Phoenix Motor Inc. (PEVM) Earnings Call Transcript & Summary

Hello, everyone. This is Craig Brelsford with RedChip Companies. Thank you for joining today's event with Phoenix Motor, which trades under the ticker PEVM.D. With us today, we have Denton Peng, Chairman and CEO of Phoenix Motor; and John Walsh, President of Phoenix Motor and CEO of Phoenix EV. We will begin with a brief presentation in a moment, and then we will answer your questions. [Operator Instructions] Before we begin, please allow me to read the safe harbor statement. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements pertaining to future financial and/or operating results, along with other statements about the future expectations, beliefs, goals, plans or prospects expressed by management constitute forward-looking statements. Any statements that are not historical facts should also be considered forward-looking statements. Of course, forward-looking statements involve risks and uncertainties. I now turn this webinar over to Denton and John. Gentlemen, please go ahead.

Thank you, Craig, and thank you, everyone, for joining us today. I'm truly excited to join you today for my first investor webinar as part of this Phoenix team. Over the 3 past decades, I've had the privilege of leading some of the most innovative companies in transit and electric vehicle industries from Proterra, where I helped scale electric bus adoption nationwide to the REV Group and other manufacturers where execution and customer focus were always paramount. I joined Phoenix because I see a company with a really strong foundation, a compelling portfolio of products, a team that is deeply committed to leading the transition to zero-emission transportation in the U.S. and internationally. What excites me about Phoenix is that we're not just building vehicles, we're building a platform for growth. With a proven customer base, advanced technology and a clear strategy to scale manufacturing, Phoenix is well positioned to capture one of the most important transformations in transportation. I look forward to working with Denton and the entire Phoenix team to strengthen execution, grow our backlog and deliver for both our customers and our shareholders. Let me start by walking through some of the key highlights that makes Phoenix a compelling opportunity. These really frame why I'm so energized about leading Phoenix EV and why I believe we're strongly positioned for long-term growth. Phoenix is already a recognized leader in the North American commercial EV sector with over 1,300 buses delivered and a track record that sets us apart from any other company in our space. We have a diverse product portfolio from heavy-duty transit buses to medium-duty trucks and light delivery vans. We serve multiple fast-growing segments in the market. And our financial performance is very strong. We've generated $26.2 million in revenue over the past 12 months, which is up substantially period-over-period. Importantly, we're addressing a robust market opportunity, substantial customer demand paired with supportive regulatory tailwinds, which creates a favorable environment for sustained growth. A clear demonstration of customer demand and strong tailwinds is evidenced by our large back order of $200 million in contracted orders, which gives us strong visibility into the future revenue. Combined with our scalable manufacturing based in innovation areas such as autonomous technology, this business is positioned for both growth and profitability. Lastly, I've highlighted an experienced management team. This company is led by seasoned executives experienced with decades of experience with EVs, manufacturing and technology experience, which gives us the bench strength we need to execute. Those are some of the key highlights, but now let's go a little bit deeper. Phoenix Motor is a U.S. manufacturer with a clear vision to accelerate the transition to zero-emission commercial transportation. Over the past 20 years, we delivered over 1,300 vehicles and logged over 60 million real-world zero-emission miles, proof that our technology works and our customers trust us and our vehicles perform in demanding everyday environments. Through our dual brand strategy, our product portfolio spans from a full spectrum of commercial EV needs from light-duty vans to medium-duty trucks to heavy-duty transit bus. This breadth allows us to serve multiple high-growth segments in the market while creating long-term opportunities for scale and reoccurring revenue across our platforms. Our newly launched Fleet-as-a-Service model is an exciting innovation that bundles vehicle leasing, charging support, maintenance and telematics into one seamless solution, making it easier and more cost effective for operators to electrify their fleets. Looking ahead, we're also investing in autonomous driving technology with active development programs underway. By moving beyond this onetime vehicle sales into service and software, we're building reoccurring high-margin revenue streams that are compounded over time. Today, we operate under 2 complementary divisions. The first is Phoenix EV, our North American brand. This division is dedicated to designing and assembling Buy America-compliant transit buses, school buses, delivery trucks and our new MEV2 low-speed vehicle, a California assembled delivery EV built specifically for last mile logistics and gig economy operators. Phoenix EV is all about execution here at home, backed by coast-to-coast operations here where I sit today in Greenville, South Carolina and in Anaheim, California, with strong customer relationships and aligned with U.S. policy incentives. Our second division is EdisonFuture International, our global growth engine based in Hong Kong and supported by 1.6 million square feet rent-free facility in Asia, EdisonFuture allows us to expand into high potential markets in South America, the Caribbean, Europe and Asia. With this structure, we can serve customers globally, scale efficiently and capture growth while keeping capital intensity