Our business is really fueling EVs, providing the fuel, the energy, the electricity for them to drive. So the more EVs that are on the road, the cheaper it is for us to deploy our infrastructure. The more grants and rebates that we receive, we will gladly accept free money.

Makes sense. Paul, anything you'd like to add?

No. I agree with the same sentiment. For us at Canoo, the way that we built our business model was not really to be dependent on these incentives. So that's why the election depending on the winner wasn't a major concern for us. We wanted to make sure we were putting together a responsible projection case and also unit economics that we thought could work to be able to implement some new business models and the new way of designing, engineering and manufacturing EV. So for us, incentives and grants are great, and we look forward to seeing more of them out there, but we see those as opportunistic versus something that we need to be successful today.

All right. We are at the time now where I'm going to start to incorporate more of the panelists. Before I do that, I do want to hear from Michael and Paul and Tod, a wish list, right? I mean, you've got Tyson on, no pressure, Tyson. But I mean I've got a wish list of things that you want -- I mean, you just talked about the subsidies, is there anything else to help build out the infrastructure, charging infrastructure. We had a lot of questions earlier around that as well. So here's your opportunity now to put it out there in the universe.

Well, I'll say one of the biggest opportunities that we see is to really create pools of clean energy infrastructure. So that's the vehicles, the charging infrastructure and everything else needed to power those vehicles. And there's a tremendous amount of infrastructure investors that we've talked to that are interested in financing that. And we think that XL is in a great position given that we have the broadest and most cost offering of electrification solutions across the commercial fleet market in the U.S. that we can actually be a leader and pulling those asset pulls together. So the wish list would be strategic partners, investors that are interested in that approach. We're definitely interested in talking.

Yes. Same here, from our perspective, it's one support with boots on the ground putting in that infrastructure. That mean we know electric vehicles are going to need to support players such as Blink in terms of putting that there because range anxiety still is a real thing, and that's something that we need to manage with consumers. And even with the fleet managers, their demands are pretty high. So we've been able to work with the states to have that hard infrastructure in place. It is absolutely critical for the long-term success here. But then also, as we're getting to industrialization and commercialization of our products, it's supporting us through partnerships and then also through investments into the operations as well.

Anything that can assist us in growing our footprint through relationships, partnerships, additional subsidies, anything like that at all is definitely helpful for us.

Okay. Perfect. Some questions here from the audience. What type of revenue will be generated from EV charging stations? Is it revenue share? Is it divided some other way? Tod, do you want to -- or Michael?

It depends upon the deployment. There are property owners that require that they own everything. So they're more likely to buy the hardware, own and operate and receive the revenue share -- the revenues from those charging stations. And there are other property owners that outsource every single thing in their locations, and they just want a provider who will handle it from A to Z, and they will be able to share in the revenue. We do basically everything from A to Z. We make sure no matter what we provide the right solution for that property with the right deployment model. And that consists of either host toning and receiving all of the revenues or a charge point operator receiving all the revenues and either paying a rent to the property owner or a revenue share that's generated from the charging stations.

Great. I want to bucket some of these questions that they're coming in sort of in -- in sort of categories and topics. One question for you, Tod, specifically here, Class 7, 8 seems like a poor use case for full electrification given charge time, payload battery trade-offs, duty cycle range, especially regarding long haul. How do you overcome the challenges?

Well, the way we look at it is fleet electrification is a broad term. It can be a hybrid, a plug-in hybrid and all-electric platform as well as a fuel-cell electric platform. All those vehicles have electric powertrains, and they have pros and cons in each scenario. If you look at California's target, it's actually 2045 for zero emissions for commercial vehicles. So that you're talking about a decade-long transition here. And what we're doing is putting electric powertrains into end-use applications where the economics makes sense and so that's how we're going to approach the Class 7, 8 market, same as we did in Class 2 to 6. We start with the customer with real world data, real customers and then back into the tech and solution that makes economic sense. Product into the market. And that's going to change over time. As the cost of batteries come down, you're going to see more and more electrification where all-electric does make sense, but it's going to be a pretty long horizon for hybrid and plug and hybrid solutions. And whether they're running off gasoline or renewable natural gas we're agnostic on that front. There's obviously a very good case for putting RNG into these vehicles. So the short answer is it depends on how the vehicles are used, and our whole business is around scaling electrification in a relatively agnostic way. We believe in the long run around electrification, but there's multiple paths to get there. And getting there first, especially with certain drive cycles that are very demanding, can be very valuable.

