Joe Mastrangelo: But – and, Hilary, the other thing I’d add that I always tell the team here at Eos, right? So prior to Eos, working at General Electric, right? I was managing product lines that were hundreds of years old. And you are getting a 4% to 5% cost–out productivity every year on a very mature product. This here, as we go through this, we’re going to be learning every day and finding ways and updating our cost out pipeline, looking at cycle time reductions and productivity ideas. So this is going to be an iterative process where it’s a funnel, right? You bring ideas in, and you want to realize ideas out the back end of this. And I think we’re starting to see, as you actually start building and operating the product, you start to find more and more ideas on how to take cost out. We just got to, say, keep our nose to the grindstone and just keep finding ways to improve the competitiveness of what we put out in the field.
Nathan Kroeker: As I was listening to Joe, I realized I didn’t fully address your question. You were asking about gross margin breakeven. I would say, we won’t achieve gross margin breakeven until we get the efficiencies of the fully automated line. So that’s how I would think of it in terms of timing. And the timing of that is somewhat dependent on capital [Technical Difficulty].
Hilary Cauley: Great. Thank you for taking my questions.
Joe Mastrangelo: Thanks, Hilary.
Operator: Thank you. Our next question comes from Christopher Souther with B. Riley Securities. Your line is open.
Christopher Souther: Hey, guys. Maybe just following up on that with the initial Z3 ramp, can you please frame some of the metrics you called out here for the semi-automated manufacturing? How do those four-minute cycle times and less than 1% scrap rates compare to what we saw with this stage with Gen 2.3? And can you update us on how the BOM cost today compare to Gen 2.3 and what the reduction would be post the three cost initiatives you called out for 2023? This is all kind of prior to the full automation that you talked about.
Joe Mastrangelo: Right, right. So, hey, Chris. Look, I mean this is night and day. The team of people that went through Gen 2.3, there’s days where, at the end of the day, we’re sitting in our — we’re sitting in our office talking and we’ll say, “Do you remember where we were at the same time with Gen 2.3?” And it’s just a nine-day difference. I mean like when you think about Gen 2.3 at the end of the first week of commercial production, our yields were in the 50% range on a good day for the first month as we were trying to perfect the infrared welding process. When you look at the stack up, and I think it’s an important thing that we talked about was, you were doing 41 infrared wells, which we were doing this. We were doing those 41 wells.
It was the largest surface area that has been done as an infrared well, and it was also the most continuous well. So doing the size of the battery we’re doing for 41 wells, no one else is doing that. But you don’t get paid by doing technological marvels. So doing what we’re doing now with one, the cycle time being at four minutes, you’re probably talking about — you’re saving 90 — more than 1.5 hours per battery as you go through and do this with a lot less material handling. On the — and then I think — look, I think we can actually get better from where we are as we go through and look at the scrap rates and the performance. I think the thing that we’ve done is our new manufacturing operations leader, he’s got visual management reports hour by hour that the entire team is focused on, what they have to do in each one of their stations.