low. Together, Phoenix EV and EdisonFuture International give Phoenix nearly 2 million square feet of manufacturing capacity worldwide, a diverse product lineup from heavy-duty buses to compact delivery EVs, a business model designed for both resilience and for scale. Phoenix EV today represents a combination of 2 respected names in commercial electrification, Phoenix Motorcars and Proterra Transit. With Phoenix Motor, we built a reputation as a pioneer in medium-duty electrification, shuttle buses, school buses and delivery trucks. In early 2024, we completed the acquisition of the Proterra Transit bus business, adding a full-size zero-emission transit bus and an experienced team. That combination gives Phoenix EV a powerful foundation to the product breadth to serve customers across light, medium and heavy-duty applications. And the scale is completely effective in a market that's accelerating rapidly towards electrification. In February of this year, we launched EdisonFuture International, a wholly owned subsidiary based in Hong Kong and serve as our global growth engine. As mentioned a moment ago, this division is targeted with high potential regions such as the Caribbean, South America, Europe and Asia. These regions are seeing strong policy support and growing demand for zero emission fleets. And EdisonFuture International gives us a dedicated platform to capture that opportunity. A major enabler of this effort is our new 1.6 million square foot facility in Asia secured rent-free for the next 10 years. This site gives us meaningful scale, cost efficiency, serving 2 purposes: first, a product hub for vehicles aimed at international markets; and second, a source for high-value components like battery modules, body stampings and e-axles that support our U.S. operations, where final assembly and customization remain in California to meet Buy America standards. With EdisonFuture, the Asia facility, Phoenix now combines global reach with capital-efficient manufacturing position us to compete effectively at home and abroad. This slide gives you a visual sense of our global footprint. In the U.S., we have our headquarters in the Silicon Valley and manufacturing facilities, as I stated, in California and in South Carolina. Internationally, we have Hong Kong as a base for our EdisonFuture International business and secured manufacturing capacity in Asia. A key takeaway is that Phoenix now has the reach of a global OEM. with the agility of a forced EV innovator, combined domestic presence, international scale and technology leadership under one platform. Here, we can see the diversity of our current product lineup, spanning heavy-duty, medium-duty and light-duty serving a broad range of customer needs. Now let's dive a little deeper into Phoenix EV. We've already covered the foundation of this division, the combination of Phoenix Motor and Proterra over manufacturing footprint and our Buy American-compliant product portfolio. Here, you can see a sampling of customers we serve across the country from leading transit agencies like CapMetro in Austin, Texas and MetroLINK in Moline, Illinois to universities such as Duke University and Harvard to airports like JFK and LAX as well as municipalities private fleet operators, Phoenix EV has built deep relationships with organizations that are driving the adoption of zero-emission transportation. The diversity of this customer base across geographies, fleet sizes and use cases underscores the reliability of our products and the trust we've earned as a long-standing partner in electrification. Here is a quick snapshot of a really major win we recently have. We were awarded a multi-category statewide contract by the California Department of General Services for zero-emission buses. This award covers multiple bus types, including 35-foot and 40-foot battery electric buses as well as medium-duty shuttles. What makes this contract so significant is it allows state and local agencies across California from transit authorities to school districts and municipalities to procure Phoenix EV buses directly through a simplified and preapproved process. That means agencies can avoid lengthy bid cycles, gain access to prenegotiated pricing and accelerate their fleet electrification plans with the confidence of our compliance and support. We view this as a major milestone. It not only validates the quality and competitiveness of our product lineup, but it also opens the door for a wider adoption across large zero-emission transit market throughout the country. Here, you'll see one of our heavy-duty zero-emission transit buses, the ZX5. This is a segment where Phoenix has real credibility with over 1,200 buses already delivered and operating successfully across North America. Importantly, these buses are fully Buy America compliant, making them eligible for the more than $1 billion in annual federal zero-emission transit funding, which creates a powerful demand tailwind for the product line. This slide shows our Greenville facility. I also have it on my screen behind me in South Carolina, which is the core part of our U.S. manufacturing footprint. Along with our California facility, it gives Phoenix EV a true coast-to-coast production capacity. Here, you can see some of the core components that set our transit buses apart from advanced battery systems to lightweight structures designed for durability and efficiency by controlling critical components in-house and through our scaled supply chain, we not only secure cost advantages, but also ensure reliability, serviceability and compliance. For investors, this translates to stronger margins and greater control over execution, which while giving customers the confidence to adopt our platforms at scale. Now shifting from heavy-duty to our medium-duty product line. Our medium-duty vehicles have been the heart of Phoenix EV's success for more than a decade. From shuttles to delivery trucks to vocational work vehicles, this line gives us the flexibility to serve a broad range of industries. Medium-duty is a sweet