And as we gradually pivot from an Asian supply to a localized supply, we want to be a catalyst for that as well but not necessarily as the dominant owner in it but an off taker and a strategic partner to unlock a sustainable, decarbonized and localized supply.
Nili Eslah: Great. Thanks for taking our question.
Tom Einar Jensen: Thanks, Nili.
Operator: Thank you. And the next question goes to Adam Jonas of Morgan Stanley. Adam, please go ahead, your line is open.
Adam Jonas: Thanks, everybody. Just the first one, if you could remind us what’s the minimum reject rate that your partners would consider from the CQP, what would they consider a success in order to sign binding agreement that essentially a ramp?
Tom Einar Jensen: So Adam, thank you for that question. So I think first and foremost, they need to see that the form factor that we are producing, the 56/10 form factor which basically is a 56/10 centimeter large electrode is actually performing in accordance with the electrochemical performance that’s the example that came out of 24M, that we recreate that. We will have low yield and low uptime of the facility in the early days. As you know, this will gradually be moving towards our targeted overall equipment efficiency, which is a function of uptime and yield, and as long as we can show that there is progress in the movement on both yield and uptime that is from a Nidec compensation point of view good enough as long as we replicate the electrochemical properties of the initial samples.
Then we have various activities and roadmap established which we have been very transparent on together with our customers. And as long as we are trending inside these roadmaps that is what should suffice at least from an Nidec point of view, and this will be the same approach that we will take also with our other customers. So expect that we will be reporting on yield and uptime on a regular basis over time, they will start off very low, we will have a lot of issues and problems. We have identified that as I mentioned previously, more than 1,500 potential sources of error and established standard operating procedures for all of them and probably we will have twice as many problems. So, but at least we have a good start in that. We’re also working actively with the relevant stakeholders in the 24M ecosystem to support the ramp-up from an experience of SemiSolid production point of view, but also from a high-speed coating based manufacturing process point of view as well as working with Nidec to provide scaling expertise as they are deep into sort of scaling energy intensive processes in their own field.
And many of these things are transferable to the challenges that we will face, but it’s of course, a combination of electrochemistry plus mechanics plus many different things. But as long as we are trending in the right direction and as long as the electrochemical properties of the initial batteries that we produce with high reject rate are within the tolerances that we have previously demonstrated that will be good enough for Nidec.
Adam Jonas: Thanks, Tom. Oscar one for you, any precedence from your extensive project financing experience on monetizing the pull forward of tax credits or are we kind of an unchartered territory. I didn’t know if there’s anything in the oil and gas world that we think could compare to that?
Oscar Brown: Yes. Thanks, Adam. Yes, there’s actually more in sort of solar and other sort of renewables is probably more comparable. And I think we have seen, in the past, typically, that financing comes in right around plant completion. So the trick here is — and so it would be a development, I think, in this market. But given the ease of monetization, we’re hopeful and optimistic that there may be an opportunity to pull that forward some from plant completion to a little bit ahead of that. And so that’s kind of what Tom was alluding to. So at a minimum, we think around the time we completed a plant that you can monetize the forward production, especially if they’re under contract, and so we’ll have to balance that because we do think the merchant market is pretty great right now.
