Badri Kothandaraman: Yes. I mean we only hear color from other industry news, but we do see some transition to the leasing model. We do see that clearly. For us, how does it affect us is we have some great partners. We have Sunnova, great partner. John Berger is a close friend of mine. Sunpower, Sunrun and other leasing partners. We do business with all of them. They’re all great partners. So for us, it is — if loan moves to lease our business, I would say there could be some product mix issues, but business is nominally not affected. We have heard anecdotes from a few industry sources that installers in California that are many long-tail installers who aren’t in business any longer, but we don’t have any direct data there.
So I can only tell you what I know. The — of course, I mean, it is a stressful time for them, and we are trying to help them with whatever we can, whether it leads or whether we can provide them some of the services like our Solargraf, etcetera, whether we can help them with NEM 3.0, their business. We are doing that. And that’s the color that we have in general. We do business — majority of the business we do is through distribution. And the distribution, one of the ways we would see it is in our payment, right? If we were to do direct business with all the installers, which we don’t. We do business with distribution partners. So therefore, we have one level a little bit away from direct relationship with the long tail installers.
Andrew Percoco: Yes, that makes sense. And the other questions — my other questions have been answered.
Badri Kothandaraman: Could you repeat the question — okay?
Operator: Our next question will come from Tristan Richardson with Scotiabank. Please go ahead.
Tristan Richardson: Hey good evening guys. Thank you so much. I appreciate all the commentary on 2024 and really just thinking about the commentary you made around stabilization next year. Should we think that could there be a swing factor with some of the new markets you’ve entered, whether that’s U.K., Greece, Denmark, even India, could that be a meaningful factor that could affect sort of the timing of that stabilization or present a growth wedge above kind of that 2Q time frame you’re talking about?
Badri Kothandaraman: Absolutely. We have a lot of vectors of growth and that’s a great place for us to start. But we are — in the color I gave you, we didn’t assume all of that. But we have absolutely so many countries that we are — we were not present even a couple of quarters ago like we have introduced in batteries and microinverters, actually, batteries, for example, in Austria, in Spain, U.K., as you correctly pointed out, Sweden, Denmark, Greece. We have plans to introduce to about 15 countries in the fourth quarter. Microinverters alone, they are all new countries. So that’s one vector. New geographies, very important for us. But on the flip side, there, it does take some time to establish infrastructure there. You do need to build up your installer base.
You do need to train them very well because our bread and butter is our installers. Therefore, we need to train them excellently. And we need to win them one by one. And that is a process in itself. It can be as early as 3 to 6 months, but it can be over a longer time frame as well. We got several new markets in Asia that are also interesting for us, like, for example, Taiwan, Korea. Indonesia, we are there today, but we are rapidly moving into IQ8, there are a few other smaller countries in Eastern Europe that we are going after. Small commercial. That’s a very big one. The small commercial in the U.S. is about 1 gigawatt. We are going to add that product this quarter. The small commercial opportunity in Europe is much bigger. It’s about 10-plus gigawatts and we are figuring out that one systematically because we can service that market less than 100 kilowatts with the products we have.
So there, of course, pricing is something that we are looking there on how to be competitive in that segment, but we do have a lot of levers there on small commercial. So that is one more. The other one is EV charging. EV charger. We just introduced our connected EV charger. That is a big deal. Now with everybody wanting to electrify, meaning their home, which is buying electric vehicles, electrified vehicles, for example. The — our product will work with solar plus batteries and it will help the homeowner optimize it’s built. He can do green charging now. He doesn’t need to spend money charging the vehicle from the grid, all he needs to do is to add about one type of investment, of course, he’s got to do that, 6 to 8 panels or 6 to 10 panels.
He needs to add it if he buys an EV. And that is a huge opportunity. We are now following up and introducing these EV chargers in Europe, which is what I talked about. So early next year, we will have IQ EV chargers in Europe. Then the other — the other one is home energy management, software, right? We’re now beginning with Germany. We now have the ability to also connect to third-party EV chargers and heat pumps. So now we can optimize the entire system, our solar, our storage, hopefully, our EV chargers soon, but in the meantime, third-party EV chargers, third-party EV — I mean, third-party heat pumps and giving the homeowner one app, all in one app, optimizing his energy from his fingertips. So that energy management software plus we have some hardware there, which we will eventually integrate into our gateway.
So we’ll roll that out to all the countries, including the U.S. So we got a lot of vectors there, which is introduced, solar plus batteries into many, many new countries worldwide. Introduce products for the small commercial markets worldwide, introduce IQ smart EV chargers, both in the U.S., which we have done and worldwide. Energy management software plus whatever hardware is required to manage heat pumps and third-party EVs worldwide. So we have a lot of vectors. Of course, I did not include that in the color, which I gave, which is conservative from our perspective.
Tristan Richardson: That’s great Badri. Appreciate all the extra comments tonight.
Badri Kothandaraman: Thank you.
Operator: Our next question will come from Moses Sutton [Ph] with BNP Paribas. Please go ahead.
Unidentified Analyst: Hi Badri. Thank you for squeezing me in. I just wanted to tag on to Andrew’s comment about the [indiscernible] installer. Are you seeing stress outside of the California market? Are you seeing any sellers selling distributors asking for price concessions, maybe distributors asking for concessions on terms and receivables, just curious if you could give a little more color on the health of the Tier 4?
Badri Kothandaraman: Yes, the — I’m just clarifying the question. You want to know the health of the business outside California. Is that correct?
Unidentified Analyst: Specifically for the — for the small stores.
Badri Kothandaraman: Specifically for the long tail, I mean — yes, the color that I can give you is the non-California business as a poly is stabilizing right now. That’s what we see. We see Q3 was 4% down from Q2. And the first 3 weeks of Q4, which is the last 3 weeks of this quarter, but also not too bad. In fact, it’s a little bit up. So we think the non-California business is is pretty decent. But of course, it is still down from the high levels that we had by nearly 35%, meaning from Q4 of last year, Q4 2022, it’s still down by nearly 30% to 35%. And your question is how is the health of the long tail — it’s a similar answer for us. We work with our business, if you see 80-plus percent probably, maybe 75% is the long tail there.
