Andrew Shepherd: Okay. Got it. That’s helpful. But so over 500 deliveries in Q1 were to Saudi Arabia in the quarter particularly. That’s helpful. Okay. And then just a question on liquidity. You touched on the updated liquidity. Obviously, the $1 billion recent capital raise fortifies the balance sheet. In your presentation, you mentioned that liquidity on hand is sufficient to fund the business, I believe, is until second quarter of next year. So I guess my question is, as you’re thinking for your next capital raise, do you — to the extendibility? Do you foresee that coming from the PIF or perhaps would that be from external capital? I guess what I’m asking is with $6.4 billion in funding from the PIF so far year-to-date, do you foresee a situation where the next raise may also be with them or elsewhere? Thank you.
Peter Rawlinson: Well, look, we’re a technology company. We’re on a growth trajectory and it’s a capital-intensive endeavor. We know that. And so all I can say is that we will take an entrepreneurial opportunistic view of raising capital when the business requires it. We are very, very aware and appreciative of a very special relationship and the steadfast support that the public investment fund has shown us and gone every single round supporting us to-date. And I think that puts us in a very strong position. It takes us past the start of production of gravity and well into next year. And I think that’s an enviable position. It puts us in a very strong position financially.
Maynard Um: Thanks Tawanda, can we move to the next question please?
Operator: Our next question comes from the line of Tobias Beith with Redburn Atlantic. Your line is open.
Tobias Beith: Hi. Good evening and thanks for your time. I have two questions for Gagan, please, and I’ll ask them separately. Through 2024, the expectation is that production processes will become more vertically integrated as you continue to build out the Phase II expansion of AMP-1. Can you confirm whether this will increase losses in the near term while volumes are subscale?
Gagan Dhingra: Yes. So as I said in the prepared remarks, we typically don’t guide gross margin because of certain controllable and noncountable factors. However, I can provide some directional color. In Q2, I expect that gross margin will remain flat despite the impact — the full quarter impact of pricing actions we took in Q1. In Q1 that impact us for part of the quarter. Scaling back to second half of the year, now purchase of gravity components ahead of production, which will result in increase in inventory, i.e., result in LCNRV and also higher depreciation as a result of Phase II activation, we expect to have some negative impact on the gross margin. But then we have Gravity scheduled for production late this year. As we move to next year, we expect things to change significantly.
Tobias Beith: Okay. But — sorry, just to ask my question slightly differently. On a variable margin basis, do you expect the higher vertical integration to decrease the variable margins in the near term on both Air and Gravity?
Gagan Dhingra: Yes, that’s a great question. Now it is a game of scale. We’re getting better on contribution margin, trim by trim. Now the BOM cost, freight and certain overheads, part of contribution margin gets significantly impacted when you have a low volume. And with scale, it significantly improves because suppliers also amortize their fixed cost based on the volume they deliver. It’s a matter of scale. The more we get close to our capacity, our margins get much better.
Tobias Beith: Okay, understood. And then just to turn back to the question that Adam and Itay asked. If I exclude the impairment charge from your cost of goods sold and make a simplistic assumption that all of the D&A charges within COGS. Then in the first quarter this year, underlying costs per unit delivered actually increased 5% sequentially. And given that delivery volume was 13% higher with some of these cars presumably benefiting from last year’s overproduction. I was wondering if you could comment on what happened?
Gagan Dhingra: Yes. It is a factor of incentive as well. So if you look at — we took some pricing actions in the current quarter. So it’s because of the pricing actions, which were largely offset by the cost reduction activities.
Tobias Beith: Okay. But — sorry, the pricing actions, surely, they’re not in your COGS anymore because I’ve excluded the impairment charge.
Gagan Dhingra: Yes. But it’s multiple things that go in that factor. So when we say pricing actions, we basically like for pure and curing that the pricing that we offered and plus mix, both together play a significant role in that component.
Tobias Beith: All right. This is been most helpful. Thank you very much for your time.
Maynard Um: Thanks Tawanda, can we move to our next question please?
Operator: Our next question comes from the line of Steven Fox with Fox Advisors. Your line is open.
Steven Fox: Hi. Thanks for all the color this evening. I just had a question on the push to have more third-party related sales of hardware and software. I guess, I was wondering if you would say over the last few quarters, whether there has been an increasing number of bottlenecks in getting to the finish line on some of these deals. I’m curious just because it seems like you’ve proven out some cost advantages that you can provide as a — from a third-party standpoint and the pressures on OEMs to get their BOM costs down, it will only increase in the last year-to-date. Any color on that and your progress going forward would be helpful?
Peter Rawlinson: That’s an interesting point, Steve. I would say this that there’s a time scale, there’s a cadence, there’s a chronology associated with any such arrangement with the traditional OE. There’s a natural cadence to the pace they work and operate. And also, there’s this impending regulatory overhang in terms of the drivers for that transition to sustainable mobility model. So all I can say is just watch this space. We need patients when we’re talking to large automakers.
Steven Fox: Okay. Thank you very much.
Operator: Please standby for our next question. Our next question comes from the line of James Bigarelli with BNP. Your line is open.
Unidentified Analyst: Hi, everyone. This is Jake [ph] on for James. So if I just look at your liquidity and the implied cash burn with the $5 billion lasting into the second quarter of 2025. It looks like the implied cash burn has stepped up from roughly $900 million in the previous commentary to over $1 billion now. So how should everyone think about cash burn really through next year once you get through the launch of the Gravity?
Gagan Dhingra: Yes. So if you look at — there are multiple things go in the cash burn. One, is the capital investment that we’re making as we have guided, we expect to spend around $1.5 billion in our investments, which is expansion in Arizona taking from 30,000 installed capacity to 90,000 because of paint shop, stamping, body in white coming later this year. And then AMP-2, which is in Saudi Arabia, where we are making significant investment, building our CBU facility. So that capital expenditure play a significant role there. And also in the next year, we have a significant amount of capital expenditure that will continue.
Unidentified Analyst: Got it. That’s very helpful. And then just following up on John’s question about the midsize, more mass market model. How do you guys thought about providing some more just detail on it, maybe some teaser pictures a little earlier to try to drill up just some more interest from a broader consumer base and even potentially opening the door reservation to just sharing some more liquidity? Thank you.
Peter Rawlinson: Well, that’s an interesting point. I actually think that the consumer has been ill served by some players in this space by taking reservations way, way ahead of time in a very artificial manner. What we believe is a much greater degree of transparency and really getting closer to that product being an absolute reality. Remember that any such reservations and money taken is a false form of liquidity because it’s something we would have to put in escrow anyway. It doesn’t really — it’s not true liquidity. And we believe in absolute transparency, and showing the product with a realistic specification as we’re doing, say, with Gravity, we’ve not taken reservations deliberately until we get closer the start of production.
