So our supplier for the paint shop is doing the final steps there. And with that, I think we are well set to start the process of ramping up into a continuous build instead of a batch build. So the batch build allows us to run basically the build on a normal build schedule from a manufacturing time. But we need to size it to an output which fits to the vehicles we are able to produce from a parts availability standpoint. And also we need to add the time to optimize the quality, and finish the final checks on the vehicle. We have established an incoming inspection on top of the outgoing inspection of our supply base. So all of this is tailored into the manufacturing, which takes time at the moment, and is handled through the batch build. And as soon as we have a more stabilized material flow, and more stabilized quality inflow, we will be able to go to in line build, which gives us 0.5 jobs per hour in the middle of next year.
Stephen Gengaro: Great. That’s very helpful. And then just one more as it relates to manufacturing and on the cost side. Any color you can you can add as far as how you how you optimize cost, particularly when we’re talking about the materials side?
Matthias Aydt: So let’s let’s go back to the first step is finalizing our manufacturing optimization. Finalizing the manufacturing optimization gives us a, first, cost reduction. I think it’s easy to imagine that we have extreme costs at the moment with this low volume. And as Jonathan mentioned, we have a burden on overhead costs. As soon as we are getting there to run more stable, this cost will decrease without having any additional activity going on on the material cost side. The next step is we have been looking into our most expensive systems, and started the process of in-sourcing the systems to be able to reduce the cost there. And also a very nice number of dollars to get to breakeven cost coverage for cost to the MSRP.
And then the next step will be that we go into a process together with our supply base to look into the value stream and optimize the overall process together with them to achieve cost reductions by ramping up to plant capacity volume. We will need the next year to go into a region that we can see that we have reasonable material cost coming in from the supply base. And the next step we will focus on is, you know, the last nine years, we have been focusing on delivering this car. So not in every case, we have result in a cost effective design solution. So we will run through what is necessary to be optimized from a design perspective and construction perspective to allow us to harvest cost reductions on changing existing designs. And then the next thing is we have a dual home market space, which is not only true for — on one hand selling cars.
On the other hand, it’s also very true for allowing us a huge reduction in material cost, which takes a little bit of time, but that is the progress we are planning to do over the next two years.
Michael Ward: Great. Thank you for the details, John.
Operator: Our next question is from Laura Li with Deutsche Bank.
Laura Li: Hi. Well, thank you for your time. So my question will be about financing. I think you already talked a little bit about this, but are there other non equity financing you are considering?
Jonathan Maroko: Sure. Yes, we certainly are. We’re continuing to look to finance the company on the least dilutive way possible. So one, as we mentioned, was the indirect sale leaseback of Hanford. And that was helpful for freeing up capital to fund tenant improvement. Tenant improvements that are required to help us scale our production, but more significantly, we’ve been in discussions with potential IP-based lenders. And based on these talks, we think we can raise a meaningful amount of capital hopefully sometime in 1Q 2024. This would be subject to revaluation of our intellectual property portfolio, which was last valued in 2019 by an independent third party at about $1 billion. So we’re optimistic on this.
Laura Li: Okay. Well, thank you for that color. So I’m also thinking about the convertible notes. I saw you stopped issuing the new ones. Do you have any plan to restructure the current convertible notes?
Jonathan Maroko: Sure. Yes. That certainly ties into moving away from dilutive financing. And so we’re doing whatever we can to move away from these existing converts. We’re always looking to improve financing options and terms. With these specific existing ones, we’re in talks to either restructure or to limit the impact of those conversions.
Laura Li: Okay. Well, okay. Thank you so much.
Jonathan Maroko: Of course.
Operator: Thank you. There are no further questions at this time. I’d like to hand the floor back over to management from the closing comments.
Matthias Aydt: I’d like to come back to a question, Michael, you raised in regards of how to hit the volumes we are targeting in next year. I think if you look at into our setup, we are in a very unique situation with Faraday. On one hand, we are focusing on a market segment which is very unique. It’s close to be a blue ocean market, with the product we are placing. So we are not facing a lot of competition as potentially Lucid and Rivian are facing in the approach they have chosen. And the other element which comes to play is if you look into size of the operation we have chosen to execute in the beginning of our company, it is small enough to be very fast coming to a cash flow breakeven. So if you look at Lucid and Rivian, they have they have decided to invest into far bigger operations, which need a lot of a lot of volume to get to a point that they can generate profits.
And as everywhere in the business, it’s basically the last days or the last months of the year deciding about the money you’re making. And the rest is just to cover the cost. So covering our costs is based on a far lower volume, which we can achieve in 2025, latest two, let’s say, in beginning of 2026 to have a breakeven. And that gives me a very positive look forward that we are in a very favorable situation at the end of next year and then through 2025. There’s even studies out there from companies like Mackenzie that exactly this market segment is the one which is growing over the next years in comparison to other markets. Thank you.
Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.
