In essence, what you’re doing is you’re focusing on the passenger or driver relative comfort level at that microclimate location, and not necessarily the entire cabin. And so, this is really starting to pay off for us. So I think that’s also going to help drive content penetration on ICEs as well.
Ryan Brinkman: I wanted to ask a couple of questions too around the pause of the BPS cell connecting, starting with – I remember you highlighting some strengths of your product, like it was lighter weight and more environmentally friendly than some of the competitors’ solutions. And there’s thought to be this growing need for cell connecting and battery health monitoring. So, maybe you could just help us understand what may be changed there in the market. I wonder if maybe the solution was incorporated into more comprehensive battery management systems, technologies that the other suppliers were offering? Or what would you say changed there?
Phil Eyler: Well, no, I don’t think it has anything to do with the battery management system architecture. That I think is basically the same. And to be frank with you, the fundamental shift that we’re seeing is related to our competition, especially chemical etch competition. That space is loaded with capacity. And I believe, personally, that the level of accepted pricing because of that excess capacity is putting us in a very difficult position when it comes to pricing competition. There’s no doubt, our customers have confirmed to us that our product provides extremely beneficial sustainability benefits and technical benefits, which revolves around the material selection and, as you pointed out, the lightweight. But, frankly, the drive towards lower cost batteries is winning the day, and that’s – chem etch is kind of taking it there.
So we’re in a position that, if that pipeline is not going to be in front of us in the near term, makes more sense for us to divert our resources and investments and focus into the areas that are seeing accelerated growth, which is our climate and comfort products, thermal and pneumatic.
Ryan Brinkman: And the second question there, also on the BPS is, that product, the cell connecting was once thought to maybe pick up the slack left by an earlier product, which was the thermal electric temperature regulation, not of the big batteries, of course, we’ve got air cooling, but of these smaller batteries that might be applicable for 48 volt or micro hybrid type vehicles, and that was with some European OEMs or maybe some luxury OEMs. It’s something that was rolling off. And that was understood to be – I think because 48 volt didn’t really pan out like the industry once thought, but it just seems like in the very recent past here or just kind of in the fourth quarter, there’s been some more scuttlebutt about it, including with the cyber truck having officially launched and Elon Musk saying on X that he was mailing to Jim Farley and Mary Barra a packet with all the technical details, explain why they need to double down as well, which will decrease the cost for everybody.
And Jim Farley responded positively on Twitter to that, saying that maybe they need to push again. Just curious if there’s any potential for that market to come back to life or is there some other competitive dynamic going on there to where maybe the thermoelectric regulation isn’t as attractive as was thought or is it just the market smaller? What are your thoughts for 48 volt is going, what you might potentially be able to provide that?
Phil Eyler: I’m not optimistic on the thermal electric BPS product for 48 volt. And the primary reason is the architecture for 48 volt systems is a little different when you look at what you mentioned on EVs, especially. The 48 volt that in the past has been used has been really used as a drivetrain boost. And to do that, they require a lot of utilization of those batteries, creating a lot of heat, and that’s where our cooling product really became pretty important. We do see some opportunities on 48 volt with air cooling, and we are winning some business and we called that out in the last couple of quarters with different customers. Hyundai Kia is an example. We’re going to be cooling all of their 48 volt batteries using our air cooling devices.
So, there’s some of that built into our outlook. Certainly, the 48 volt thermal electric BPS with Mercedes will gradually decline over time. It’s not going to be a digital decline, but it will steadily decline. So if you net all that out, and we do have some built-in wins with our MSP based battery heating as well, using the same technology as the CCB, but netting all that out, we’re seeing a net decline in revenue of BPS through 2026.
Operator: Our next question comes from the line Luke Junk with Baird.
Luke Junk: Apologies for the background noise here. Phil, I was hoping we could start with the ClimateSense award with GM. And what I’m really hoping to tease out is just the software opportunity alone versus scaling in hardware over time. I really just want to better understand the materiality, both of the software piece that you announced today and then the underlying controller, understanding that you can add a hardware to that.
