Adam Jonas: I appreciate that, Kevin. And I’m also — just as a follow-up, people in the robotics community are describing 2 years ago as the good old days and that there seems to be a revolution in the last couple of years with large language models and GenAI now rolled into multimodal models with visual learning models to help autonomous systems and robotics learn faster and better without as much of the rules based to really kind of attach to the flywheel of AI. I’m sorry if I’m speaking in platitudes here, but I think you know exactly what I’m talking about. I’d be curious if, a, you agree that there have been some profound changes in AI’s role of on robots in a car form factor, which is something you enable, and how that might be changing the decisions that you make and how your capital is deployed?
Kevin Clark: Yes. It’s — that’s a great question and a complex question. Listen, I agree that AI/ML is changing. it’s changed a number of things. And you’re right, it actually changed how we approach a number of the products that we develop like radar solutions, right, is a great example, any perception solutions. So I think it’s a pretty easy argument to make today that the utilization of tools like AI/ML allows the advancement to move much faster at a much lower cost. And we’re seeing that and we’re benefiting from that. And that’s one of the big benefits about this Gen 6 ADAS platform that we’ve talked about. Use of AI/ML allows us to drive down the cost of the perception system, which allows us to actually reduce the compute on this particular platform and reduce cost.
I think one of the items that — so we’re using AI/ML. One of the items that we think is somewhat unique relative to the automotive industry, and I guess one could debate whether it’s necessary or not, but the concept of safety and traceability and the complexity that things like AI/ML can introduce to that in terms of lack of traceability, makes that calculus a bit more complex. And when we sit down with our customers today and talk about how systems that are integrated operate, they want to know why things or how things fail or how they can determine things fail. Now we’ll see if that changes at some point in time in the future. But now it needs to be a balance between an element of the traditional rules based and a full AI — generative AI/ML based.
Operator: And we will take our final question from Tom Narayan with RBC.
Gautam Narayan: I’ll try to be real quick. On SPS, 3 powertrains, you talked about ICE, hybrid, plug-in hybrid. Europe seems to be growing more a lot of hybrid growth. China is more plug-in hybrid, let’s say, maybe the U.S. is more ICE. Just curious, as these kind of dynamics change, how does that impact your guys S and PS business? Is it easy to pivot? Is there kind of retooling involved to try to change these different powertrains? Or is it just really just straightforward?
Kevin Clark: It’s a different product line. So it’s pure BEV product. So whether it’s a bus bar or it’s a connector for a battery electric vehicle or a harness, it tends to have a specific set of equipment with specific tools. A lot of those are within existing facilities that we had to produce products for both low voltage as well as high-voltage solutions. So there’s some ability to pivot there. When you think plug-in hybrid and hybrid, there’s some overlap between that product portfolio that goes on a BEV vehicle that would also go on a plug-in hybrid or hybrid vehicle. So there’s some work that needs to be done, but it depends on the specific situation and oftentimes, it’s not real significant to shift from one to the other.
Joseph Massaro: Yes, it’s not something outsized, Tom, that you’d see like pop up in CapEx or something. I think it could be managed within the existing business and financial framework.
Gautam Narayan: Yes. The other thing that’s come up, there’s some pretty big legacy OEMs who reported results this past week, commenting on their efforts to like reduce their dealer inventory levels. We saw some big just general production cuts in the quarter. I mean they’re all saying they’re going to do big H2s. But I’m just curious if you’re seeing or hearing any just overall high-level downside to overall global production, which would impact all powertrains?
Kevin Clark: Yes, that’s — we brought our outlook for vehicle production down a point. The biggest piece of that is that is BEV related, as Joe and I have talked about. There are some OEMs that we’ve seen an increase in production schedules for products that have internal combustion engines, but net-net, BEV production is down.
Joseph Massaro: Yes. As I said in my prepared comments, Tom, April was a month of schedules coming down with a few exceptions. There are some ICE platforms that popped up. But I would say both legacy global OEMs and global EV-only OEMs, we saw schedules come down in the past 4 or 5 weeks and that’s really what — that’s what is driving the takedown in the top line.
Operator: That will conclude the Q&A session. I’d like to turn the conference back to Kevin Clark for any additional or closing comments.
Kevin Clark: Thank you, everyone, for taking the time today to listen to our earnings call. I apologize for the technical problem at the start. Take care and have a good day.
Operator: Thank you. Ladies and gentlemen, that will conclude today’s call. We thank you for your participation. You may disconnect at this time.