What are some of the vehicles that you believe is interesting market potential? This is a question here from Phillip.

We haven't disclosed anything in Class 7 and 8 at this point. So I can't announce anything like that.

All right. And then considering EV vehicles will be mainstream, and combustion engines are phasing out with a band? How does that fleet -- for XL Fleet plan to stay in business while to build hybrid for natural gas and hydrogen vehicles?

Right. We do see all-electric as a short-term opportunity. We have products in the work for 2022 time frame. So we will be offering all-electric solutions. The opportunity for hybrid and plug-in is going to be still in the multi-decade range. I mean, if you look at Bloomberg's projections by 2040, still about 40% or less than 40% of all vehicles on the road are going to be all electric. The new vehicles obviously are higher. But if you look at some of the leaders like California sitting there with zero-emission target at 2045 for commercial vehicles. China who is the leader globally in production and usage of EVs, just updated their targets so that it's 50% hybrid by -- it's 50% EVs and 50% hybrid. So they've learned more lessons than pretty much most essential in the world, and they've just adjusted after 10 years or so of being heavily committed to EV. So we do think it's going to be a long horizon. It's an extremely massive market. You're talking about a trillion-dollar market globally. Just in commercial fleet when you include the vehicle as well as the energy consumption. So how fast did it transfers to full EV is not of concern for us. We're already in there with the leading customers with the supply chain, with our production, with our service. So transitioning that to full electric is part of the plan and whether it happens in 2 years, 5 years, 10 years, we're fine with that transition.

Paul, a couple of questions here for you. Any update on the B2C side of your business, demand for last-mile delivery, especially?

So it's been very interesting and an exciting opportunity for us. After we announced our SPAC transaction, we really did raise our product profile because we were really in stuff mode prior to that. So with that deal, we were excited to be able to pull that forward or that program forward and kick off the prototype building for these vehicles. We do believe that we are very uniquely positioned with the product that we do have, and we're starting to see that come in from some of the demand side with the inbounds that we're receiving for last-mile delivery. And the reason that I say this product is very unique, we're looking at something much smaller than what Tod is, is add-on scale we're closer to Class 1. So think about the 4 transit and sprinters. But what we did that was very unique was we created a very small skateboard that has -- is very short from bumper to bumper, but it has a lot of interior space. And we think this is the perfect solution for last-mile delivery. But what's critical is within that class, we do have to go through a full crash program at that weight and that size. And out of all of the other players that I've seen on the street today, that's like one of the biggest challenges is getting through that program. Especially if you're looking at the last-mile delivery. So you may go to something higher, 3, 4 or 5, and not have the same stringent requirements, but we've actually gone through that in terms of what we've done to date with our skateboarding crash testing that and having that result. So a very exciting time right now with the inbound that we're receiving on that product, and we're pulling it forward as much as we can.

All right. Great. And speaking of timing, a lot of questions about the merger. Is it still Q4?

So right now, it's a process where we're on file with the SEC, and that just takes its time. And then as you start looking into December, you have the holidays there. So we're continuing to push on that timing, but it's really in the hands of somewhat of the SEC and their feedback.

Okay. And then in terms of the consumer response to this, the design feedback, what's that been like?

It's certainly a very unique looking vehicle, very different type of product that's out there. When we had the reveal back in September of last year, the feedback was overwhelmingly positive from the media and from those that were there on-site to see the vehicle. And that's really one of the unfortunate parts as well with us being on lockdown. We can't get the product out there on the road in front of more consumers because that's one way that you can really understand kind of what it is that we're doing. We do have a wait list, and we announced 10,000 orders already, and a large majority of them here in California, which is our first home market. But that wait list has grown since we announced the deal, and we're excited to make additional announcements in the future.

