Hull Xu: Yes. And I’ll add, Tom here. Since we’re talking about the macro and the whole industry, automotive industry trend, right? On the EV side, OEMs are definitely going into a price war, right, led by Tesla. And margin is going to compress because of that ASP is coming down and also the labor cost is going up. So if you think about where they make money is actually on the optional equipment. And for lidar, the safety is a necessity but initially, those are going to be optional equipment, right? So that’s actually what they could make some profit margin.
Operator: The next question comes from Kevin Garrigan with WestPark Capital.
Kevin Garrigan: Congrats on the progress. So in your previous answer, you had mentioned that you’re seeing delays a lot with EVs. Are the companies that are developing internal or the car OEMs are doing more internal combustion engines? Are they not nearly as delayed as automotive OEMs that are kind of focusing more on EV platforms.
Mitch Hourtienne: That’s a good question, Kevin. This is Mitch. Yes. So the traditional OEMs have both, right? They’re transitioning from ICE to EV but they’re going to maintain the ICE vehicles. And Mary Barra talked about it in the GM earnings release about the traction they had gained in the luxury segment and that expands across ICE and EV. So I wouldn’t say one way or the other, there has been delays on ICE versus EVs or traditional companies versus up-and-coming companies. I think this resorts back to the megatrend Hull was talking about.
Hull Xu: Yes. And it’s also just the macro events associated with the automobile industry that is pretty obvious in the last couple of months that is finally resolved, as you may be aware of. And all of these are not EV specific. So it’s kind of across the board. So it’s not 1 way or the other. It’s really a macro effect here.
Mitch Hourtienne: Yes. And I’d add that EV, although it does kind of changes the OEM’s priorities, right? EV has been the priority for quite some time, maybe a couple of years. And the recent headwind on EV, having some of the OEMs refocus their attention on ICE vehicles and bring those vehicles up to technology standard. So that internally would take some time. And the good thing with our award is that we are awarded both ICE vehicles platform and also EV platforms.
Kevin Garrigan: Okay. Perfect. No, I appreciate that color. And then you mentioned you’re fully integrating cybersecurity software. How big of a talking point is cybersecurity in dealing with lidar systems and perception software?
Mitch Hourtienne: Yes. I mean, cybersecurity is table stakes for launching a lidar for automotive. I mean, it’s similar to radar, cameras, any element of perception that could pose a threat if it was accessed externally go through very rigid cybersecurity requirements. Our lead OEM, General Motors has a notable requirement on that front. It’s one of the most rigid in the industry. And that’s what we talked about today, finally, integrating all those requirements.
Operator: The next question is from Matthew Galinko with Maxim Group.
Matthew Galinko: Can we — I guess, with respect to your — to the delay to your primary automotive customer, does that change or does that delay any further decisions on new vehicle platforms or programs at that OEM? Or can you talk about how those conversations and decisions are progressing?
Mitch Hourtienne: Yes, Matt, good question. This is Mitch. We have to defer to the OEM in that case. We can’t get into too many specifics on vehicles. We’ve been concentrated on the contracted and awarded vehicles, of course. And we’re still engaged with General Motors, right? We’re still engaged with our target customers. So we’re constantly talking about additional vehicles, additional programs, features, I think I have to just leave it at that.
