Randy MacEwen: Yes. Good question. A couple of things I’d highlight is one of the things we’ve done in terms of our own scope of work as we look in our product road map moving forward, is that we historically didn’t include DC/DC conversion in our scope of work. And we have, over the last 2 years, really started to include DC/DC converters in our scope of work. And so what we are looking to do is to make sure we have a fuel cell module that is applicable to all vehicle OEMs without any major deviation or we’re looking to standardize. Now there might be some modest application engineering support required by a vehicle OEM, which we’re strongly positioned to support. But we’re not talking about really substantive changes to the bill of materials.
Rupert Merer: Okay. Very good. And then with your focus on cost reduction, you’ll be able to narrow down to a few areas where you have core expertise. You mentioned you saw some benefits of cost reduction in this quarter. Just wondering if you can give us an update on where you’re at today and how you are progressing towards your ultimate targets?
Randy MacEwen: Yes. I think there’s two areas where we’re seeing really good development on cost reduction. One relates to the MEA and the second relates to balance of plant components. We have significant efforts organizationally over the last number of years on our cost-reducing MEAs from a processing perspective as well as from a material perspective. Those are starting to show up in the production and we’ll see I think even more evidence of that into 2024. And then we have a very significant team that we’ve built over the last number of years that’s working on balance of plant components. And we have typically 5 or 6 really heavy-hitters in the bill of materials that we’ve been working with suppliers on and have seen significant cost reductions on some key balance of plant components, some of which still have not got into production yet, but we will see that into 2024.
So we’re progressing very well, as we mentioned at the Capital Markets Day. On the 3×3 [ph] program, we had been 55% of the 70% target had been achieved already. We’re still tracking to that 70% target. I think more importantly now is this balance of plant component cost reduction as that is a significant part of the overall fuel cell engine cost structure. So we’re very excited about what we’re seeing. And I think as we look out to 2025 and 2030 and think about the longer-term cost reduction, not just with MEAs, but now introducing lower-cost bipolar plates under Project Forge [ph] that we have internally and that we talked about a few months ago in June as well as moving forward with balance of plant component cost reduction and some of the advanced manufacturing initiatives.
We’re looking at pretty significant reduction beyond that 70% stack and module cost reduction that we talked about over the last 2 or 3 years.
Operator: The next question comes from Jordan Levy with Truist Securities.
Jordan Levy: I appreciate all the color. Maybe just — I know it’s still kind of early for a 2024 outlook. But if you just think about the various segments that you’re in and how quoting activity is shaping up, can you maybe just talk to which segment, whether it’s kind of rail and bus or that could kind of flex one way or the other in 2024 that you could see really taking off and surprising us or shifting to the downside and maybe just some of the activity around quoting you’re seeing right now?
Randy MacEwen: Yes. Thanks, Jordan. And I think just go back to the 75% of our sales pipeline in bus, truck and rail, I would say the surprise there has been the rail market. And I wouldn’t mind just spending a second to highlight the rail market, but I’ll come back to the overall sales pipeline and outlook for a second. But if you ask kind of which one to surprise the upside. We said a few years ago that rail could be one of those markets that surprised to the upside. And I think we’ve seen that. And there are really two core markets we’re focused on in rail. One is the European and northern — our North America commuter passenger rail market. And the second is the North American freight market. In the North American freight market, there’s 35,000 diesel locomotives that, in my opinion, must be replaced on a time line in order to see emissions reduction.
And I think related to that, I just want to highlight, both for the North American freight plus the North American commuter rail market, there are increasing regulations, particularly in California. So California has implemented a policy past regulations that really require pretty significant measures to reduce these locomotive emissions and it will effectively require passenger, industrial and switching locomotives built in 2030 or after 2030 to be able to operate only in a zero-emission configuration. And for line haul locomotives that will be — deadline is 2035. So 2030 and 2035 may sound like they’re pretty far away, but for line haul locomotives, this is — they’re typically 15-year lives. It’s really time for the next couple of years for these solutions to start being developed.
I did want to highlight in the rail market, we had just announced one of our customers Stadler that has the FLIRT train and the first fuel cell FLIRT train was showcased at APTA, an important conference in Florida just last month. That train, that first fuel cell FLIRT train from Stadler is going into service at San Bernardino County Transportation Authority in 2024 and the Stadler is now just received an order for 4 fuel cell trains to be operated as part of the Amtrak California intercity service. And there’s an option for another 25 trains to be ordered as well. And that FLIRT design includes 6 Ballard fuel cell rail HD plus engine, so 100 kilowatts each. And we don’t have the orders for those 4 yet, but that’s certainly our expectation as we’re the supplier of fuel cell engines to Stadler.
That’s a pretty compelling train, by the way, it’s got a maximum speed of about 80 miles per hour and a range of about just under 300 miles. So pretty significant, I think, compelling opportunity there. So that’s the market that I view as showing significant upside in North America and along with this freight locomotive market and we’ve made some announcements with CPTC. And I think they’ve ordered somewhere in the range of about 30 fuel cell engines year-to-date from Ballard for mainline, switcher and shunter applications and are looking at a very progressive plan as they move forward for decarbonization. So that would be the upside market. I would say I’ve talked a little bit earlier about the transition that we’re seeing in the bus mark and the inflection point where we’re seeing more transit operators understanding the advantages of range, fast refueling as well now — and by the way, range in all weather conditions as well as the opportunity for recharging versus refueling infrastructure.