spot for Phoenix EV. The market is very large. The vehicle is versatile. Our track record here, very strong. In fact, much more than our 1,300 vehicles delivered base comes from this segment and a 70% repeat order rate that customers value the reliability and economics of the products. The breadth of our medium-duty line also shows a wide spectrum of customers. As you can see here, municipalities, universities, airports, utilities and commercial fleets. This list is quite impressive. We are among the first to deploy all electric shuttles in the U.S. And since then, we've expanded into many other applications, proving the versatility and reliability of our solutions. Importantly, these vehicles are also available in Buy America compliant configurations, giving agencies and fleet operation access to significant federal and state funding support. For investors, this segment represents a proven reliability revenue engine, one that continues to generate repeat orders and plays directly into some of the largest electrification opportunities in the market. At the core of our medium-duty line is the Gen 4, all-electric drivetrain developed in-house on the Ford E450 chassis. This next-generation platform is designed for efficiency, range and adaptability. The Gen 4 offers up to 123 kilowatt hours of battery capacity and 140 miles of real-world range, backed by an advanced cooling system that maintains performance under these demanding conditions. It supports both Level 2 charging and CCS fast charging with the ability to go from 15% to 100% in under an hour. Beyond range and charging, what sets the Gen 4 apart is its modular design, including DC-powered distribution and built-in options for auxiliary equipment. That means our vehicles can be tailored to meet the needs of diverse industries from last mile logistics to specialized vocational fleets. For investors, the takeaway is the Gen 4 platform not only anchors our current product lineup, but also provides a scale future-proof foundation for growth across multiple medium-duty applications. Finally, let's turn to our light-duty lineup. This segment is anchored by the MEV2, low-speed vehicle, our California assembled delivery EV designed specifically for food delivery and last mile logistics. It's purpose-built for dense urban environments where affordability, efficiency and quick deployment matter the most. The MEV2 is a true game changer for the Phoenix EV. This rightsized low-speed EV was engineered for the fast-growing gig economy, serving operators like Uber Eats, DoorDash, Instacart and other last mile providers with up to 120 miles of real-world range, compact size and DC fast charging, it's optimized for campus, community and downtown routes. Just as important as the vehicle itself is the business model it enables. The MEV2 forms a cornerstone of our Fleet-as-a-Service platform, which bundles the vehicle leasing, charging infrastructure, maintenance and telematics into a single subscription. For customers, that lowers total cost of ownership and dramatically simplifies the transition to zero-emission fleets. For investors, it creates reoccurring high-margin revenue streams moving Phoenix beyond a onetime vehicle sale into long-term service-driven growth. And because the final assembly is in Anaheim, California, this vehicle meets Buy America requirements, also supported by local job creation. At the same time, we leverage our Asia facility for high-value components like battery modules and e-Axles, giving us cost efficiency and scale. Customer deliveries are scheduled to begin in Q4 of this year with a pilot production already underway. We believe the MEV2 positions Phoenix to capture one of the fastest-growing opportunities in fleet electrification, which is last mile delivery. Now let's take a closer look at EdisonFuture International, our global growth platform. Future extends Phoenix' reach into high-growth markets from Latin America to the Caribbean, to Europe and to Asia, while leveraging our manufacturing capacity in Asia for both cost efficiency and scale. This slide highlights our Asia manufacturing facility, 1.6 million square feet plant secured rent-free, as I mentioned before, for the next 10 years. This is transformative asset for Phoenix, dramatically increasing our production scale and cost efficiency. The facility serves 2 critical roles for us. First, it produces high-value components such as battery modules, body stamps and e-axles, which are shipped to the U.S. for final assembly and customization in California, ensuring Buy America compliance. Second, it will also be used to build complete vehicles specifically for our international markets. By building light, medium and heavy-duty EVs directly in Asia, EdisonFuture International gives Phoenix a true dual market strategy. U.S. production for Buy America customers are here at home and Asia-based production is efficiently to serve high-growth overseas markets. One of those high-growth markets is Latin America and the Caribbean, regions where demand for fleet electrification is certainly accelerating. Cities like Santiago, Bogota and Sao Paulo already have active EV bus deployments supported by strong policy mandates. Access to climate finance and rising fuel costs over our current and future product lineup is well aligned to these markets' needs, and we are exploring distribution with local partnerships to capture all of that growth. For investors, the point is simple. This is long-term growth opportunity directly tied to global decarbonization trends. We've already introduced our Fleet-as-a-Service model, but it's worth underscoring what makes it so powerful. By bundling vehicles, charging, maintenance and telematics into one subscription, we take the complexity out of electrification for operators. For customers, that lowers the cost and speeds adoption. And for investors, it transforms Phoenix from a onetime vehicle seller into a reoccurring revenue business, creating stickier customer relationships and higher growth demands over time. Our Fleet-as-a-Service