FREYR Battery (NYSE:FREY) Q4 2022 Earnings Call Transcript

But it would be — it’s my understanding is it would be a little bit of a development to pull that forward. But that might translate into how the banks are willing to commit to financing a little bit ahead of time. So there just may be some benefits. This is sort of evolving real-time as people improve their understanding of the IRA, which is quite good. And of course, we’ll see what the treasury regs say to clarify anything, but it’s pretty straightforward. So we’ll see. But we’ve got a few months to sort of figure out with our counterparties how it might work.

Adam Jonas: Thanks a lot, Oscar. Thanks everybody.

Oscar Brown: Thanks Adam.

Operator: Thank you. And the next question goes to Maheep Mandloi of Credit Suisse. Maheep, please go ahead. Your line is open.

Maheep Mandloi: Hey, good morning . Thanks for the questions here. Just on to the U.S. factory, you talked about accelerating the build out here, could you just talk about the timing as it like early 2025 or mid and as you kind of like, look at the module manufacturing also, could you remind us of the CapEx for module manufacturing is included in that initial estimate? Are you expecting any revision to the CapEx guidance?

Tom Einar Jensen: Maheep, thank you for that question. As Jeremy alluded to, we are neck deep in evaluating the different scenarios and different options that we have in front of us, initial couple of production line, brownfield, greenfield, first step equity finance, project finance, different sort of partnership arrangements around it. So it’s a little bit too early for us to be concrete as to sort of when we believe we can start up. So we say 2025 for now, and then we’ll be more specific in terms of what that looks like when we have done the initial investigation. What also Jeremy alluded to was that we are, as part of that, also evaluating module and DC block kind of development because a number of our customer engagements in the U.S. don’t necessarily only need battery cells, they actually want a final ESS product.

This is obviously something that we are developing together with Nidec in Norway. And we’re looking into various options as to how we can also play in the downstream area of that. As you know, the CapEx related to that relative to cell manufacturing on a per kilowatt hour basis is significantly less. But let us come back with more specific estimates on that when we’ve done the work in the next four to six weeks.

Maheep Mandloi: Got you. And then something more timely some news earlier today on China, potentially reducing supply — lithium supply from one of its hubs in Yichun province. Just curious, like, how does that, like, global supply of lithium kind of impact your cost assumptions and how should we think about your pricing assumption? Then all — I understand that you probably you don’t have China exposure directly, but just curious in global lithium pricing, how does that get impacted because of all these challenges? Thanks.

Tom Einar Jensen: Yes. So of course this is a big question and one that many in the battery industry are grappling with. But as you know, in our off take agreements, we have pass-through mechanisms for the most critical raw materials that are critical in defense that they are both have a market and also at the most volatile, and in that it’s a spoke lithium hydroxide and lithium carbonate. So that price exposure is in large part to passed on to our customers. And that is obviously something that impacting the overall contractual negotiations of the pricing structure in the long-term off take agreements. Now, so that’s kind of on the commercial side of things. We feel that we are hedging that volatility if you like quite significantly through how the contractual framework is being constructed.