I can’t comment exactly when I’m going to do that, but we are looking now at exactly that kind of situation. And for example, we may not have to order the whole line at once. We may order more lasers, for example, to get that bottleneck out. We may order more back-end capacity to make sure that goes out. So I don’t want you guys to think of lines as holistic things we need to order like one at a time. So that’s the kind of optimizations we are making. But we’ll be ready for ramp in ’25 with our customers.
Ajay Marathe: And just to add to what Raj just said, the building the Fab 2, as we have been sharing with you, which is nearly ready now, ready to accept the Gen2 equipment, that building in itself right now, it’s ready for four lines. right? So we have built infrastructure, power, a lot of details around how that facility has come up. It is ready for four lines, and the campus itself is expandable all the way to eight lines. That is consistent with what we have shown and shared with you all right now. That goes hand-in-hand with what Raj has said in terms of qualification cycles and adding the equipment.
Operator: Our next question comes from Bill Peterson of JPMorgan.
William Peterson: Kind of want to follow up on one of the prior questions about adding additional lines. Lines two through four, I guess, or even just adding to the first line. I guess the question is, are you going to be waiting for line 1 to be successful before you actually place orders? Or I mean, I assume there’s pretty long lead times. So why would you actually have to place orders for the subsequent lines, let’s say, two through four in order for them to be installed next year?
Raj Talluri: Yes. So like I said, I think it’s not a simple answer of this is a whole line lead time. There are pieces of the line that have shorter lead time, they are pieces that have a longer lead time. So we are looking at those and figuring and making sure that we have the long lead time ones covered. The short lead time comes, we can wait. Now we’re also improving these lines. As we start making one, Ajay and his team have figured out how to even improve the performance of the lines the more, reduce the cost of the lines more. So we want to take all that into account and order them carefully, so that we don’t spend too much money too soon, but at the same time, meet all the demand of the customers that are coming in ’25.
William Peterson: And actually a follow-up on that. So is $50 million sort of the right way to think about a full line? Or is there opportunities to go lower from there? That’s a follow-up to that last question, but I actually have a separate question related to EVs. You’ve been kind of talking about EVs for a while, at least in the context of fast charging and some of the other attributes. I believe at least in the past, the team has at least had an idea to maybe have at least one JDA by the end of this year. Now remind me if it was the prior management team. Just trying to get a sense for what is the optimal way you can work with OEMs? How many OEMs are you in discussions with? And when would you really want to, I guess, take this to another level with a partner?
Raj Talluri: Yes. I’ll take the new question and then I’ll have Ajay talk about the line question. Look, I mean, our challenge honestly has been, the demand has been so strong. My challenge has been to prioritize which one we do first and which one do later, right? We just had one factory here, and we were learning on the yields. We are trying to make small-sized cells that we can get into the customers that had already early on signed up with us. We learned about how to improve the yields for the next-generation line. Then we are in the Army contract that we’ve been satisfying. Then we got a lot of this demand from smartphones, which we had to make bigger cells to give them samples to work on. Then the EV opportunity is also still there, and we had to make some cells for them.
So it’s just been a lot of things to do at the same time. And we’ve been prioritizing them and getting to them as quickly as we can. Honestly, now that we — I think we’ve said in our press release now that we are not making high-volume manufacturing in Fremont, and now we are able to get our Manesar facility up quickly. We should be able to now start working on those EV type cells because they need clean room, they need a lot of different materials and so on. And that’s where that is. The discussions are absolutely going well with the OEMs. We have been in the bottleneck of making them. And that’s just on me because I prioritize making the smartphone cells and the largest cells for the Army first because we felt that’s where the revenue opportunity in the short term is, and we will absolutely get to the EV cells in the first quarter next year.
Ajay Marathe: And just to answer your other question, which is how many batteries were lined. You should keep thinking 9 million to 10 million batteries on line 1, which is a universal line. And as Raj said, we are continuously improving or increasing the UPH, I should say, and reducing and taking cost out. So line 2 will be copy exact for most part, but then a little bit higher UPH, removing the bottlenecks and cost reducing the line. That’s how we are thinking line 2 onwards.
Raj Talluri: And we would like to get to that $50 million range that you talked about. Of course, I’m pushing the team to make it even less cost, but…
Operator: Our next question comes from George Gianarikas, Canaccord.
George Gianarikas: Just very quickly, I watched the video with Ajay. And I’m curious, looked very automated, high parallelism. So when I’m assuming that you weren’t operating at the full tilt in terms of UPH. So when that happens, what’s your confidence level that you can continue with that level of automation with all the metrology happening? What’s the risk that those things start to break down as you speed up the process?
Ajay Marathe: Yes, good observation. And yes, we were not operating anywhere near full tilt. I just wanted to make sure that we are capturing videos of exactly what’s going on per station. So we had slowed the line down quite a bit. FAT will require it to run in what we call marathon run for a certain number of hours at the 1,350 UPH. So that’s part of the buying criteria or qualification criteria for the line. We will continue doing that. And only after that, then we’ll give a green light to ship that line. So that’s what we were doing. And my confidence in making sure that the line runs without having to stop the MTBA meantime between assist and mean time between failures is exactly meeting the specs that we wrote, which means the OEE has to climb up to that 85%, which is equipment effectiveness, the equal equipment effectiveness. So yes, so definitely not running at full tilt in the video.
George Gianarikas: And maybe as a follow-up question, there have recently been discussions from China around export restrictions around graphite. I’m curious what you think that does to your long-term business and also actually to RouteJade. How confident are you that you can continue to get graphite supplied to your existing business there?
Raj Talluri: Yes. ourselves don’t use any graphite. So I mean the silicon cells that we are making. We haven’t seen any effect to the RouteJade cells on the graphite section so far. So as and when we know about it, we’ll comment. I just read as much as you have. I haven’t seen the restrictions.
Operator: Our next question will be from Gabe Daoud of Cowen.
Gabriel Daoud: I was hoping we can maybe just start with Fab 2. Hoping, Raj, you can maybe just give us a bit more color around the smartphone launch. The cells coming off of those lines, would that be EX2? And then with the second half ’24 launch, I guess the quality period would only be a few months if you’re anticipating commercialization in ’25 with multiple OEMs. Is that right?