rollout is starting with a pilot launch in California, where fleet electrification has already been driven by strong policy mandates and customer demand. From there, our plan is to expand the model nationally through a franchise approach, giving us a capital-efficient way to scale while ensuring localized service and support. It's a phased strategy designed to move the model into one of the most advanced EV markets then replicated all across the country. We provide aftermarket parts, charging support, finance and maintenance services. These offers not only give customers confidence and convenience, it also creates additional revenue streams, including reoccurring revenue over the life of each vehicle and fleet, strengthening our margins and deepening our long-term customer relationships. Our robo transit platform represents the next phase of innovation at Phoenix. It's designed to bring advanced autonomy into transit and to fleet operations with a focus on safety, efficiency and scalability. That platform integrates AI-driven perception, enabled real-time detection of pedestrians, vehicles and road conditions, combined with the predictive decision-making, it can adapt to traffic, weather and passenger demand on the fly. Supporting technologies, including drive-by-wire controls for acceleration, braking, steering, cloud connect, diagnostic and preventative maintenance and the V2X communication, which allows vehicles to interact with infrastructure for optimization on traffic flow. A key point here is the robo transit positions Phoenix not just as an EV manufacturer, but as a technology leader, building the foundation for Level 4 autonomy and an important long-term differentiator in the commercial fleet market. On this slide, you'll see a few milestones we achieved and some that are still in motion. We finalized our partnership with ADASTEC, a leader in heavy-duty Level 4 autonomous transit buses in Europe and now based in East Lansing, Michigan with current deployments already underway in the U.S. We have launched programs for both an autonomous bus and a last-mile delivery van, and we're targeting Level 4 robo transit by early 2026. In parallel, we are evaluating multiple additional AD partnerships. The takeaway is simple. Phoenix is actively building the ecosystem to bring autonomy into the commercial fleets with real partnerships and programs already underway. Here's how we're thinking about the next phase of Phoenix, growth across our product lines. On the heavy-duty side, we are preparing the ZX5 bus for international markets, expanding our lined up throughout selective outsourcing and targeting the launch of autonomous transit model. For medium-duty, the focus is Gen 5, drivetrain development and introducing autonomous-ready shuttle buses, trucks and logistic vehicles, advancing the technology foundation we already have in place. And in light-duty, we see the most exciting near-term opportunities. That includes the launch of our Fleet-as-a-Service model, serving high-profile platforms such as the 2028 Olympics, exploring innovations like robotics delivery dog for the door-to-door logistics and bringing to market a new electric mini bus. The common theme across all of this is clear. We're extending Phoenix from being purely an EV manufacturer into a smart mobility platform that blends vehicles, services and autonomy, creating near-term revenue opportunity and long-term drivers. We have assembled an extraordinarily strong leadership team. Collectively, we bring decades of experience across EV technology, manufacturing, autonomous systems and global market development. It's a group that has scaled business, delivered innovative products and navigated the challenge of building in fast-growing industries. For investors, the takeaway is clear. Phoenix has the bench strength and proven expertise to deliver on an ambitious road map we have laid out here for you today. Before we open it up to questions, here's a quick snapshot of our financial performance over the past few years. Phoenix has a solid financial foundation, improving profitability levers and discipline to invest where it matters the most and scaling the business long term. Let me quickly recap why we believe Phoenix represents such a compelling investment opportunity. We are a recognized leader in commercial EVs with more than 1,300 vehicles on the road today and over 60,000 -- excuse me, 60 million miles of zero-emission miles driven in real-world operations. We have a diverse product portfolio from heavy-duty transit, medium-duty trucks and light delivery EVs while serving multiple high-growth segments. We have strong financial foundation with improving gross margins and disciplined cost management. We're positioning for the future profitability. We currently have about $200 million in contracted orders, giving us strong revenue visibility moving forward. Importantly, we're still innovating from Fleet as a Service through our autonomous robo transit platform, we're building new and reoccurring revenue streams and long-term differentiators. And finally, scale. With nearly 2 million square feet of global manufacturing capacity, we have the infrastructure to meet the rise in demand, both at home and abroad. Taken together, Phoenix is not just another EV manufacturer. We're building scalability, diversity and innovation-driven platforms positioned to deliver sustainable growth for the years to come. Phoenix is transitioning into a global smart tech EV company, combined with our legacy in electrification with innovation, scale and the need to lead the next chapter of zero emission. I want to close by highlighting the very heart of the company. That's our team. This image is from our Greenville, South Carolina facility, reflecting what drives Phoenix EV every day, American-built vehicles, Buy American compliant and one dedicated workforce committed to delivering for our customers and our communities. And I want to thank each and every one of you who work here at Phoenix EV. With that, I'll hand it back over for Q&A.

