Gogoro Inc. (NASDAQ:GGR) Q3 2023 Earnings Call Transcript

Gogoro Inc. (NASDAQ:GGR) Q3 2023 Earnings Call Transcript November 16, 2023

Operator: Welcome to the Gogoro Inc. 2023 Q3 Earnings Call. These sessions will be recorded. I would like to introduce Bruce Aitken, CFO of Gogoro, who will kick us off.

Bruce Aitken: Thanks, Operator, and thanks to everyone for taking the time to join us today. I’m Bruce Aitken, CFO of Gogoro, and I’m pleased to welcome you to our third quarter 2023 earnings call. Hopefully by now you’ve seen our earnings release. If you haven’t, it’s available on the Investor Relations tab of our website, investor.gogoro.com. We’ll also be displaying the materials on the webcast screen as we go. We’re looking forward to sharing our Q3 results, as well as providing guidance on what we’re seeing as the outlook for the remainder of 2023. Before our CEO, Horace Luke, shares, I’d like to introduce Michael Bowen of ICR, who will share the process for today’s call and provide some important disclosures. Michael?

Michael Bowen: Thank you, Bruce. I’m sure you’re all looking forward to hearing from Horace and Bruce on behalf of Gogoro, but before that, allow me to remind you of a few things. You are all currently on mute. After Horace has given a brief overview of Gogoro and some of the business highlights from Q3, Bruce will go a bit deeper into the Q3 financial results, and then we will open the line for Q&A and answer as many questions as time allows. During the call, we will make statements regarding our business that may be considered forward-looking within applicable securities laws, including statements regarding our third quarter 2023 results, management’s expectations for our future financial and operational performance, the capabilities of our technology, projections of market opportunity and market share, the strategic cooperation and investments in India and the Philippines, our potential growth, headwinds facing the company, the company’s business plans, including its expansion plans, the company’s expectations relating to its growth in overseas markets, statements relating to the potential of our strategic collaborations, partnerships and joint ventures, statements regarding regulatory developments and our plans, prospects and expectations.

These statements are not promises or guarantees and are subject to risks and uncertainties, which could cause them to differ materially from actual results. Information concerning those risks is available in our earnings press release distributed prior to market open today and in our SEC filings. We undertake no obligation to update forward-looking statements except as required by law. Further, during the course of today’s call, we will refer to certain adjusted financial measures. These non-IFRS financial measures should be considered in addition to, not as a substitute for, or in isolation from IFRS measures. Additional information about these non-IFRS measures, including reconciliation of non-IFRS to comparable IFRS is included in our press release and investor presentation provided today.

Now, we’ll turn the call over to Horace.

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Q&A Session

Horace Luke: Thanks, Bruce and Michael. Thanks for joining our call today. We’re pleased to have this opportunity to meet with you and provide an update on the third quarter 2023 results and for the rest of 2023. When we prepare for these quarterly results and remarks, as well as answer your questions, we’re always struck by the need to address the immediate quarter, but not to waver from our mission. Quarters go up and down, results vary, but our mission remains unchanged. We’re seeking to put smart, swappable power in the reach of every urban rider in the world. This is a bold mission. One we’re committed to. We seek to advance that cause every day, and as we have stated many times, we believe we’re on the right path.

One at a time, individual riders are selecting a better, more sustainable, more data-driven riding experience by choosing to adopt the Gogoro battery swapping system. We know that our technology can change the world. In the ever evolving mobility landscape, the macro message is clear. It is time for a sustainable shift. As our world faces growing environmental challenges, a fundamental transformation in our approach to mobility is imperative. Across many regions, this shift to electric vehicles and EV second life use are gaining momentum, even in the face of legacy technologies. As stated last quarter, the long-term future remains bright despite some near-term challenges and we remain excited for the future of vehicle and infrastructure electrification.

