Donovan Schafer: Okay. Thank you. I’ll take the rest of my questions offline.
Operator: Your next question comes from the line of Bill Peterson from JPMorgan. Your line is open.
Bill Peterson: Hi. Good afternoon, and thanks for the questions. I’d like to get a little more details on the history that led to the decision to kind of wind down the efforts here. I mean, I think back over the last few years, there indeed was a lot of excitement. The founders program even four months ago, you’re still — I mean, still talking about cost of as advantages and infrastructure advantages. So just trying to get a feel for how did this evolve and apparently coming — I’m not saying it’s going to come out of nowhere. I mean, obviously, the fleet decisions are understandable given their own challenging times. But just the evolution of that? And then at this stage, looking ahead, how do you see the fleets really adopting many new technologies?
Is it really going to be a 2027 story what do you think about the mix between the various options they have. Again, like the nat gas generated option you had — did have advantages in that there was a lot of infrastructure versus lack there other others — infrastructure, especially given the student, you’ve actually provided such great information across the landscape, whether it be bad fuel cell, hydrogen and so forth. How do you — how should we figure this evolving from here?
Thomas Healy: Sure. So a little history on it of kind of getting to this decision. So we still have customer interest and engagement and even fleets — we’re doing fleet trials. And one thing I want to really reiterate is — this was not a decision based on product performance or having reliability issues or things like that. Actually, we’ve been very, very pleased with how the product was outperforming in fleet hands, and we were seeing — hearing that same feedback from fleet. But I think this — what has really happened is the market has shifted to fleets are saying, with these vehicles costing a lot more upfront than diesel trucks and as shared, we’ve been experiencing those price increases as well in our components and having discussions with fleets about passing those costs on fleets are expressing that they’re going to really slow down their rate of adoption until they wait for the government mandates to force the adoption.
And as you pointed out, that probably is a later this decade type of a situation. And one other thing that gives us concern is there’s a lot of discussions out there right now about those government mandates potentially even softening or changing or becoming elongated as to when fleets really need to adopt electric. And so as we look at the position we were in, we’re more approaching this from a position of strength as opposed to a position of weakness where we’re fortunate that we have a strong balance sheet and a strong cash position. And we have two really strong technologies within the company. We had powertrain and KARNO, and powertrain is facing some of these hurdles that we mentioned of the demand changing, the cost components going up in the regulatory side of things.
And as we look at the KARNO market opportunity, we see it as a more capital-efficient path to market. We’re going to be delivering initial customer units next year in the second part of the year. So that’s what led us to look at. We’ve got — as we closed out last quarter, $324 million of cash available to us. And we feel like it’s the best decision to put focus on the KARNO go-forward, take the powertrain technology, preserve it, put it on the shelf for potential later use and then for the time being focused on KARNO.
Bill Peterson: Okay. Yes. Okay. Well understood. On KARNO, just trying to get a more bigger picture view on how you’re viewing the competitive landscape for the stationary power market. We’re hearing early use cases like around EV charging. We’ve heard people talk about data center backup. There’s different business models and later approach it, whether it be Turkey solution is generated plus to trying to get a feel for how you see the landscape for this and where you’re going to be focusing on over the next few years?
Thomas Healy: Sure. So there’s a couple of different markets, anything about the power generation side of things. And maybe to start off with just clarifying. So we’re looking at being a generator of electricity versus some of these solutions that you mentioned like a battery is more going to help with saving conserving electricity and then being able to use it at a later date. As we think about what is really needed, we think it is both, but there’s a lot of demand for just more electricity production — especially as you think about the EV space, more chargers are being deployed, substations don’t have the electricity available to actually service some of these charges and in some instances, and we’re enabling an opportunity where we could just bring a generator out and actually produce electricity locally at that site.
There are a lot of other companies in this space. Some are using more conventional internal combustion engines in order to produce that electricity. And then some others are using things like fuel cells in order to produce electricity. What we see is our advantage is an internal combustion engine does not have great efficiency, requires a lot of maintenance. And from an emissions and pollution standpoint, many are still running on diesel fuel, and that’s not great for our environment, right? I don’t think we want EV chargers that are sitting there being powered by a diesel generator. So, we’re looking at the KARNO solution is bringing many benefits from an emissions and pollution standpoint, similar to what a fuel cell brings forward, but we’re bringing it with low maintenance and the cost that we are looking at coming in a lot less than where fuel cells are at.
So as mentioned before, it’s kind of bringing forward many benefits that normally you see in a power plant, but bringing it forward in a size like a conventional generator that can be deployed locally and produce your own electricity at a cost affordable rate.