Today. John. [Operator Instructions] We've already received some questions in the text box. is a personal one for you, John. How would you describe your personal overarching vision for Phoenix 1 month into your new job? And what sets Phoenix apart from other EV companies in the commercial space?

Well, this -- a lot of people that know me, Craig, they know this is personal. I've been in the transit industry for 35 years, both in manufacturing and distribution, in medium-duty shuttles for many, many years with the REV Group to being the former CCO at Proterra. It's personal to me. It's emotional. I was hired by Ryan Popple and Dale Hill to come to this company in 2019, and we built a just tremendous team at Proterra. And now we can take that to the next stage with Phoenix EV. What makes us different is this? Who's in that picture? That's number one. But even above that is the fact that in Europe, there's 17 bus OEMs in Europe. And in the U.S., there's 2, and now there's 3. And we're trying to create competition in the market by bringing Phoenix to a point in the market. And we're also creating jobs here in the U.S. in Greenville, South Carolina and California. So those that know me well know this is personal to me, and I'm going to work hard to see this be a huge success.

Thank you, John. Phoenix has secured a 1.6 million square foot rent-free facility in China, but U.S. policy heavily incentivizes domestic EV production. How will Phoenix avoid becoming overly dependent on China? And what's the strategy to capture U.S. subsidies and compete with bigger EV players on American soil?

Really, really glad to get this question. Just so I can be clear. Phoenix is a U.S. company. We are going to take advantage on all the abilities we have for U.S. federal funds, state funding that's out there. We're manufacturing buses here in the U.S. in Greenville, South Carolina, Anaheim, California. We meet Buy America. Over 75% of the components that are in these vehicles are made right here in the U.S. What we're doing that's different than most companies is we're taking our technology over to Asia. We're not bringing it here. We're taking what we have, our IP and this beautiful bus you see in this picture over to Asia to be able to manufacture in Asia for international markets. It's very difficult to export from the U.S. in some of these countries, and it's much easier and more cost effective to do it from Asia. So glad to get that question. I hope I make that very clear that this is a U.S. company that we're taking internationally.