We see a world where two-wheel electric vehicle and battery swapping are affordable, stylish and readily available, revolutionizing urban mobility, while significantly reducing the environmental footprint. Similar to last quarter, the macroeconomic environment in Q3 has continued to be challenging, but we remain confident that customer interest remained high in the markets we serve and in new and prospective markets. Let me begin with a few recent highlights from Q3. We’ll elaborate on these in more detail, but I do want to start with some good news. In October, we launched our new CrossOver vehicle in the Taiwan market, a two-wheel electric SUV. CrossOver is a new breed of versatile, rugged vehicle that can be customized for different riders’ personal use cases and needs.

Our India vehicle factory is now up and running, and we’ve delivered our first made-in-India vehicle samples to B2B customers there. This is the first of our B2B-focused vehicles, which will include locally sourced components and is assembled in India. We’ll be commercially launching that vehicle later this quarter. We’ve also announced an MoU with HPCL, a large Indian gas retailer, to place GoStation at their station across India. We launched a new Gogoro Experience Center in the Philippines together with the Ayala Group, Globe Telecom and 917 Ventures, with services going live before the end of the year. We also attended the Japan Mobility Show together with MIH, Foxconn’s EV Consortium and demonstrated a four-wheel concept car which has both a fixed battery, as well as Gogoro batteries.

This lowers product costs with a smaller fixed battery, but doesn’t impact range, given the flexibility of the supplemental Gogoro batteries. We held our first post-pandemic Taipei Bridge community event. Over 2,000 Gogoro riders joined us at a Halloween night party and ride through Taipei street celebrating the ongoing transformation of urban mobility in Taiwan. We partnered with Apple on two new features. Our riders can now add a digital scooter key to their Apple Wallet on their iPhone and Apple Watch, and use their phone or watch as their vehicle key. And in addition, we also worked with Apple to integrate our vehicles into Apple’s Find My feature across their device ecosystem. This is a world’s first for two-wheeler integration for both Apple and Gogoro.

Lastly, we are honored to be recognized as one of MIT Technology Review’s 2023 15 Climate Tech Companies to Watch. Gogoro has always pushed the envelope on what is possible in the electric mobility space and will keep doing so, with new products, new software capabilities and new partnerships. As always, the team is working hard and despite the highlighted accomplishment, we’re never satisfied. We’ll continue to innovate and deliver new services and capabilities for existing customers and new vehicles to target new customers and new markets. Despite these strides forward, our core market of Taiwan continues to be challenging. Taiwan’s scooter market remains very competitive. Taiwan’s macroeconomic environment continues to have a significant impact on consumer sentiment.

Intense price competition continues as ICE manufacturers strive to maintain their market position and attract cost-conscious customers and government subsidies for ICE vehicles continue to be a barrier to EV adoption. In Q3, the total number of registered scooters in Taiwan was 242,944, up 17% from Q3 2022. Through September 2023, the total number of registered scooter was 606,691, up 14% compared to 2022. The total number of registered electric scooter in Q3 in Taiwan was 20,815 units, down from 23,926 units in Q3 of last year. Of these electric scooters, approximately 17,314 were Gogoro powered vehicles and 15,302 were Gogoro branded vehicles. We attribute this slowing of electric vehicle purchase to the price competition from ICE vehicle makers.

While unable to deliver competing electric vehicles, they’re competing purely on price and attracting the highly price-conscious consumer segment with pricing power, scale and the ongoing government subsidies provided for the retirement of a gas vehicle. Any replacement gas vehicle will be on the road for 10 years or more, impeding the government’s ability to achieve the net zero targets. Climate change and achieving net zero emission have become shared global challenges. The Taiwan Government has declared its commitment to achieve net zero emission by 2050 and all new two-wheel and four-wheel passenger vehicle will be electric by 2040. It has also outlined that 35% of all new vehicle will be electric by 2030 and 70% by 2035. We’re working on a number of initiatives to spur growth and meet these government objectives.