That's great. And then just a few more, and then we've got lots of questions for Michael here as well. The manufacturing process, Paul, any insight you can shed into that for us.

So for us, again, you heard earlier in the panel about how the manufacturing process is incredibly difficult. And there's a couple of approaches that you can take here. Some are partnering with the big OEMS, but our path forward was to find a world-class contract manufacturer that's been doing this for many years to produce this vehicle for all of the top companies out there. And to be one of their first partners in terms of developing EVs. So that's something that we wanted to be able to stick to our core competencies of design and engineering and really rely on partners to build the vehicles for us because quality is important, and you also want to make sure that you get that process right, and there are no delays when you get to start of production.

Thanks, Paul. Michael, you've got some fans of your facial hair. So I wanted to give you a shout out there on that. Very good goals. Well, we're in November. That's whole thing, I have no idea. All right. But, Michael, here's for you. What kind of cars is Blink planning on adding to the LA EV car share program and how do they plan on growing that?

We are right now deciding between the chevy Bolt and the -- I believe it was the Kia EV. Range, cost, durability. Those are something that's very important to us. The cars that are currently there are a little bit small, more difficult to maintain, less common parts and so on. So we are looking for a mainstream manufacturer to deploy their cars at that location -- those locations.

And the vision to make possible any kind of agreement with manufacturers to have the equipment be sold for customers when they buy a car as an option.

And well, it allows people to get a feel for EVs, but we're not looking to sell the cars that we put into the program. But we can introduce them to local dealers. But once -- I think it's more of just getting accustomed to driving EV, realizing that range anxiety is not really as important that most people think. It's not really as much of a concern, but we believe that our car-sharing program will, number one, open EVs to disadvantage areas will also allow charging stations to be used for others other than cars that are in the program.

Great. And last one here for you, Michael. This is a really kind of outside of the car realm here, but new solar shipping container charging stations deployed.

Yes. There are a lot of areas that are in need of a gridless EV charging solution. So what we're doing is combining a shipping container with a tremendous amount of batteries and solar panels. It's not a perfect solution. It also offers a grid connection if necessary or if there's a lower grid capacity, at least the batteries could store that energy as well as the solar storage. It serves a couple of different purposes, and we believe it's going to be a pretty successful product.

All right. Fantastic. All right. So we're going to, again, now be opening it up to all the panelists here. A lot of questions about different types of charging. So for -- this is for Lionel, yes, you're still on, and then also for Steve. Do you have any plans for inductive charging, magnetic resonance field between a transmitting pad on the ground? I don't know, Lionel or Steve. Lionel, go ahead.

Sure. So we actually -- of course, I can't reveal details, but yes, we're actually going to be on a truck that's deploying next year with high megawatt inductive charging on it.

Steve?

Similar. It won't be on our first ship model year, but we have got fleets that park in the same spot every time. So it's nice to have it. We just jump on another vehicle and don't have to plug it in. So it's coming.

All right. Jagdeep anything you might want to add on this either or Michael and Tod and then Paul?

Yes, the only thing I'll add is...

Go ahead, please.

Sorry, the only thing I'll add is that in addition to the charging infrastructure, fast charges requires a battery that can accept high enough power to charge quickly. So I think direct coupling is fantastic, makes it really easy. When you couple that with a battery that can charge in 15 minutes, then you've got an experience that's potentially starts to arrival on combustion engines.

I agree. And I'd like to add to that. Blink, quite some time ago, filed a patent for an inductive parking bumper. That design, which is that concrete bumper one sees in almost every single parking spot in the world, and we have some very interesting developments. And we also partnered with EnerSys to take that bumper design and install their wireless energy transfer technology in order to provide an amazing solution that will be seamless for the driver. With ISO 15118, which is a communications protocol that is done for charging stations to communicate with the cars. Having a wireless transmitter and those protocols really will allow everyone to just drive into a spot, pull away from there -- get out of their car and have certain settings set into the telemetric system of the car, which will allow them to charge, it will be interoperable with all different charging networks, and it will be the most seamless fueling experience that anyone could ever imagine.