Just for confirmation, this person writes, all production will be in China and final build will be in the U.S.?

Incorrect. That is not correct. We will do all beginning and final assembly here in the U.S. for Phoenix EV, our U.S. company. Everything will be built here 100%. What we're going to build in Asia will be built in Asia for other countries, not to be imported to the U.S., but to be sold to the Caribbean, Europe, Asia, South America. So we will not be bringing in a knockdown kit into the U.S. at all. This is 100% built in the U.S., starts with the shell of that body in Station 1 that is built in Rhode Island by one of our partners and gets 100% built here in the U.S. I hope that makes that clear.

Yes, I think it does, John. Thank you very much. How does your compliance with Buy America and other regulatory mandates give you a competitive edge in securing public sector contracts?

Yes. Again, I think we have a huge advantage in that. And again, I'm going to go back to the statement. In Europe, there are 17 bus OEMs. That market is about 10x smaller than our market here in the U.S. There's 6,000 new buses built a year in heavy-duty transit. There's only 2 OEMs today, and we're the third OEM. So the market 10x bigger, the funding even bigger than that and the fact that there's only 3 OEMs to build 6,000 buses position us very, very well in the market. The advantage that we have as a company that builds EVs is that bus you're seeing is a purpose-built bus. So it was designed from the ground up to be electric, and that is not something that the other competitors have in the market, and that's one of the big advantages that we have.

After Phoenix did the 1-for-5 reverse stock split, the price of stock is going down more, this person writes. What is your plan to support the stockholder?

Yes. So great, great question, and we did do the reverse stock split. And what we're going to do, and I'm working very closely with Denton, and we have Tony Chen on here, our new CEO; and Tony Zhou, who's our CTO. We're going to capitalize this business in the proper way to scale it. And I think you're going to see very, very soon in the coming months, that you're going to see that stock price begin to really move up because the demand in the market, the innovation that we have in this product, customer loyalty and the fact that we are going to properly capitalize this business for success. And I think we're going to have to be patient with that stock price, but I definitely think we're going to see it move up. And my focus is the shareholders for sure. And we have a plan around that.

How do you plan to fund future expansion without further diluting shareholders? And what is the path to achieving scale that protects current investor value?

Yes. So great question. And the way I would answer that is I want the investment community to know that I am very focused on our core business. I am very focused on what we're doing here in Greenville to build that 40-foot heavy-duty transit bus, the deliveries we're making now, some of the new orders that are coming in. We're going to make sure we're solid with that foundation as well with our medium-duty platform. As we look at expansion and as we look at new products, we're going to be very, very careful about how we invest. We have to make sure we take care of our core business. We have to make sure we take care of the foundation. But we always have to be thinking ahead. We always have to be innovators because I have to be honest with you, if Dale Hill in 2004 wasn't being innovative. We would never have an electric bus today in the U.S. or maybe anywhere around the world. So we have to continue to innovate, but I'm going to be very focused on our core business. I'm going to be very focused on shareholder value as I lead the company.

Another financial type question here, John. Any update on getting relisted on the NASDAQ?

Yes. We actually had a meeting on that today. I can't give you a time line, but we are working, obviously, with the NASDAQ to make that happen. And a lot of it comes down to a few items that we're still taking care of with them, but additionally, kind of building out the company from a capitalization standpoint as well. So I wish I could give you a time line. This is a webinar. So it's very difficult for us to do any types of disclosures or nondisclosures in this call because this is not an earnings call. It's just a webinar. So more to come and promise to give you some answers in more detail in the next month or 2, okay?

Phoenix has a $200 million backlog. How is it that your financial results are not getting better with that $200 million backlog?

Yes, that's a good question. So when the transition happened in January of 2024, the backlog was even bigger than that. And as Phoenix has built out the foundation of the company, put the team in place, figured out strategically what products they wanted to have where supporting the current fleets in the field, it's been challenging. It's -- this is a tough market to be in. And I will tell you, we've been here for 18 months. We're still here. We're still strong. And what's great for me is that we have that backlog, and we have this great plan in 2026 to begin to build out that backlog. I would be in a different position if we didn't have the backlog. So I'm very glad that we do have it. The other thing I'll mention is that we are really working hard with our supply chain. And I have great partnerships over 35 years of working with all the companies that put components in these buses with us. And there are some key partners in that with the body of the vehicle, the powertrain, battery systems, seats. Those are really big relationships. And those companies are working very close with us so we can begin to ramp up production and begin to see those better financial results as we can really grow our deliveries. And that should start for us Q4 and definitely in Q1.