Okay. Great. And before I transition over to more of the opportunities and a lot of questions about the SPAC, so I want to get to that in a second, but I do want to address a couple of these other questions around. Again, the battery is the most important thing, obviously, driving the acceleration of electrification. The question coming here for a swappable battery. So in China, there are some companies that are already making this. Uber was doing this. We think with their jump bicycles. And I think maybe their scooters does this panel here think that battery as a service works. So that B2C connection. Jagdeep, if you want to take that first?

Yes, I'll take that. So a couple of challenges with swappable batteries. One is, of course, there's the sheer amount of capital required. If you're storing -- I mean, the battery is the single biggest line item. As I mentioned in the building materials of the cars, if your inventory in batteries have changing stations, have swapped them out, that requires a $30 investment in capital before you can even start to be useful. But beyond that, batteries, unfortunately, are not digital devices where their performance stays constant until they die. Batteries can be abused. So if a battery is being swapped into your car, you don't know how it's been handled. You don't know what you're getting. So I think our view is simply that swappable batteries are trying to solve a problem, which is fast charge. And we think a cleaner way to solve it is to have a battery that can fast charge. So if you just -- you drive in and you plug it in and 15 minutes later, you're on our way. And over time, that will get even faster than 15 minutes. But I think if you can do that, then you don't need to deal with the infrastructure of having to inventory batteries, you can rely on the power grid, which already exists, which over time will continue to get more and more capable.

I'll take further from Jagdeep. So total in line in terms of -- first of all, Jagdeep, very excited about what you're doing and excited to bring your battery to market. But he's absolutely right, we are focused on long-range and fast charging, okay? So the truck that we're going to be on next year, for example, is going to be dependent on the SOC, 660-kilowatt hour, we're going to be charging in 30 minutes. Okay, with our solutions. So we are focused on longer range, fast charging. And when Jagdeep Blink wakes excited about the solid state. So one thing I'll say is our design principles are MSG and supply agnostic. Okay? So soon, I would love to have a discussion with you offline Jagdeep. But when I think to swappability, long duration, that's where the leasing model starts to make sense, where you can have a battery that's performing from vehicle to vehicle, where the vehicle is old, and we continue to flip into autos. We can potentially power if you have a construction company need a few months of energy consumption, et cetera, et cetera. So swappable is if your battery is not performing the way it needs to be. I mean in line with Jagdeep, where you enable long range, faster charging, and you solve it that way.

I also agree with Jagdeep and Lionel. Even just from like the actual design of the vehicle, you're adding additional componentry to be able to swap out those batteries, which is more weight and that more weight reduces your range as well. Plus increases the cost of the product. So not only is it a difficult business model from the infrastructure side and the logistics side for the battery swap, but also just on the OEM and the design side, there are some downsides to doing it as well.

In addition, the biggest failure in EV history was a company called Better Place, and it was all based upon battery swapping. The technology, it doesn't make sense. And again, as Jagdeep mentioned, very clearly, we're investing in a car. We buy cars. And the most expensive component of that is going to be the battery. For us to put our battery into some system and not know what we're getting back in return. I think it's just something hard to swallow. If someone were able to make some sort of leasing program for batteries and someone wouldn't have direct ownership over the battery, they would just own the car. That may work as you're not taking that financial risk and the degradation risk of someone else's usage. But other than that, I don't see it working.

So I just want to add that I think the question around what's the right charge rate, what's the right charging technology or solution. It's very important, obviously, because you want fleet electrification be successful. And you don't want people to be stranded. I think the -- really understanding how those vehicles are operating in the field gives you great insight into what solution is going to make sense under what application, and XL Fleet already has over 130 million, almost 140 million customer miles across North America. Just to put that in perspective, Tesla had about 4 million miles under their belt when they went public. So we've got really good insight into how our customers are using their vehicles with our hybrid product and now plug-in hybrid product. And that gives us really good insight into as far as what technology is to bring to market, what's the return on investment of a certain battery technology or a certain charge rate based on, again, how those vehicles are being used in the real world.