Phoenix has shown improving gross margins and cost discipline, but net losses continue each quarter. When is the company projecting its first quarter of positive net income and what specific revenue scale or margin profile must be achieved to get there?

That's a question that would be more appropriate if we were on a designated earnings call. It's going to be very difficult for me to say by Q3 of next year, we're gross margin positive. There is a plan in place to become gross margin positive very quickly. We've rightsized the business. We're going to get the right products in the market. We're going to position ourselves with the right customers. And there's a formula to do this. I've done it in the past. And we have a team here that is dedicated to getting that done, but being able to come to the market and say it's going to happen at this point would be more appropriate, Craig, if we were on a true earnings call to answer that question, and we'll be prepared to do that in the months to come.

Phoenix EV recently launched the MEV2/LSV, John. What makes this vehicle unique? And how does it address the needs of the growing gig economy?

Yes. So it's a great product. It fits a niche that truly there's nothing there right now. If you guys can imagine last mile delivery where you see these full-size vans that come to your home, delivering packages. If it's at my house, they show up every day. So you have that product. And then you guys are seeing some of the robo products that go up and down sidewalks and delivering food and things of that nature. This product fits in between that, very dense areas where you need maneuverability, companies, like I mentioned before, DoorDash and Uber Eats. The problem with a lot of those companies is when you deliver that food, Craig, it doesn't get there at the right temperature. So our little car actually has an oven and a refrigerator built in. So the driver can put the food in the proper place, gets to the customer, and it's going to be a more positive experience for the customer. So we see a big niche that's not being filled today, and we're excited because it's a simple product. It's going to be very simple for us to assemble. And we've got a big demand in the market for it. So we're excited to get that launched here with the pilot in Q4 and really into production in Q1.

Coming up to the top of the hour, and we do have time for one more question, John. Looking ahead, 2026, beyond, what are the, let's say, 2, maybe 3 catalysts that you believe will define Phoenix' next phase of growth?

Yes. I think what will define Phoenix is we have a great starting point. We have a great foundation. We have 20 years of experience with Phoenix Motors, 20 with Proterra, Combine those 40 years of experience with already several vehicles in the market, the installed base is very solid. And with a big backlog, it's exciting to me that I'm going to be able to take that backlog and convert that into deliveries into the market. But the idea that we are one of the few companies that are manufacturing heavy-duty buses and medium-duty buses in the U.S. Again, I've said it a couple of times, there's not a lot of manufacturers in the space with a really, really big demand. So we're not going to be the manufacturer that wants to build thousands of buses a year. We want to be the manufacturer that builds enough to make us profitable and to keep our customers happy and our employees happy. So I'm very excited about the foundation that's been laid. I'm super excited that Denton and the executive team and the Board and one more time, the people in this picture have entrusted in me to try to lead us forward in 2026 and beyond.

Thank you very much, John. For more information about Phoenix Motor, reach us at 1-800-REDCHIP or e-mail us at [email protected]. Please visit RedChip's Investor Information page for Phoenix Motor. It's redchip.com/stocks/pevmd, PEVMD. There, you can view and download the investor presentation and fact sheet and sign up for news alerts on Phoenix. RedChip is excited to announce the launch of RedChat, our advanced AI assistant designed to empower investors with instant in-depth insights on thousands of small-cap and micro-cap stocks. Try it now. Go to red.chat. Watch Small Stocks Big Money, RedChip's program featuring exciting small-cap companies every Saturday night at 7:00 p.m. Eastern on Bloomberg USA. And finally, join RedChip's next webinar with Nexllent technology on Tuesday, September 9, at 4:15 p.m. U.S. Eastern. Register for all RedChip webinars at redchip.com/events. Thanks again to our many participants today. And thank you, Denton, and of course, John.

Thank you, Craig.