Great. We're going to still ask the questions there, but we do want to get to some of the questions that we're getting around SPACs, and John has got his own as well.

Yes. Thanks, Hope. Maybe we'll start this one with Jack. So I've heard investors say this more broadly about SPAC. There are just too many of them. So some very good companies can get lost in the shuffle. Is there something to that, Jack? And could you say that? I mean, I don't want to be negative here about the EV world.

Yes. Absolutely. Well, I do think, as we've heard today, there's been an influx, an unprecedented influx in the number of SPACs that have come to market. And so at some point, each of these have a time period where they're going to have to find, negotiate a deal and acquire a company that will become -- in the end become a public company on the listed exchange. So I think there's 2 things. One, you've got institutional investors that are looking at where can they deploy their capital, especially as it relates to the PIPE. Are these the management teams? Are these the broader kind of investment thesis that we want to invest in? And then two, what are the opportunities and chances that they are going to get a deal done? And how do we become more strategic, so a lot of people -- as we saw the early kind of first half influx of deals get out to market, a lot of people had made investments there. And now as we continue to see that trend through the second half, they're starting to say, okay, well, I've already got x amount of capital deployed to these SPACs covering these general sectors, should I wait and see if these come to fruition, should I wait and see if these are going to be successful or not, and I'm able to redeem and capture that cash back? And what does this time period look like going forward. So I think now that you see so many different SPACs in play you're seeing the companies that they're bringing to market, they're getting just a better flavor of what this evolution will look like. You're starting to see people hit pause. But I do think as we look at the backlog and maybe Mark can attest to this, the backlog on the SPACs that are still coming and in the pipeline that is looking to get out through the end of the year, especially in the Q1. We're still bullish on this sector as an alternative way of going public.

That's great. Yes, Mark, do you have any thoughts on that?

Yes. Look, I mean, this year, it's been quite a year for SPACs. I mean there have been about 100 SPAC IPOs this year. They have raised close to $40 billion of capital. I mean, that's almost half of the IPO market, and I think it's up threefold from last year. So a lot of deals have taken place. And aside from the 100 IPOs this year, you have all the other SPACs that went public in prior years. So right now, you have almost about 200 SPACs out there looking for acquisition targets. So there are going to be a lot of deals that come to market. Obviously, they're not going to all be in the EV space. But before this year, we really didn't have -- public company investors really didn't have a lot of ways to play the EV market, right? And it's obviously a very large market, very exciting one that's growing very quickly. You had Tesla, but -- $400 billion market cap and typically, when you have a sector that's exciting, you have many, many options. So look, despite there being a lot -- several companies that have gone public this year via SPAC I'd expect there will be many more in the future. And clearly, there's a lot of SPACs looking for targets. So that's what I would -- I'd expect.

That's great. Ramey, can you -- you want to weigh in real quick, then return this back to Hope because I want to get a few more questions in.

Well, one thing to keep in mind here is just because the company goes public saying that they think they're going to focus on mobility or energy transition or what have it, SPACs have flexibility to target whatever industry is popular, is investable at the time, right? I mean there was a rumor confirmed last week that a company called Tuscan is going to emerge with Microvast, which is another battery tech company. If you'd invested in Tuscan at IPO, you thought you were investing in a cannabis-related business, right? That was what Tuscan said they were going to go after. So yes, there's a lot of these -- there's a bunch that are going to focus on things that you think might be electric vehicles, but you really don't know until you get next year before you figure out which one of these are actually going to find what kind of company.

That's great. All right. And host a few minutes left and lots of questions. If we don't cover them all, we'll try to e-mail some folks back.

Yes. And again, our e-mail is editor@ipoedge. So if you've got him, shoot him over. There's some matchmaking going on for Jagdeep and Lionel. There's a question saying that potentially a partnership here where the solid-state batteries could become an input into Romeos battery packs. Does that make sense? How does Romeo see innovation at the cell level impacting their end product and again, QuantumScape's solid-state batteries. What do you guys think?

Sure. So I'll start there. Look, we have -- we don't make battery cells, but we have our rigorous process that we take cells through. We've tested more than 200 cells from global players, okay? So our design principle, like I said, goes across any form, in fact at any chemistry. And we've actually packaged semisolid state on solid-state batteries already, not QuantumScapes, but based upon Jagdeep and his team is doing, it would be compelling, we would take his product I will still put our secret sauce from our leading-edge value technology on it and an enterprise connectivity layer and make the trucks go further. So that's -- I think it will be a great partnership if possible.

Yes. I think there are sort of improvements that can be delivered with [indiscernible] and then improvements that can be levered at the PAT level that go beyond the cell. And I think the combination of a QuantumScape type technology at the cell level, coupled with the improvements [indiscernible] bring to bear at the system level. Really could get the most out of the battery that's possible. I think those 2 things are really very complementary.

All right. I have only got -- sorry, Jagdeep. Okay. I've got like 3 minutes left and I have 3 topics. I hope we get to all of these. The big one here is China. We haven't really talked about it yet as the biggest market vehicles, automobiles and obviously EVs anybody have a China plan here that they want to share really quickly?

We know China is going to be a really big part of the marketplace, and their government is very supportive in terms of putting all that technology and infrastructure and providing facilities there. Shipping vehicles from outside of China, the tariffs are incredibly expensive. So you're taking an EV that's already more expensive than combustion engine and now adding on these tariffs. So you do need that production site also to get the supplier tooling pricing from China as well, too. So a very important part of the market, but I see that as a little bit further out in terms of where we're going to focus.

Okay. Michael, you had some keen observations about the charging standards across the world. I think you want to weigh on that side?

No. China has their own standard. U.S. has our own Europe has another. And I don't think we'll see a consolidation amongst those global standards. There's always been geographical differences with automobiles somewhat. China is by far the largest EV market, where we're focused now on Europe, U.S., South, Latin America, and some other areas. But right now, we don't have any current plans for expansion into China.

Second to China really is California. There's a great question here. Any of you concerned at all that everyone is dependent on California to launch, is there enough demand for all companies. I mean, I don't know, Tyson, if you even want to weigh on this. I mean, again, no pressure on you, but the whole state, the world really looks to California here.

It's -- I'll jump in. This is Tyson. It's a great question. I think that we have 30 million vehicles in California, about half the sales for zero-emission vehicles have been here so far, and we're only at 8%, 9% new car sales being zero-emission vehicles. There's a lot of room for growth. And that's just on the private side. Commercial, we're just getting started.

Yes. On the commercial vehicle side, it's less than 1% of new vehicles sold in the U.S. So we're just getting started here. There's plenty of room. When people ask us, who is our competitor, it's really gasoline and diesel. So it's a huge market, plenty of solutions out there.

When you look at the automotive markets, historically, California has always led automotive trends worldwide. This is not new. This has historically been the way it has been consistently whether it was hybrids or European cars or Japanese cars or -- it all starts with California. There are very automotive focused society in California. This is not new.

Okay. Not new. We are at the top of the 4 o'clock hour, I want to be respectable to everybody's time really appreciate it. One company, we did not mention a lot, surprisingly is Tesla. Good job avoiding that maybe for the next one, guys. I want to thank all of our panelists today. Everybody who stayed on with us. We've got over 1,000 people registered. We had 600 people at one of our peaks, and we saw 400 now. So I want to thank Lionel, Jagdeep, Jack, Michael, Tod, and of course, our panelist, Steve, Mark, Paul, Tyson and Ramey, Editor and Chief is John Jannarone. Editor at large is Jared Banks. My name is Hope King. We thank you so much for joining us. A replay will be up later today, and we'll have lots of clips and some transcripts as well. Thank you, guys. Take care.

Thank you.

Thank you.

Thank you.